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Abstract:
The Canadian government announced its ratification of the Kyoto Protocol to the United Nations Framework Convention on Climate Change on December 17, 2002. Under this protocol, Canada has agreed to reduce annual emissions of greenhouse gases (GHGs) to 6 percent below 1990 levels during the period 2008-2012 - a commitment that requires a 30 percent reduction relative to projected GHG emissions for 2010 assuming business as usual. In order to achieve this objective, the Canadian government has established specific reduction targets and proposed various policy instruments in its climate change action plan (CCAP) released in November 2002. Although the main policy instruments contemplated in the plan involve public spending, voluntary agreements, and public information programs, it also mentions tax measures - though these are not clearly spelled out.

This article seeks to contribute to the CCAP by considering the role that tax policy can play in helping to meet Canada's commitments under the Kyoto accord. The author first provides a general justification for environmental taxes and tax incentives to address environmental challenges, examining different rationales for these tax measures and their implications for the design of environmental taxes and tax incentives. He then reviews existing and potential tax measures in Canada and other developed countries that are directed at the problem of global warming, considering their likely effectiveness to reduce GHG emissions or enhance carbon sinks that remove GHGs from the earth's atmosphere. Returning to the CCAP, the author suggests ways in which tax measures can contribute to each of the areas for which action is proposed under the plan: (1) transportation; (2) housing and commercial/institutional buildings; (3) large industrial emitters (including renewable energy and cleaner fossil fuels); (4) small and medium-sized enterprises and fugitive emissions; (5) agriculture, forestry, and landfills; and (6) international emission reductions. Finally, he offers general conclusions on the role of tax policy in reducing global warming.

Environment, gasoline taxes, fuels, motor vehicles, tax incentives, tax expenditures

Abstract:
This paper reviews the role that environmental taxes and tax incentives can play to combat global warming, making specific proposals within the Canadian context.

Part I provides a brief introduction to the problem of global warming, the Kyoto Protocal, and the Canadian Government's Climate Change Action Plan to address global warming. Part II provides a general justification for environmental taxes and tax incentives to address environmental challenges.

Part III reviews existing and potential tax measures in developed countries directed at the problem of global warming, examining: (1) taxes on fossil fuels and energy consumption (automotive fuel taxes, motor vehicle taxes, and energy and carbon taxes); (2) taxes on other sources of GHG emissions; (3) tax incentives to reduce CO2 emissions (incentives for fuel-efficient and clean-fuel vehicles, incentives for ride sharing and public transportation, incentives for energy-efficient buildings and equipment, and incentives for clean and renewable energy); (4) tax incentives to reduce non-CO2 GHG emissions; and (5) tax incentives to preserve and enhance carbon sinks.

Part IV returns to the Canadian Government's Climate Change Action Plan, explaining the role that taxes and tax incentives can play in each of the areas for which action is proposed under the Plan: (1) transportation; (2) housing and commercial/institutional buildings; (3) large industrial emitters (including renewable energy and cleaner fossil fuels); (4) small and medium-sized enterprises and fugitive emissions; (5) agriculture, forestry and landfills; and (6) international emissions reductions.

tax policy, environmental taxation, environmental tax incentives, global warming

Abstract:
The idea that taxes involve the confiscation of private property is widely held in popular thinking and scholarly writing. This article challenges the libertarian foundations of this assumption by critically examining libertarian theories of private property and their implications for tax policy. Part II summarizes the leading libertarian theories of private property, reviewing John Locke's argument in the Second Treatise of Government and Robert Nozick's account in Anarchy, State, and Utopia. Part III examines the implications of these libertarian theories for tax policy, considering libertarian prescriptions for substantive tax measures as well as institutional arrangements that affect tax policy outcomes. Part IV criticizes libertarian theories of private property, casting doubt on tax thinking that relies on these libertarian foundations. Part V considers the implications of this critique for tax policy and tax scholarship.

Abstract:
When the United States acted to phase-out its estate tax by 2010, it joined a small but growing group of countries which have also repealed their wealth transfer taxes. In Canada, federal gift and estate taxes were repealed in 1972 and provincial wealth transfer taxes were abolished in the 1970s and 1980s. In Australia, State and Commonwealth wealth transfer taxes were repealed in the late 1970s and early 1980s. New Zealand followed suit in the 1990s, reducing estate tax rates to zero in 1992 and repealing the tax in 1999. This paper reviews the abolition of wealth transfer taxes in Canada, Australia and New Zealand, relying on public choice theories of politically efficient revenue structures to help explain the repeal of these taxes in each country. Part II outlines the essential elements of public choice theory and its implications for tax policy. Part III surveys the history of wealth transfer taxes in Canada, Australia and New Zealand, examining in detail the events leading up to the repeal of these taxes, and illustrating the relevance of public choice theory to their abolition in each country. Part IV offers brief conclusions on the significance of this experience for the future of wealth transfer taxation in these and other countries.

Abstract:
The last fifteen years have witnessed significant changes in the way that charitable contributions by individuals are treated under the Canadian Income Tax Act. The most significant of these changes involves the conversion in 1988 of what had previously been a deduction for charitable contributions whereby the value of the tax benefit depends on the donor?s level of income, into a tax credit under which the value of this benefit depends on the total amount of charitable contributions claimed in the particular taxation year. As a result of this amendment, Canada has become the only developed country that recognizes charitable contributions by individuals in the form of a tax credit rather than a deduction.

