The taxpayer purchased conditional sales contracts from Canadian General Motors franchise dealer 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 finding that the rate support program amounts were paid by the taxpayer as agent for GMCL, Rip TCJ. noted ( at p. 1856) that although the dealer did not know of the agency relationship "the agency relationship does not rely on the knowledge by third parties of its existence or its specific terms", and that the taxpayer had no chance of profit and no risk of loss with respect to the program.