Les Investissements Nolinor Inc. v. ARQ, 2023 QCCQ 3835

The taxpayer, which carried on a business of providing charter flights to generally remote locations, e.g., in Nunavut or Gabon, paid its pilots, crew and mechanics allowances of $3 to $5 per hour of flight to cover costs of meals and cleaning their uniforms. The ARQ denied 50% of the deductions claimed by the taxpayer for such allowances pursuant to TA s. 421.1 (similar to ITA s. 67.1(1).) Richard JCQ found that such amounts were deductible in full by virtue of the exception in TA s. 421.2(d) (similar to ITA s. 67(2)(d)) given inter alia that the allowances were in respect of remote work sites described in the Quebec equivalent of s. 6(6)(a)(ii).

The taxpayer (Nolinor) was required pursuant to a covenant under its loan agreement with a Canadian bank to take out a policy on the life of the individual who was its CEO and (through a holding company) its wholly-owning shareholder (Mr. Prudhomme) and assign that policy to the Bank as security for the loan. The ARQ denied the deduction by Nolinor of deductions for the premiums paid by Nolinor on the policy since Mr. Prudhomme was named as the policyholder. In allowing the deduction under TA s. 176.6 (similar to ITA s. 20(1)(e.2),) Richard JCQ found that in substance Nolinor was the policyholder.