derived

A U.S. company (“PepsiCo”) entered into an “exclusive bottling appointment” (“EBA”) with an independent Australian bottling company (“SAPL”). PepsiCo agreed in the EBA to sell, or cause a related entity to sell, beverage concentrate to SAPL for bottling and sale, and granted SAPL the right to use the Pepsi and Mountain Dew trademarks in this regard.

Crude pumped from an undersea oil reservoir of the Hibernia joint venture up to the “Hibernia Platform” above the ocean surface was temporarily stored there (in the “GBS”) and then pumped from there, through two underwater flow lines, to an “offshore loading system” (“OLS”) two kilometers away (consisting of a north and south base). The OLS was used to load the crude onto tankers for sale and shipment to refineries.

The appellant (Apex) was a limited partnership that developed and sold the residential condominiums in a particular Calgary condominium project, consistent with its parent’s practice of forming a separate LP for each of its condo projects. Apex hired a general contractor to construct the condo units who, in turn, engaged the trades.

Two Caymans investment LPs (“RCF IV” and RCF V”) whose limited partners were mostly U.S. residents, realized gains from the disposal of shares of significant shareholdings in a TSX-listed Australian corporation (Talison Lithium) which, through a grandchild corporation, held mining leases in Australia and carried out an operation there of mining lithium ores and processing them.

In the years in question, the only revenues of a testamentary trust were from non-exempt sources. However, the trustees made distributions to the income beneficiary out of undistributed tax-free bond interest that had been received in previous years. In finding that these distributions were exempt in the income beneficiary’s hands as “income derived” from Dominion bonds, Thorson P stated (at p. 1082):

A bonus received in 2003 by the taxpayer when he was a resident of Canada was taxable in Canada, notwithstanding that the bonus was earned in 2002 when he may have been a resident only of the United States for Treaty purposes. The word "derived" meant "having its source", and the bonus was taxable at the time of receipt, regardless of when or where the employment to which it related was exercised.

In accepting the taxpayer's submission that royalties (calculated as apercentage of sales proceeds) received by it from the licensee of its interest in an iron ore body qualified as "income derived from the operation of the mine" for purposes of an exemption for such income generated in the first 36 months following commencement of production, Abbott J stated (at p. 1033) that he accepted:

Two mining companies that mined crude ore in New South Wales and (for the most part) also processed the crude ore there, but made contracts for sale of the product outside the Colony were found to have "incomes ... arising or accruing ... from any ... trade ... carried on in New South Wales", or "derived from lands of the Crown" in the Colony, or "arising or accruing ... from any other source whatsoever in New South Wales". Lord Davey also stated (at p. 592) that "their Lordships attach no special meaning to the word 'derived' which they treat as synonymous with arising or accruing".

Before going on to find that business interruption insurance proceeds were "income derived from the operation of a mine" for purposes of ITAR 28(2), Mahoney J.A. stated (p. 6362) that "the authority has established that 'derived from' is a term of wide import".