Date: 19980521
Docket: A-949-96
CORAM: MARCEAU J.A.
DENAULT J.A.
CHEVALIER D.J.
BETWEEN:
TECK-BULLMOOSE COAL INC.
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Ottawa, Ontario,
on Thursday, May 21, 1998)
MARCEAU J.A.
[1] We are all of the view that this appeal cannot succeed. In spite of the excellence of counsel for the appellant's presentation, we have not been persuaded that the Tax Court judge had misinterpreted the provision of the Income Tax Act here involved, namely subparagraph 66.1(6)(a)(iii.1).1
[2] The conclusion that the cost here involved, that is one incurred in order to build a permanent heavy duty road needed to transport the product of a coal mining operation to market, is not a cost incurred for the purpose of bringing the mineral resource into production, appears to us, as to the Tax Court judge, required by a proper reading of the words used by Parliament. Indeed, the provision speaks of a purpose specifically related to production, an expense which has as its object production, that is to say required to bring the mine to the state where it will "produce," bring forth the mineral, at a certain commercial level. To try to read the provision as covering an expense related to the transportation of the mineral after the resource has been brought into production, on the basis that the expense was seen by the promoters as inevitable if the operation was to be economically profitable, would require an unacceptable extension of the words and a disregard for the clarifications that can be drawn from the formal examples Parliament has seen useful to add, and the legislative context in which it appears, as it was added to subparagraph 66.1(6)(a)(iii).2
[3] Counsel argues that such an interpretation, by limiting the allowable expenses to those incurred in the physical construction of the mine, renders the time requirement added to that of the purpose meaningless. We do not agree. There had to be established a time limit to the period of construction, in regard to the level of production.
[4] The appeal will be dismissed with costs.
"Louis Marceau"
J.A.
Date: 19980521
Docket: A-949-96
CORAM: MARCEAU J.A.
DENAULT J.A.
CHEVALIER D.J.
BETWEEN:
TECK-BULLMOOSE COAL INC.
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
Heard at Ottawa, Ontario, on Thursday, May 21, 1998.
Judgment delivered from the Bench on Thursday, May 21, 1998.
REASONS FOR JUDGMENT BY: MARCEAU J.A.
FEDERAL COURT OF APPEAL
Date: 19980521
Docket: A-949-96
BETWEEN:
TECK-BULLMOOSE COAL INC.
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
OF THE COURT
__________________
1 This provision reads as follows:
66.1 (6) In this section and sections 66, 66.2 and 66.4, ( a) "Canadian exploration expense" of a taxpayer means any outlay or expense made or incurred after May 6, 1974 that is ... (iii.1) any expense incurred by him after November 16, 1978 for the purpose of bringing a mineral resource in Canada into production and incurred prior to the commencement of production from the resource in reasonable commercial quantities, including (A) clearing, removing overburden and stripping and (B) sinking a mine shaft, constructing an adit or other underground entry
2 Which reads:
66.1 (6) In this section and sections 66, 66.2 and 66.4, ( a) "Canadian exploration expense" of a taxpayer means any outlay or expense made or incurred after May 6, 1974 that is ... (iii) any expense incurred by him for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada including any expense incurred in the course of (A) prospecting, (B) carrying out geological, geophysical or geochemical surveys, (C) drilling by rotary, diamond, percussion or other methods, or (D) trenching, digging test pits and preliminary sampling, but not including (E) any Canadian development expense, or (F) any expense that may reasonably be considered to be related to a mine, whether or not owned by the taxpayer, that has come into production in reasonable commercial quantities or to be related to a potential or actual extension thereof