Words and Phrases - "agent"
29 November 2011 November CTF Roundtable, 2011-0426561C6 - Public Warehouse: PIA
The questioner noted that:
CRA has in [the context of Reg. 400(2)(b)] ascribed an ordinary meaning to the word "agent", [as] being one who is authorized to act for or in place of another. This view of the meaning of the word "agent" is sufficiently broad that a public warehouse that acts only to store and ship goods for a particular corporation would typically be deemed to be a permanent establishment of that corporation for provincial income allocation purposes.
In response, CRA noted the statement in Canada v. Merchant Law Group, 2010 FCA 206 that "it is settled at common law that for an agency relationship to exist the agent must be able to affect the principal's legal position with third parties by entering into contracts on the principal's behalf or by disposing of the principal's property," and then stated:
We are of the opinion that sufficient support exists for using the legal meaning of the word "agent" in situations involving allocation for provincial income tax purposes and the CRA is prepared to change its position on a prospective basis.
Kinguk Trawl Inc. v. Canada, 2003 DTC 5168, 2003 FCA 85
The taxpayer (which was engaged in fishing for shrimp in Canadian waters) was found, based on the wording of an agreement between it and a non-resident group ("Uhrenholt") to have sold the shrimp harvested by it overseas through Uhrenholt as its agent rather than immediately upon landing, with the result that a portion of the interest credited by the taxpayer to Uhrenholt qualified for exemption under s. 212(1)(b)(iii)(E), as such interest related to business carried on by the taxpayer outside Canada (namely "the whole of the sales function, from the marketing of the catch to the making of the contracts"). Selling the catch was not merely an ancillary activity but an essential component of the taxpayer's business.