This paper evaluates the merits of this policy change and the structure of the Canadian charitable contributions tax credit in light of alternative possible rationales for the recognition of these gifts in computing the amount of tax payable under an income tax. Part II reviews the history of Canadian income tax provisions regarding charitable contributions by individuals and explains the structure of the current tax credit and related provisions governing the tax treatment of charitable contributions by individuals. Part III examines alternative rationales and related tax designs for the recognition of these charitable gifts in computing the amount of tax payable under an income tax, rejecting the views that recognition is necessary to define income or reward altruism, but accepting the arguments that tax assistance may have a useful role to play to promote pluralism by encouraging donations. Part IV offers conclusions.

Tax policy, personal income tax, charitable contributions

Abstract:
In Canada, tax recognition for contributions to charitable organizations takes four separate forms: (1) a deduction in computing the donor's net income from a business or property where the contribution is made for the purpose of gaining or producing income from the business or property; (2) a deduction in computing taxable income where a corporation makes an eligible gift to a qualified donee; (3) a non-refundable credit where an individual makes an eligible gift to a qualified donee; and (4) a full or partial exemption from capital gains tax otherwise payable where the donor makes a gift of specific kinds of property to a qualified donee. This paper reviews each of these approaches in light of a theoretical analysis of the rationale for tax recognition of charitable contributions.

Part II considers different rationales and approaches for the tax recognition of charitable contributions, considering deductions theoretically appropriate where a gift is made for the purpose of gaining or producing income, but otherwise inappropriate. Concluding that tax recognition for charitable contributions is best justified as a way of subsidizing both the quasi-public goods and services provided by charitable organizations and the social and cultural pluralism that these organizations advance, this part presents a normative argument for the kinds of recipients donations to which should be eligible for tax recognition, the kinds of contributions that should qualify for this recognition, and the form that this recognition should take. Part III reviews statutory rules and judicial decisions governing the tax treatment of charitable contributions in Canada, examining eligible recipients, qualifying gifts, and different methods of tax recognition: the deduction for corporate donations, the credit for individual donations, and special rules for gifts of property that has appreciated in value. In light of the theoretical approach proposed in the second part of the paper, Part IV concludes by recommending specific reforms to the current statutory scheme.

Income tax, charitable contributions

Abstract:
This article examines a specific category of legal transfers between the United Kingdom and Canada, considering the legacy of UK tax concepts in Canadian income tax law. Two main areas are considered where, in our view, this influence has been most profound: (i) the concept of income deployed for Canadian tax purposes; and (ii) judicial approaches to statutory interpretation and tax avoidance. Although the rules and concepts that Canadian courts and legislatures have adopted in each of these areas have necessarily evolved over time, the path of this evolution as well as current approaches reflect the enduring influence of UK tax concepts on Canadian income tax law. The first substantive section examines the structure and concept of income in Canadian tax law, linking its origins and development to the global and schedular taxes that were adopted in the United Kingdom in 1799 and 1803, and to the source and trust concepts that UK courts have employed to interpret the meaning of income for tax purposes. The next section considers judicial approaches to the interpretation of tax statutes and tax avoidance in Canada, tracing the origins of a strict construction approach to interpretation and a formalistic approach to the characterisation of transactions and relationships to early judicial decisions in the UK, and explaining the influence of this traditional approach on subsequent legislative and judicial developments. The final section concludes that the traditional approach endures, albeit uneasily, in Canadian income tax law in the continuing emphasis on textual interpretation of tax legislation and in the formalist application of the general anti-avoidance rule by the Supreme Court of Canada.

The British Tax Review is available on Westlaw

Abstract:
Like other developed countries, Canada experienced massive increases in road transportation since the end of the Second World War. At first, Canadian governments attempted to match the growing demand for road transportation by improving the quality and capacity of roads and highways - significantly increasing the extent of paved roadways and introducing a national highway system supported by federal shared-cost funding. Since the 1970s, however, Canadian governments have been less willing to invest in roads and highways, as growing environmental concerns lessened public enthusiasm for automobiles and urban expressways in particular. At the same time, government support for public transit decreased, resulting in recurring fare increases and reduced ridership per capita. As a result, road congestion has increased significantly in Canada, particularly in the largest urban areas, the Greater Golden Horseshoe area surrounding Toronto, and along the Trans-Canada highway from Quebec City to Windsor, Ontario. In order to finance improvements to road and transit infrastructure and address the growing problem of road congestion in Canada, the federal government has promised to share a portion of the federal gas tax with municipalities, and provincial governments have established urban transportation authorities, increased funding for public transit, and plan to introduce high occupancy vehicle (HOV) lanes as an incentive for people to carpool. Notably absent from these measures, however, are any concrete proposals to introduce more explicit road prices in the form of tolls and congestion-related charges. This paper hopes to contribute to Canadian public policy by making a case for increased reliance on explicit charges for the use of Canada's roads and highways. Part II considers road pricing in theory, considering the main arguments for and against road user charges as well as their optimal design. Part III reviews international experience with road pricing in order to derive lessons for the Canadian context. Part IV offers tentative conclusions.

