On September 21, 2011, the Federal Court of Appeal (Sharlow, Layden-Stevenson, and Stratas, JJ.A.) heard an appeal by CIBC World Markets Inc. (“CIBC”) from a judgment of the Tax Court of Canada dismissing the taxpayer’s appeal of an assessment by the Minister of National Revenue under the Excise Tax Act.  For further details, see our earlier post.

The Appellant’s oral argument dealt with many of the points raised in the reasons for judgment of the Tax Court judge (Chief Justice Gerald J. Rip), specifically the interpretation of subsection 141.01(5) and section 225 of the Excise Tax Act.  Counsel for the Appellant was asked only a few questions from the bench during his submissions.

Counsel for the Respondent faced a number of questions from the panel.  Counsel for the Respondent argued that the Appellant had not adduced evidence to show that its revised input tax credit (“ITC”) allocation methodology was “fair and reasonable” within the meaning of subsection 141.01(5) of the Excise Tax Act.  The panel observed that the revised ITC allocation methodology had already been accepted by the Minister as a “fair and reasonable” method for subsequent years.  The panel was interested in hearing the Respondent’s submissions on what statutory basis exists in the Excise Tax Act precluding a taxpayer from using an alternative “fair and reasonable” allocation methodology in respect of prior years.

After a brief reply by Appellant’s counsel, the hearing concluded and the panel reserved judgment.