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Issues:
Determining whether the appellant was a personal corporation under s. 68 of the Income Tax Act during the 1955 and 1956 taxation years. Analysis: The appellant, initially controlled by Robert William Fiddes, was considered a personal corporation under s. 68 while he was alive. However, following his death, the shares were held by executors appointed under his Will, leading to a dispute regarding the appellant's status as a personal corporation during the 1955 and 1956 taxation years. The appellant claimed exemption from tax based on being a personal corporation, which was rejected by the Minister, leading to reassessments upheld by the Income Tax Appeal Board and the Exchequer Court. Judson J. opined that the appeal should be dismissed as the appellant failed to meet the criteria of a personal corporation under s. 68 of the Income Tax Act. The definition of a "personal corporation" under s. 68(1) includes control by an individual resident in Canada, by such an individual and family members, or by any other person on their behalf, while deriving income from specified sources and not engaging in active business. The crux of the issue was whether the executors controlling the appellant qualified as individuals under the Act. The appellant argued that the executors should be considered individuals based on the Act's definition, including executors as persons. However, Judson J. rejected this argument, emphasizing that control by executors on behalf of estate beneficiaries did not align with the modes of control outlined in s. 68(1)(a). The judge clarified that the individual controlling the corporation must be a living person acting on their behalf, excluding executors from this definition. Moreover, the judge addressed the appellant's reliance on sections 63(1) and (2) of the Income Tax Act, which define trusts and estates. Despite these provisions deeming executors as individuals for certain purposes, they do not alter the definition of an individual under s. 68(1)(a) for determining a personal corporation. Judson J. concluded that executors, despite holding shares and controlling the corporation, could not fulfill the requirements of s. 68(1)(a) as intended by the Act. In light of the above analysis, Judson J. dismissed the appeal, emphasizing that the executors' control did not align with the statutory definition of an individual under s. 68(1)(a) for categorizing the appellant as a personal corporation. The judgment reaffirmed the specific criteria and modes of control necessary to qualify as a personal corporation under the Income Tax Act, ultimately upholding the reassessments for the 1955 and 1956 taxation years.
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