Abstract:
This article briefly describes trends in the frequency and severity of medical malpractice claims in Canada and the U.S., with some comparative references to trends in Britain and Australia. In all cases, frequency and severity rates appear to have risen quite dramatically over the past decade and a half. The article proceeds to explore various hypotheses that might explain these trends. While empirical analysis does not yield firm conclusions, the fact that so many jurisdictions have experienced a somewhat similar phenomenon makes it doubtful that the primary cause of the increase is likely to be idiosyncratic features of one particular country's tort system. Instead, the authors conjecture that various changes in medical technology may well be a more important explanatory factor. The article goes on to examine the empirical evidence on the impact of expanding liability on physician behaviour and in turn whether observed changes in physician behaviour have caused reductions in the medical injury rate. While it seems clear from the evidence that the liability system has 'induced various changes in physician behaviour, it is much less clear whether these changes have reduced the medical injury rate or are otherwise socially desirable.

Abstract:
This paper presents a preliminary argument for the introduction and design of a lifetime accessions tax: a progressive tax on inherited wealth levied on the cumulative lifetime gifts and inheritances of the recipient.' As such, it contains an elaboration of the rationale for the tax and a presentation of distributive principles to govern its design. However, it does not include a detailed exposition of the actual design of the tax, nor an analysis of its feasibility in a given context. As a result, it provides an ethical blueprint for the design of an ideal inheritance tax without fully considering concrete questions of compliance and administration which any actual tax must ultimately address.' Nevertheless, even this exercise should serve as a useful guide to concrete tax policy. In addition, to the extent that this paper strengthens the ethical argument for taxing inherited wealth and stimulates creative thinking about the actual design of such a tax, it will have served a useful purpose.

Abstract:
Since a society’s tax system is one of its most basic and essential social institutions, the justice or fairness of this tax system is an important subject for social and political theory, as well as for practical politics. In order to assess the fairness of any particular tax or the tax system as a whole, however, it is essential to consider the purpose of the tax and the tax system in general.

While the most obvious purpose of most taxes is to raise revenue to finance public expenditures, taxes are also employed to regulate social and economic behaviour and to shape the distribution of economic resources. For this reason, the concept of tax fairness is necessarily pluralistic, depending on the particular purpose for which the tax is imposed.

Where a tax is designed to affect the distribution of economic resources, principles of tax fairness dissolve into broader considerations of distributive justice which determine the manner in which economic resources are fairly distributed and the respective roles of taxes and transfer payments to achieve this distributive goal. Although conceptions of distributive justice differ significantly, widely shared and normatively defensible principles of distributive justice support progressive taxes on income and wealth transfers in order to moderate inequalities that would otherwise prevail in the distribution of income and wealth, as well as the opportunities that result from substantial inheritances.

Taxation, Fairness, Tax policy

Abstract:
On October 19, 2005, the Supreme Court of Canada released the first decisions in which it considered the general anti-avoidance rule (GAAR) in Sec. 245 of the federal Income Tax Act (ITA). Effective for transactions entered into on or after September 13, 1988, this rule was enacted as a deliberate response to the Supreme Court of Canada decision in Stubart Investments Ltd. v. The Queen and was intended to reduce what the Court had described as "the action and reaction endlessly produced by complex, specific tax measures aimed at sophisticated business practices, and the inevitable, professionally guided and equally specialized taxpayer reaction." Designed "to distinguish between legitimate tax planning and abusive tax avoidance", the GAAR operates to deny a "tax benefit" that would otherwise result from an "avoidance transaction" or "series of transactions" of which the avoidance transaction is a part if the transaction results in a misuse of the provisions of the ITA, the Income Tax Regulations, the Income Tax Application Rules, a tax treaty, or any other relevant enactment, or an abuse having regard to those provisions read as a whole.

Although the ITA defines the terms "tax benefit", "avoidance transaction", and "series of transactions", it is up to the courts to decide if these requirements are satisfied in the context of specific transactions and whether an avoidance transaction results in a misuse or abuse within the meaning of the statutory rule. In its unanimous decisions in Canada Trustco Mortgage Company v. Canada and Mathew v. Canada, the Supreme Court of Canada considered each of these issues and provided important guidance on the interpretation and application of the GAAR.

This article reviews the decisions in Canada Trustco and Mathew in light of the previous tax jurisprudence of the Supreme Court of Canada and the lower court pronouncements on the operation of the GAAR. Part 2 outlines the facts of each case and the grounds on which the Crown sought to apply the GAAR, and Part 3 summarizes the decisions reached in each case by the Tax Court of Canada and the Federal Court of Appeal. Part 4 examines the Supreme Court of Canada decisions and considers the Court's general approach to tax law and the GAAR and its application of this approach to the facts of each case. Part 5 summarizes the conclusions of this examination.

