Honeywell Limited v. The Queen

Honeywell Limited v. The Queen

The Court applied the slip rule to correct omitted determinations and held that amendments to the Reply that are consistent with the GAAR‑based assessment are permitted, while amendments that seek to justify the assessment on an entirely new FAPI basis are not permitted; the Court also held that Rule 168 permits correction of the order notwithstanding that appeals had been filed.

Citation
2006 TCC 327
Parties
Applicant (respondent): Her Majesty the Queen; Respondent (appellant): Honeywell Limited
Court
Tax Court of Canada
Jurisdiction
Canada
Judgment Date
26 September 2006
Procedural Posture
Tax Appeal Under the Income Tax Act (motion Concerning Amendments to the Reply and Timetable Under Subsection 152(9)) / Motion for Amendment and Reconsideration; Supplemental Reasons for Order (post‑order Correction/slip Rule)
Outcome
Motion partially granted: respondent allowed to amend the Reply in specified respects; certain proposed amendments advancing a FAPI basis disallowed; prior timetable Order dated March 17, 2006 vacated; parties directed to contact the Court within 30 days to set a new timetable.
Legal Topics
General Anti‑avoidance Rule (gaar), Foreign Accrual Property Income (fapi), Amendment of Pleadings, Slip Rule / Correction of Omitted Matters, Income Tax Act Procedures and Waivers
Source Language
English
Tax Law Administrative Law Civil Procedure Statutory Interpretation General Anti‑avoidance Rule (gaar) Foreign Accrual Property Income (fapi) Amendment of Pleadings Slip Rule / Correction of Omitted Matters +1 more

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Parties

Her Majesty the Queen

Applicant (respondent)

Honeywell Limited

Respondent (appellant)

Procedural Posture

Tax Appeal Under the Income Tax Act (motion Concerning Amendments to the Reply and Timetable Under Subsection 152(9)) / Motion for Amendment and Reconsideration; Supplemental Reasons for Order (post‑order Correction/slip Rule)

Legal Issues

  1. 1 Whether the Crown may introduce a new basis for assessment (FAPI) after obtaining a waiver and assessing on GAAR grounds
  2. 2 Whether the Court may correct an omission in its earlier order under the slip rule (Rule 168) despite appeals having been filed
  3. 3 Which proposed amendments to the Reply are consistent with the GAAR assessment and which effectively advance the FAPI basis and must be disallowed

Ratio Decidendi

The Court applied the slip rule to correct omitted determinations and held that amendments to the Reply that are consistent with the GAAR‑based assessment are permitted, while amendments that seek to justify the assessment on an entirely new FAPI basis are not permitted; the Court also held that Rule 168 permits correction of the order notwithstanding that appeals had been filed.

Court Disposition

Motion partially granted: respondent allowed to amend the Reply in specified respects; certain proposed amendments advancing a FAPI basis disallowed; prior timetable Order dated March 17, 2006 vacated; parties directed to contact the Court within 30 days to set a new timetable.

Orders

  • Respondent permitted to amend the Reply as set out in the Reasons and Supplemental Reasons for Order; allowed amendments include (inter alia) paragraphs 5, 8, 8A, 13(f), 13(g)(i), 13(g)(ii), 13(g)(iii), 13(g)(iv), 13(i), 13(k), 13A, 15, 16, 17, 18, 21E, 22A, 23(b), 23(c), 23(d), 23(e) (with references to clause...
  • The following proposed amendments are disallowed: paragraphs 18A, 21A, 21B, 21C, 21D, 23(a), 33A and 33B (those advancing the FAPI justification).