commission

The taxpayer (“Alcan”), a Canadian public company listed on the TSX and NYSE and in Europe, incurred fees (mostly of investment dealers, law firms and a French lobbying and public relations firm in connection with its decision to make a hostile bid for a French public company (“Pechiney”) and the subsequent making and completion of that bid late in 2003. In 2004, the taxpayer determined to effect a butterfly spin-off of a portion of its (laminated products) assets, which resulted in the receipt by its shareholders of shares of a new public company (“Novelis”) in January 2005.

The taxpayer, a Canadian public company listed on the TSX and NYSE and in Europe, incurred fees (mostly of investment dealers, law firms and a French lobbying and public relations firm (“Publicis”)) in connection with its decision to make a hostile bid for a French public company (“Pechiney”) and the subsequent making and completion of that bid late in 2003. In 2004, the taxpayer determined to effect a butterfly spin-off of a portion of its (laminated products) assets, which resulted in the receipt by its shareholders of shares of a new public company (“Novelis”) in January 2005.

The taxpayer's business was the sale in Quebec through a Quebec sales force of stoves manufactured by an affiliated company whose manufacturing plant was in New Brunswick ("Enterprise Foundry"). Most administrative functions of the taxpayer's business were handled by Enterprise Foundry in consideration for a fee equal to a percentage of the taxpayer's purchases from Enterprise Foundry. In finding that these fees were commissions for purposes of Regulation 402(7) (now Regulation 402(8)), Mr. Weldon stated (p. 667):

The taxpayer's bonuses were not "commissions" for the purposes of s. 8. Christie J. stated (at para. 5):

To my mind the result is that in order for expenses to be deductible under that paragraph the remuneration pertaining thereto must be fixed by reference to the volume of the sales made or the contracts negotiated by the taxpayer claiming those deductions. Twenty per cent of the pre-tax gross profits of an employer with a number of employees is not synonymous with remuneration so fixed.

In connection with the interim construction of a building, the taxpayer agreed in 1962 to pay interest on the borrowed money at a rate of 9%, plus "additional interest", in each of the 25 years after 1964 in which it was profitable, of 1% of its gross rental income from the building. The 1% fee incurred in each year arose in the course of borrowing money, and was deductible. "What appears to me to be the test is whether the expense, in whatever taxation year it occurs, arose from the issuing or selling or borrowing ...

In connection with a rights offering the taxpayer, in addition to paying a commission to the underwriters in consideration for their services as dealers in securities, paid a fee for their services rendered in forming and managing a soliciting dealers group and in consideration for their agreement to maintain an orderly market, and paid a further fee which was alleged to be for the administrative and clerical services of the dealers in processing the rights tendered by shareholders, but which was described in the relevant agreement as a commission for each common share which a soliciting de