Abstract:
On October 19, 2005, the Supreme Court of Canada released its much-anticipated decisions in The Queen v. Canada Trustco Mortgage Co. and Mathew v. The Queen, the first two cases from Canada's highest court addressing the general anti-avoidance rule (GAAR) in section 245 of the federal Income Tax Act. The Faculty of Law at the University of Toronto hosted a symposium on November 18, 2005, which brought together academics, practitioners, representatives of the Canada Revenue Agency, and Chief Justice Donald Bowman of the Tax Court of Canada to discuss the implications of the decisions. This article summarizes the formal presentations and comments of participants in the proceedings.

This article is reproduced with the permission of the Canadian Tax Foundation.

anti-avoidance, GAAR, statutory interpretation, Supreme Court decisions, tax administration, tax avoidance

Abstract:
This two-part article discusses the various doctrines to which Canadian courts have referred in interpreting the Income Tax Act, evaluates these doctrines, and proposes an alternative "pragmatic" approach that offers a more open, reasoned, and balanced method of statutory interpretation than each of the alternatives otherwise available.

Part 1 of the article reviews the four main doctrines applied by Canadian courts in interpreting the Income Tax Act: strict construction, purposive interpretation, the plain meaning rule, and the words-in-total context approach. After the characteristics of each of these four doctrines have been explained, the article examines leading tax cases in which these doctrines have been defined and applied, illustrating the manner in which the applicable doctrine has influenced the courts' decisions and critically evaluating these decisions in light of the pragmatic approach developed in part 2. While strict construction and the plain meaning rule downplay the scheme of the Act, the object of the Act, and the intentions of Parliament, leading to decisions at odds with legislative intentions and statutory purposes (for example, the majority judgment in Friesen), purposive interpretation downplays the words of the Act, resulting in doctrinal confusion (for example, Bronfman Trust and McClurg) and decisions at odds with the text of the Act (for example, Neuman). Although the words-in-total-context approach affirms a more pragmatic outlook, according to which the words of the Act are to be read contextually and "harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament," the Supreme Court of Canada has yet to acknowledge this approach as an independent interpretive doctrine different from purposive interpretation and the plain meaning rule. Moreover, to the extent that the words-in-total-context approach limits the scope of contextual analysis and disregards the practical consequences of alternative interpretations, it is only partly pragmatic and fails to fully describe the interpretive process that the court implicitly employs.

Part 2 of the article evaluates each of the interpretive doctrines examined in part 1, explains the essential features of an explicitly pragmatic approach to statutory interpretation, and advances an argument for this approach as an alternative to each of the interpretive doctrines currently employed.

Reproduced with the permission of the Canadian Tax Foundation

Abstract:
This article examines the relationship between the federal Income Tax Act (ITA) and provincial private law, evaluating judicial decisions and statutory provisions according to the goals of Canadian bijuralism expressed in the policy on legislative bijuralism adopted by the federal Department of Justice in June 1995, the preamble to the first Federal Law-Civil Law Harmonization Act, No. 1, and new sections 8.1 and 8.2 of the federal Interpretation Act.

The first part of the article reviews notable cases in which Canadian courts have recognized a relationship of complementarity between the ITA and provincial private law, looking at cases arising in Quebec in which courts have relied on the civil law, and cases arising in the rest of Canada in which courts have looked to the common law and applicable provincial statutes.

The second part of the article considers cases in which Canadian courts have dissociated the interpretation of the ITA from provincial law, examining key legal concepts that have been interpreted with little or no regard for the private law of the applicable province, such as the concepts of a gift and a charitable purpose or activity, the distinction between an employee and an independent contractor, the meaning of an individual's residence, and the concepts of an acquisition and a disposition of property. The third part of the article explains the goals of Canadian bijuralism set forth in the Department of Justice policy on legislative bijuralism and recent legislative initiatives, and the implications of these developments for the interpretation and amendment of the ITA. With respect to statutory interpretation, it is argued, new section 8.1 of the Interpretation Act mandates a reconsideration of several cases in which courts have dissociated the interpretation of the ITA from provincial private law. Where complementarity with provincial private law produces unacceptable differences in tax consequences among different provinces, however, the article proposes specific legislative amendments.

Full text version reproduced with the permission of the Canadian Tax Foundation.

BIJURALISM, TAX LAW, STATUTORY INTERPRETATION, CASES, BILINGUALISM

Abstract:
This comment examines the Supreme Court of Canada decision in Neuman, considering the grounds of the decision itself as well as its implications for income splitting, tax avoidance, and the manner in which the Supreme Court of Canada interprets the Income Tax Act. Part II reviews the facts of the case, its judicial history, and the decision reached by the Supreme Court of Canada. Part ill evaluates this decision in light of the text of s. 56(2), the purpose of this provision, and the practical consequences of the court's interpretation. Part IV considers the implications of the decision and subsequent legislative amendments for income splitting, tax avoidance, and statutory interpretation. Part V offers brief conclusions.

Abstract:
Quality assurance (QA) and risk management (RM) programs originated relatively recently in Canadian hospitals. Associated with the increasingly institutional framework for the delivery of health care, their development has been stimulated by tougher standards for hospital accreditation., the expanded scope of hospital liability for medical malpractice, and direct government regulation.

