Canadian Lawyer

May 2020

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Page 34 of 59 33 his loan from TD Bank. The 165,000 Bank of Nova Scotia shares pledged by MacDonald to get his loan were also the underlying assets of the forward contract with TD Securities. If MacDonald received money from TD Securities under the forward contract, it would be pledged as extra security for the loan with TD Bank. Maintaining the forward contract was also part of the condition for getting the loan, and so the loan agreement, share pledges and forward contract were all linked. "As Noël C.J. observed, the combined effect of the forward contract, the loan agreement and the pledge agreement allowed for credit backed by collateral that was free from market fluctuation risk," wrote Abella in her reasons. In dissenting reasons, Justice Suzanne Côté found that the tax characterization of the forward contract turns on the taxpay- er's intent, which was determined here by reviewing the taxpayer's subjective state- ments of intent and objective manifestations of intent. MacDonald's intent was to specu- late and not hedge, Côté found. At the lower court levels, it "came as a surprise" that the Tax Court judge's decision was reversed by Federal Court of Appeal Chief Justice Marc Noël, Innes says. "He decided the issue of MacDonald's intent was irrelevant, [and] that changed the law in my view. I suspect it was why the Supreme Court granted leave, because that change in the law gave a certain discomfort to the investment community." Elie Roth of Davies Ward Phillips & Vineberg LLP in Toronto, who represented the appellant, told Canadian Lawyer that "both the majority and the dissent acknowl- edged the core principle advanced by the taxpayer on appeal, which is that intention, or purpose, is the central test to be applied in determining the characterization of a derivative instrument as on income or capital account." © 2020 Thomson Reuters Canada TR1056011-NM Available Risk-Free for 45 Days Online: Call Toll-Free: +1 800 387 5164 In Toronto: 416 609 3800 Find much-needed guidance to the law of emergency planning, management, and response in Canada Canadian Emergency Management and Response Manual: A Guide to the Law and Practice Norm, A. Keith, B.A., J.D., LL.M., C.R.S.P. Covering each Canadian jurisdiction in detail, this work draws together discussion of the vast and varied array of legislative provisions that apply in different emergency situations, including pandemics, storms, terrorist events, derailments, and toxic spills. The book analyzes the specific regimes that apply to particular professions – for example, firefighters, police, and emergency medical personnel – and offers general guidelines for local and provincial authorities and municipal institutions and employers on developing effective emergency preparedness policies. Choose eBook, Print, or both Experience the freedom and flexibility to work wherever and whenever you want, with or without an internet connection, with Thomson Reuters ProView®, the premier eBook experience for professionals worldwide. *eBook not available to trade bookstores, third-party distributors, and academic institutions. Print + ProView eBook* Order # 30852754 $525 2 volume looseleaf supplemented book + eBook Anticipated upkeep cost – $365 per supplement 3-4 supplements per year Supplements invoiced separately ProView eBook only Order # 30850171 $477 Print only Order # 30843020 $477 Prices include shipping and handling. Price(s) subject to change without notice and subject to applicable taxes. Stay current with COVID-19 Canada Resource Centre. Thomson Reuters has information to help support you and your business. To learn more, visit

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