The taxpayer purchased conditional sales contracts from Canadian General Motors franchise dealers and was reimbursed by General Motors of Canada Limited ("GMCL") under a "rate support program" for the amount by which the principal or face amount of the purchased contracts exceeded their discounted value. In later taxation years, the rate support program amounts were paid by GMCL directly to the dealers. The taxpayer brought the difference between the discounted amount and the face amount of the contracts into its income over the life of the contracts.
In rejecting a submission of the Crown that the rate support program amounts represented compensation to the taxpayer for lost interest, Rip TCJ. found that the taxpayer was not in a lender-borrower relationship with the retail customers of the dealer and (at p. 1855) "for an amount of money to constitute interest, the amount must be paid by the borrower of the money to a person who loaned money to the borrower".