1068754 ALBERTA LTD. v. QUÉBEC (AGENCE DU REVENU), 2019 SCC 37

Québec is authorised by the Bank Act to seek information from a bank branch situated in another province provided the main branch is located in Québec.

The general principle is that under the Constitution of Canada, provinces have their respective powers to levy taxes on their territories. The decision of whether the entity will pay tax or not is decided on the basis of ‘domicile’. In the instant case, the appellant is the Bitton trust, which is a legal person and the place of residence of a trust is where its affairs are managed. Bitton Trust was set up in Alberta and had a bank account with the National Bank in Calgary. However, there were certain apprehensions from the side of the Québec officials for which they wanted to seek information from the branch where the account was (in Calgary).

The Appellant’s argument was premised on sections 462(1) and (2) of the Bank Act that any action of the Québec officials outside Québec would be termed as “extraterritorial”. On the other hand, the Respondent argued that the Bank Act permitted them to go to the branch where the account was located, even if the bank branch is outside the province of Québec. The issue before the Court was not to decide whether the Appellant should pay taxes or not, it was to decide as to whether the Québec administration had powers to seek information from a bank branch territorially located outside Québec.

Both motions judge and the Court of Appeal agreed with the stance taken by the Respondent. Thereafter, the Hon’ble Supreme Court of Canada also adjudged in favour of the Respondent.

The court explicated that the Appellant’s argument of the bank and its branches being separate legal entities cannot be accepted as in the case of Equity Account Buyers Ltd. v. Jacob et la Banque Royale du Canada, tierce-saisie, [1972] R.P. 326 (Que. Prov. Ct.) it has been clearly stated that it is only in the case of “practical exigencies” where the branches of a bank are regarded as distinct. Court elucidated that the correct interpretation of section 462(2) does not treat the branch as a separate legal entity because of which Québec administration had full authority over the National Bank and just because one of the many branches of the National Bank was located in Calgary, it could not be a reason for any obstruction on Québec’s administration. There is no obstruction with Alberta’s regional sway in conveying a conventional interest to National Bank through one of the bank’s offices in Alberta. Nor is there any unfairness in subjecting an enterprise that works in various provinces in Canada to a proper interest from a purview wherein it works. Therefore, the demand could not have been considered to be “extraterritorial” and the appeal was dismissed. At the same time, the Court cautioned that the situation might change if the National Bank or the main branch of the bank concerned is not operating in Québec.