While these measures promise substantial advancement in patient safety and the quality of medical care, considerable concern has been voiced that their potential is frustrated by the unwillingness of medical personnel to participate wholeheartedly in such programs without clear guarantees of confidentiality for the deliberations and recommendations of QA and RM committees. Consequently, it has been suggested that such communication should be shielded in subsequent public disclosure.

While widespread support among both medical and non-medical communities suggests the relatively uncontroversial nature of such statutory protection, careful examination reveals several issues demanding cautious legislative treatment. This comment advances specific recommendations for statutory protection of the quality assurance and risk management process by reviewing the current basis for evidentiary disclosure, exploring the reasons for evidentiary privilege generally and in the context of QA and RM, and applying this analysis to the design of a specific statutory rule to protect certain categories of QA and RM information from disclosure during malpractice actions.

Abstract:
Part 1 of this two-part article reviewed the four main doctrines to which Canadian courts have referred in interpreting the Income Tax Act (strict construction, purposive interpretation, the plain meaning rule, and the words-in-total-context approach) and examined leading cases in which these doctrines have been defined and applied. Part 2 of the article evaluates each of the interpretive doctrines examined in part 1 and develops, as an alternative, an explicitly "pragmatic" approach. This alternative approach builds on the words-in-total-context doctrine by interpreting the words of the Act "in their entire context," having regard to the scheme of the Act, the purposes of the Act, the intentions of Parliament, and the practical consequences of different interpretations.

Following the analysis of the four doctrines, the article outlines the essential features of an explicitly pragmatic approach to statutory interpretation, explains the relevance of practical consequences to judicial decisions, and considers the manner in which consequential considerations and other relevant factors are properly brought together in the context of a particular interpretive issue. Emphasizing the significance of textual, purposive, and consequential considerations to statutory interpretation, this interpretive approach favours an open and inquiring method of judicial reasoning by which the court should endeavour, where possible, to fashion a mutual harmony among these various interpretive elements. Where this harmony is ultimately unachievable, however, the pragmatic approach advocated here follows the traditional practice of English, US, and Canadian courts by generally weighing textual considerations more heavily than purposive considerations and purposive considerations more heavily than consequential considerations.

To the extent that Supreme Court of Canada decisions interpreting the Income Tax Act already examine textual, purposive, and consequential considerations, the pragmatic approach advocated here is not so much a departure from the court's actual practice of statutory interpretation as a more satisfactory account of that practice than is provided by the various doctrines to which the court now refers. To the extent that these doctrines shape both the process of statutory interpretation and the substance of the decisions themselves, however, the proposed pragmatic approach promises a more open, reasoned, and balanced method of statutory interpretation than each of the alternatives otherwise available.

Reproduced with the permission of the Canadian Tax Foundation

Abstract:
This comment questions both the justification offered in the Department of Finance study and tax assistance for charitable giving in the form of a reduced capital gains inclusion rate on gifts of publicly traded securities. The article begins by presenting the most persuasive rationale for special tax treatment of charitable contributions under the income tax and the implications of this justification for the design of an appropriate tax incentive. In light of this analysis, the article turns to the reduced capital gains inclusion rate on gifts of publicly traded securities and the justification offered in the Department of Finance study. A final section offers more general conclusions.

charitable donations, tax expenditures, tax incentives, securities, capital gains

Abstract:
Tax recognition for charitable contributions in Canada takes the form of a deduction where the contribution is made by a corporation or for the purpose of gaining or producing income from a business, a nonrefundable credit where individuals make qualifying gifts to eligible recipients, and a reduction or exemption from capital gains tax on gifts to eligible recipients of qualifying cultural property, publicly traded securities, or ecologically sensitive land. This article reviews different rationales for the tax recognition of charitable contributions, concluding that the most persuasive rationale is to indirectly subsidize the quasi-public goods and services that charities provide and the social and cultural pluralism that they advance. The article goes on to evaluate current rules by reference to these rationales for tax recognition and makes specific proposals for reforming Canadian tax rules in light of this evaluation.

Abstract:
Contemporary debates regarding the appropriate way to resolve custody and access disputes reflect deeply rooted conceptions of both the family and the proper relationship between the family and the state. The prevailing "best interests of the child" test and judicial presumptions favouring sole custody embody a traditional definition of the family and a communitarian image of familial relationships. Conversely, current joint custody legislation adopts a liberal-contractual paradigm, in which the family is viewed as a joint partnership and children are conceived as assets to be equally divided upon termination ofthe spousal relationship. The authors reject both notions of the family and the standards for custody determination associated with each. Instead, they advance a feminist vision of the family and a feminist approach to the resolution ofaccess and custody disputes.

Abstract:
The federal Income Tax Act contains an extensive number of provisions addressing the taxation of families with disabled persons. These provisions, however, have been the subject of a series of ongoing incremental adjustments, and do not reflect a comprehensive and coherent approach to the taxation of these individuals in light of their unique financial circumstances. This article considers the existing income tax provisions regarding families with disabled persons, analyzing the relationship between disabilities and appropriate tax liabilities, and providing suggestions for reform of the current tax structure. Focussing on the goals of tax policy narrowly defined as compared to the broader social policy goals that may be pursued through the tax system, the article evaluates in turn (i) existing provisions aimed at recognizing the costs of disability for disabled individuals and their families; (ii) tax measures designed to facilitate participation by disabled persons in the paid labour force; and (iii) current tax rules on income support for disabled persons who have difficulty supporting themselves. In each of these areas, the article undertakes critical analysis of the present tax provisions and makes proposals for their improvement or replacement, bearing in mind the overriding rationale of promoting horizontal equity between individuals with and without disabilities and between persons who support disabled individuals and persons without such support obligations.

