Certain words and combination of words are employed throughout the ITA. Understanding what they indicate will be of great use when interpreting and applying the ITA. These include:
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“For Greater Certainty” |
When the phrase “For Greater Certainty” is used in the ITA, it generally signals that the ITA was amended to insert this provision to deal with a decision of the court that was inconsistent with the desired interpretation of the ITA. |
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“And” |
When the word “And” is used in the ITA, it is used as a conjunctive – meaning that it connects words, sentences, phrases, or clauses or equal importance together.
The ITA uses “and” between the second-to-last and the last items on a list. It indicates that all of the listed matters are necessary and included. For example, when used as part of a test, all of the listed criteria must be satisfied before the result contemplated by the test applies. |
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“Means” |
When the word “Means” is used in the ITA, it indicates that the material that follows is exhaustive, and is usually used as part of a definition or description. |
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“Or” |
When the word “Or” is used in the ITA, it is used as a disjunctive – meaning that it links alternative words, sentences, phrases, or clauses together.
Just as with the word “And”, the ITA uses “OR” between the second-to-last and last items on a list. It indicated that any of the listed matters are sufficient with or without the others. For example, when used as part of a test, any of the listed criteria, if satisfied, are sufficient to have the result contemplated by the test apply. NOTE: The word “Or” can at times be a substitute for the word “And”, and therefore be used as a conjunctive. For example, when used a part of a list of amounts or in a formula, all of the amounts may need to be totalled up. |
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“Includes” |
When the word “Includes” is used in the ITA, it indicates that the material following is not exhaustive. “Includes” is usually used as part of a definition, and indicated that the explicitly listed items are indicative of the types of items that fall within the definition. The purpose may either to define the general class of items, or it may be to supplement and expand the normal or existing definition of the thing defined to include items that would not usually form part of the definition. |
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“That Portion of [A] That [B] is of [C]” |
When the phrase “That Portion of [A] That [B] is of [C]” is used in the ITA, it indicates that the relevant value is one that is a proportion of other numbers. It indicates the use of a fraction.
What the ITA means is that the following formula is to be used: [A] x [B]/[C] |
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“The Total of [A] and [B]” |
When the phrase “The Total of” is used in the ITA, it indicates the need to add up whatever is indicated.
NOTE: The ITA sometimes uses other words and phrases that indicated the need to add. |
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“The Amount By Which [A] Exceeds [B]” |
When the phrase “The Amount By Which [A] Exceeds [B]” is used in the ITA, it indicated the need to subtracts the two identified amounts.
What the ITA means is that the following formula is to be used: [A] – [B] NOTE: Section 257 of the ITA applies to calculations involving formulas in the ITA. What this section does is to deem any negative number that results from the application of a formula to be Nil, and not the negative number. If the ITA specifically indicates that a number can be negative, then section 257 will not deem the result to be Nil. NOTE: There is a difference between a “formula” to the calculation of which section 257 can apply, and amounts to which other specific amounts are added or from which other amounts are subtracted. Just because elements are described as being required to be added or subtracted, does not mean that the ITA has set out a formula. For example, the Capital Dividend Account can be negative as section 257 does not apply. |
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“The Greater of [A] and [B]” |
When the phrase “The Greater of [A] and [B]” is used in the ITA, it indicates that the relevant amount is the larger of two other amounts. By requiring the use of the larger amount, the ITA is setting a floor or minimum amount. |
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“The Lesser of [A] and [B]” |
When the phrase “The Greater of [A] and [B]” is used in the ITA, it indicates that the relevant amount is the smaller of two other amounts. By requiring the use of the smaller amount, the ITA is setting a cap or maximum amount. |