SPG International Ltée v. R., [1998] 3 CTC 2046, 98 DTC 1706 (TCC) -- summary under Income-Producing Purpose

The taxpayer, which was a Canadian manufacturer of tool boxes and metal lockers, established an American marketing subsidiary and decided that, during the start-up period, it would pay various expenses (such as trade convention reservation fees, and travelling expenses) directly rather than charge them to the subsidiary. In finding that such expenses were deductible by the taxpayer, Dussault T.C.J. noted that each American sale made by the subsidiary also represented a sale for the taxpayer (because the taxpayer was an exclusive supplier of the subsidiary), that the taxpayer made more profits on such sales than the subsidiary and that the taxpayer's decision to absorb such expenses was a perfectly legitimate business decision analogous with the sharing of expenses for advertising, marketing or promotion by a taxpayer with its distributors.