The taxpayer wholly owned a corporation ("Amadéus") which, in turn, wholly owned another corporation ("Pub Création"), and the taxpayer was also the president and director of Pub Création. He assigned a $240,000 debt to Pub Création in exchange for a $240,000 "employee advance." As the debt which he assigned was essentially worthless, the Minister included $239,000 in the taxpayer's income. By the Tax Court trial, the position of the Minister (consistent with the pleadings, which did not refer to s. 6(1)(a)) was that this amount was included in the taxpayer's income under s. 246(1), on the basis that Amadéus had indirectly conferred a benefit on the taxpayer by arranging for the debt assignment at an inflated value, and such benefit would have been included in the taxpayer's income under s. 15(1) if Amadéus had paid this benefit directly to the taxpayer. The Tax Court found that the amount was included in the taxpayer's income under s. 6(1)(a), but found in the alternative that the Minister's position was correct.
The taxpayer argued that, because the benefit "could" have been included under s. 6(1)(a), the Minister lost the right to include the benefit in income under s. 246(1), which only applies "to the extent that [the benefit] is not otherwise included in the taxpayer's income ... under Part I." Before dismissing the taxpayer's appeal, Noël J.A. stated (at para. 25):
The question the TCC judge should have asked was not whether the benefit "could be included" under paragraph 6(1)(a), but rather whether the value of the benefit was "included" in computing Mr. Massicotte's income under paragraph 6(1)(a) or any other provision in Part I. While subsection 246(1) is generally used as an alternative basis, nothing prevents the Minister from relying on this provision as the sole basis of assessment when the circumstances require.