Abstract:
Although the positive externalities associated with higher education favour substantial government support, sound arguments also favour student contributions to the costs of post-secondary education, based on both the private benefits obtained and the regressive impact of general subsidies for higher education. At the same time, the central role that higher education performs as a vehicle for social mobility and the general reluctance of private lenders to finance individual investments in higher education suggest that governments also have an important role to play in the area of student assistance - ensuring that higher education is accessible to all students on the basis of merit, irrespective of financial ability. The need for a well-designed student assistance program is more important than ever.

Among many proposals for a restructured student aid system, one of the most promising is to replace existing 'mortgage-style' student loads with a financing arrangement involving repayment obligations that depend on the student's income after graduation. To the extent that this 'income-contingent' approach reduces the risk to borrowers with respect to their investments in higher education, it will likely lessen the reluctance that students exhibit with respect to such borrowing. Moreover, where funding covers both the direct costs of higher education as well as living expenses, income-contingent financing programs may enhance accessibility by making higher education effectively free at the point of purchase - offsetting the 'sticker shock' associated with increased tuition fees as well as living costs which generally exceed the direct costs of higher education. Finally, collection through the income tax should reduce the incidence of nonpayment and dramatically lessen the costs of administering student financial aid.

This paper proposes an income-contingent financing program (ICFP) for Ontario to replace the current system of mortgage-style loans, automatic debt remission, and interest and debt relief available under the Ontario Student Assistance Program. Part 1 reviews the current system of government-provided student aid in Ontario, providing an essential foundation for our subsequent proposal for an ICFP. Part 2 examines the experience with ICFPs in Australia, New Zealand, Sweden, and the UK, in order to derive lessons relevant to the design of an ICFP for Ontario. Part 3 considers the essential features of an ICFP, canvassing the competing arguments and making specific recommendations informed by our review of the current system in Ontario and the international experience with ICFPs.

Abstract:
Over the past few decades, several factors have contributed to what numerous revenue agencies and academic authors have characterized as a significant increase in tax avoidance activity. This paper considers both the causes of increased tax avoidance activity over the past several years as well as governmental responses to this phenomenon in key common law jurisdictions, notably Australia, Canada, New Zealand, the United Kingdom and the United States. Part 2 examines the concept of tax avoidance, distinguishing unacceptable or abusive tax avoidance both from illegal tax evasion on the one hand and acceptable tax planning or tax minimization on the other. Part 3 considers the causes of recent tax avoidance activity and its adverse effects for domestic tax systems. Part 4 reviews government responses to tax avoidance, examining both legislative reforms and administrative innovations. Part 5 considers whether these legislative and administrative measures are sufficient to the address the problem of tax avoidance in the 21st century, concluding that, although they can be expected to discourage some abusive tax avoidance, there is also much that remains to be done.

Australia, Taxation, Tax avoidance

Abstract:
Beyond Conjugality, the Report of the Law Commission of Canada on close personal relationships among adults, reviews a number of federal statutes in which legal consequences turn on specific kinds of relationships among adults, and it proposes a new methodology for assessing existing or proposed legal rules that employ relational terms in order to accomplish their objectives.

This comment on the Report addresses its most significant recommendations regarding personal income taxation and income support in Canada: that the tax credit for spouses and common law partners should be repealed and that the GST credit should be fully individualized. Questioning both of these recommendations, the comment draws some general conclusions on the Report's vision of close personal relationships among adults, at least as these affect issues of income taxation and support.

tax policy, personal income taxes, income tax credits, households, family, spouse

Abstract:
The trilogy of family law decisions, released by the Supreme Court of Canada on 4 June 1987, represents perhaps the most important statement of the past two decades by Canada's highest court on this rapidly changing area of law. Although decided under the repealed Divorce Act of 1968, judicial analyses of support and domestic contracts are likely to be little altered under the 1985 Act. Furthermore, that these cases reveal the Court's underlying philosophy of the new family law as a whole suggests a significance that transcends specific amendments to the Act.

With respect to the outcome of each individual case, specific pronouncements of legal doctrine, and the Supreme Court's apparent understanding of the central features and purposes of the new family law, this comment is largely critical of the decisions. In particular, three arguments are made. First, while the Court's conceptualization of support conforms to the norms of the new family law, the majority demonstrates insufficient sensitivity to the real barriers to the economic independence of spouses disadvantaged by a division of functions within marriage, and/or enduring consequences of the marriage. Second, the majority's inadequate inquiry into the application of contract law principles to the family context and its related failure to distinguish clearly between the separate subjects of support and domestic contracts at issue in each case contribute to its formulation of a confused and inappropriate test to govern the exercise of judicial discretion under the Divorce Act to overlook the terms of a domestic agreement. Third, leaving aside this highly problematic test, the Court's general posture of considerable deference to the terms of such agreements is neither required under the Act nor consistent with the central principles animating the new family law. An alternative approach to this exercise of the Court's jurisdiction is then advanced. Finally, this comment considers the implications of the decisions for future cases involving domestic contracts

Abstract:
The book in which this chapter appears, A Globally Integrated Climate Policy for Canada, builds on the premise that Canada is in need of an approach that effectively integrates domestic priorities and global policy imperatives. This chapter provides a comparative evaluation of different policies to promote the generation of electricity from renewable sources.

