The Supreme Court's 2012 Tax Cases: Formalism Trumps Pragmatism and Good Sense

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Supreme Court of Canada, 2012, Formalistic Approach, Tax Legislation, Judicial Interpretation, Canada v Craig, Fundy Settlement v Canada, Canada v GlaxoSmithKline Inc, Calgary (City) v Canada


The Supreme Court of Canada released decisions in four cases in the 2012 year. We argue that each illustrates the Court's formalistic approach to interpreting tax legislation. Each of the following four cases is evaluated in turn. Canada v Craig relates to the circumstances under which a taxpayer can offset losses incurred in a farming business against income earned from a completely different source. Fundy Settlement v Canada required determining the residency of a trust for tax purposes. Canada v GlaxoSmithKline Inc. focused on the circumstances to be taken into account in determining an arm's-length price in the transfer pricing context. Finally, Calgary (City) v Canada, a goods and services tax issue, looked at whether a particular supply of good and services constituted a single supply or multiple supplies and whether a grant or subsidy was given for a public purpose or was consideration for a supply.