Territorial Limits

Nöel, J.A. noted (at para. 23) that when s. 150(1) formerly simply provided that in the case of a corporation, a return shall be filed by a corporation for each taxation year, "with respect to non-resident corporations, the obligation to file could only extend to those that had some connection with Canada. To construe the provision as applying in the absence of any connection with Canada would give it a reach that could not have been intended."

Binnie J. stated (at para. 54):

"While the Parliament of Canada, unlike the legislatures of the Provinces, has the legislative competence to enact laws having extraterritorial effect, it is presumed not to intend to do so, in the absence of clear words or necessary implication to the contrary ..."

The following principle was applied by Rouleau, J.: "The mere fact of becoming a resident does not give the Minister - or Parliament - jurisdiction over the previous life or conduct of a corporate taxpayer." [CR.: 248(1) - "Income Bond"]

"[U]nless the contrary is expressly enacted or so plainly implied that the courts must give effect to it, United Kingdom legislation is applicable only to British subjects or to foreigners who by coming to the United Kingdom, whether for a short or a long time, have made themselves subject to British jurisdiction."

The Court found that the principle that foreign states cannot directly or indirectly enforce their tax claims in Canada applied to prevent a foreign state (here, the U.S.A.) from taking a judgment of its own courts and bringing suit in Canada on that judgment.