Canada, Climate change policy, Electricity, Renewable resources

Abstract:
Among alternative public policies to reduce emissions of carbon dioxide and other greenhouse gases (GHGs), environmental taxation represents a promising but often under-utilized approach-particularly in North America where the introduction of any new tax involves enormous political challenges. In Canada, however, British Columbia became the first North American jurisdiction to implement a consumption-based environmental tax specifically designed to reduce GHG emissions when BC's provincial government enacted a carbon tax effective July 1, 2008.

This paper provides a general overview and initial evaluation of British Columbia's carbon tax, explaining the background to the announcement of the tax in the Provincial Government's 2008 Budget, the structure of the legislation and its relation to other provincial initiatives to address climate change, and the possible implications of the tax for climate change policy in Canada. Part I provides a short background to the tax, summarizing the evolution of Canadian climate change policies up to the announcement of the tax in February 2008. Part II explains the structure of the carbon tax and its relation to other provincial climate change policies, reviewing the Provincial Budget and the specific tax implementing legislation. Part III discusses the implications of the tax for climate change policy in Canada, considering public reaction to the tax in British Columbia and subsequent developments at the federal level.

Canada, British Columbia, Carbon Tax, Climate Change legislation

Abstract:
This chapter deals with Canadian transfer pricing.

Canada, Transfer pricing

Abstract:
The article examines the contributions of Supreme Court Justice Frank Iacobucci in the Canadian tax jurisprudence. The traditional Anglo-Canadian and American judicial approaches to tax statutes was taken into account. Key information about significant tax decisions made by Iacobucci is presented. On the other hand, his judicial restraint and legislative supremacy was also evaluated.

Canada, Taxation Law, Jurisprudence

Abstract:
The Supreme Court of Canada released its decisions in The Queen v. Canada Trustco Mortgage Co. and Mathew v. The Queen in October 2005. These were the first cases in which the Court has specifically addressed the General Anti-Avoidance Rule (GAAR) in section 245 of the Canadian Income Tax Act. Since then, the Tax Court of Canada has released several decisions in which the GAAR has been considered and applied.

The articles in this book reflect on these decisions and the role of a general anti-avoidance rule more generally by reviewing the decisions themselves, considering other tax avoidance cases in Canada and other countries, and considering the structure and amendment of a GAAR as a matter of legislative policy. By addressing various aspects of tax avoidance jurisprudence as well as the design and amendment of the GAAR, the book makes a positive contribution toward the interpretation and application of this provision.

Canada, Taxation, Tax Avoidance, General Anti-Avoidance Rule (GAAR)

Abstract:
Since the rise of the Canadian welfare state in the aftermath of the Second World War, the politics of social policy and fiscal federalism have been at the centre of federal-provincial relations. Recent events have given impetus for scholars to re-examine these issues. In 2002, the Quebec Commission on Fiscal Imbalance released its report, which introduced the term "vertical fiscal imbalance" into the vocabulary of Canadian politics. Essentially, the Commission determined that a disjunction between revenue-raising capacity and expenditures involving different orders of government "vertical fiscal imbalance" was an urgent problem that must be addressed. Dilemmas of Solidarity is both a reflection on and response to that finding.

The editors have brought together an array of respected legal and political scholars to reflect on the Quebec Commission's findings. The contributors to this volume illustrate how recent debates surrounding Canada's equalization program suggest alternative ways to approach the issue. The goal of Dilemmas of Solidarity is to stand back from the particulars of different policy debates, to enable scholars to reflect on basic questions regarding redistribution. This fascinating collection will undoubtedly inform a more nuanced and wide-ranging debate both among academics and policy practitioners than has occurred in this past.

This chapter focuses on taxation, redistribution and fiscal federalism.

Canada, Taxation, Redistribution, Fiscal federalism

Abstract:
Until the 1970s, Canadian courts affirmed a narrow approach to the application of tax legislation, according to which these statutes were interpreted in a strict and literal manner and tax consequences were based on the legal character of transactions and arrangements irrespective of their commercial or economic substance and the absence of any non-tax purpose for their existence. Characterized by one Canadian writer as the two “pillars of tax planning,” these judicially-established norms of literalism and formalism were highly conducive to tax avoidance.

From the late-1970s to the early 1990s, the Supreme Court of Canada adopted a much broader approach to tax statutes, favouring a more purposive method of statutory interpretation, endorsing a more substantive approach to the application of tax rules having regard to “commercial and economic realities, rather than juristic classification of form,” and suggesting that tax-motivated transactions could fail to achieve their intended results where they contradict the “object and spirit” of a relevant statutory provision or the provision itself requires a business purpose.

