Words and Phrases - "purports"

The taxpayer, which was assessed under Part XII.6 for applying the look-back rule in s. 66(12.66) to Canadian exploration expenses (CEE) which were ineligible for treatment under the rule because they were renounced to a non-arm’s length shareholders, argued, referring to a statement in Joseph v Joseph, [1963] 3 All ER 486 at 490 that

The word “purports” … does not mean “professes”. It means “has the effect of”.

The taxpayer then argued that as the phrase “purported to renounce” in s. 211.91 meant “had the effect of renouncing,” A in the formula would only apply where the renunciation was effectively made in the year under s. 66(12.6) or 66(12.601) because of the application of s. 66(12.66).

In rejecting this submission (so that the taxpayer was liable for the Part XII.6 on all its look-back renunciations), V. Miller J stated (at paras. 42-43, 47):

…It is clear that “an amount purported to be renounced in respect of expenses incurred or to be incurred” must refer to an amount “claimed” to be renounced or “intended” to be renounced whether the claim is true or not. …

… If the legislators intended that section 211.91 only applied where the corporation effectively renounced an amount, they could have achieved this goal by simply omitting the word purport. …

Subsection 66(12.66) allows a corporation to renounce CEE that it has not yet incurred. In effect, it permits a corporation to back-date the expenses so that the shareholder can deduct amounts with respect to the CEE in the year prior to their being incurred. These are CEE that the corporation anticipates it will incur and “purports to renounce”. Clearly, this is a claim the corporation is making which may or may not be true.