This article traces the change in the Supreme Court of Canada’s approach to tax legislation by examining the criteria for interest deductibility set out in Bronfman Trust, Singleton and Ludmer, and the role of the reasonable expectation of profit test in Moldowan, Stewart and Walls. Section B reviews the cases on interest deductibility, contrasting the substantive approach employed in Bronfman Trust and various post-Bronfman Trust decisions with the formalist approach adopted in Singleton and Ludmer. Section C considers the reasonable expectation of profit test, contrasting the broad formulation in Moldowan and subsequent Federal Court of Appeal decisions with the much narrower interpretation adopted in Stewart and Walls. Section D offers concluding remarks, considering the reasons for and implications of the Court’s current approach, and the draft legislation released by the Department of Finance.

Canada, Tax legislation, Statutory interpretation, Jurisprudence

Abstract:
This comment reviews the Supreme Court of Canada decision in Lipson v. Canada, 2009 SCC 1, the third Supreme Court of Canada decision to consider application of Canada's general anti‑avoidance rule (“GAAR”).

The British Tax Review is available on Westlaw.

Canada, Taxation, Income tax, Tax avoidance, General Anti‑Avoidance Rule, GAAR

Abstract:
Introduction to the book.

Abstract:
A Globally Integrated Climate Policy for Canada builds on the premise that Canada is in need of an approach that effectively integrates domestic priorities and global policy imperatives. Leading Canadian and international experts explore policy ideas and options from a range of disciplinary perspectives, including science, law, political science, economics, and sociology. Chapters explore the costs, opportunities, or imperatives to participate in international diplomatic initiatives and regimes, the opportunities and impacts of regional or global carbon markets, the proper mix of domestic policy tools, the parameters of Canadian energy policy, and the dynamics that propel or hinder the Canadian policy process.

Canada, Climate changes, Government policy

Abstract:
This paper on wind power in Canada was given at the 6th Annual Global Conference on Environmental Taxation, as held in Leuven, Belgium, 22-24 September 2005.

Canada, Alternative energy sources, Wind power

Abstract:
This chapter reflects upon the evolving approach to large business taxpayers in the United Kingdom, considering questions of tax compliance and tax avoidance in the context of increased globalization and cross-border activity. Beginning with a brief discussion of tax compliance and risk-based regulation, the chapter addresses concerns about legal clarity and legal certainty, and concludes with a brief evaluation of general and specific anti-avoidance rules.

Corporate taxation, Tax avoidance, Globalization

Abstract:
This chapter provides a comparative evaluation of market-based policies for electricity from renewable energy sources.

Canada, Electricity, Renewable resources

Abstract:
Over the past 15 to 20 years, Canada and most other developed countries have experienced substantial increases in foreign direct investment. In this context, it is not surprising that several of these countries have begun to reconsider their income tax rules governing outbound direct investment in order to determine whether they are optimal in an era of increased economic globalization.

In theory, countries may employ one of three approaches for the taxation of outbound direct investment. Under an accrual regime, resident corporations are subject to tax on all income earned by foreign affiliates (with a credit for foreign taxes paid), whether or not this income is repatriated through a dividend. Under a deferral regime, resident corporations are taxable on income earned by foreign affiliates (again with a credit for foreign taxes paid) only when this income is repatriated through the payment of a dividend. Under a territorial or exemption system, on the other hand, foreign source income is generally exempt from tax.

In practice, no country applies a pure version of any of these methods, and most developed countries employ either deferral or exemption systems for active business income earned by foreign affiliates, and an accrual system for income from property and other mobile sources earned by controlled foreign corporations. While many countries have introduced controlled foreign corporation rules over the last 30 years, a more recent trend involves a shift from deferral regimes to territorial regimes for active business income.

This paper considers the rationale for a territorial or exemption system for foreign direct investment, as well as key issues in the design of such a system. Part II presents an argument for a territorial system as opposed to an accrual or deferral regime. Part III examines key elements in the design of an exemption system, considering the entities and income that should qualify for exemption and the entities and income that should be subject to accrual taxation under controlled foreign corporation rules. Part IV concludes.

Taxation, International Taxation, Foreign Direct Investment

Abstract:
As alternatives to more general taxes based on broad measures of each taxpayer's economic capacity, benefit taxes and user fees are praised by some for promoting economic efficiency, government accountability and tax fairness, and condemned by others as reactionary, regressive, and distributively unjust. This paper adopts a more even-handed approach to benefit taxes and user fees, regarding these sources of revenue as preferable to general taxation for specific purposes but inferior to general taxes for other purposes. Part II provides a theoretical framework for analyzing benefit taxes and user fees, defining these levies in contrast to general taxes, examining theoretical arguments for and against government reliance on benefit taxes and user fees, considering the appropriate role of benefit taxes and user fees as methods of government finance, and reviewing the manner in which these levies should be designed in order to achieve the purposes for which they are best suited. Part III considers benefit taxes and user fees in practice, surveying the extent to which governments rely on these levies in Ontario and other jurisdictions, and examining the current and potential application of benefit taxes and user fees to finance various categories of government expenditures. Part IV summarizes the argument of the paper and offers general conclusions.