In justifying this result, the FCA relied on the nostrum:
" When interpreting provisions in taxation statutes, we must keep front of mind their real life context: many taxpayers study closely the text of the Act to manage and plan their affairs intelligently. Accordingly, we must interpret “clear and unambiguous” text in the Act in a way that promotes “consistency, predictability and fairness,” with due weight placed upon the particular wording of the provision: Canada Trustco, at paragraph 12, citing Shell Canada Ltd., supra at paragraph 45.
" We must not supplant or qualify the words of paragraph 95(6)(b) by creating “unexpressed exceptions derived from [our] view of the object and purpose of the provision,” or by resorting to tendentious reasoning. Otherwise, we would inject “intolerable uncertainty” into the Act, undermining “consistency, predictability and fairness”: 65302 British Columbia Ltd. v. Canada, 1999 CanLII 639 (SCC),  3 S.C.R. 804, at paragraph 51, citing P. W. Hogg and J. E. Magee, Principles of Canadian Income Tax Law (2nd ed. 1997) at pp. 475-76; see also Canada Trustco, at paragraph 12."
But would there be "intolerable uncertainty" if the Courts prevented double deductions? As the FCA said, people are studying tax laws hard to find these surplus deductions. If you have to look so hard to find a way around a rule, would the Courts create "intolerable uncertainty" by helping to block the escapes? The rules are plain enough; whether you can find the holes is the uncertainty.
That said, as Justice Stratas shows, the tax laws do allow this kind of double-deduction; so that it's hard to raise a forceful complaint against the arrangement in this case:
" A hypothetical but commonly-occurring scenario illustrates this problem. Where a Canadian taxpayer borrows to buy shares in a non-resident subsidiary corporation that carries on an active business, the tax result will always exceed the commercial result. The Canadian taxpayer will be able to deduct interest on the loan and deduct the dividends. As a practical matter, the tax advantages of borrowing to buy shares in a non-resident corporation often enter into the taxpayer’s decision-making.
" In this case, the Tax Court found that the principal purpose behind the acquisition of shares in the non-resident corporation, NAM LLC, viewed in light of the entire series of transactions, was to achieve overall U.S. tax savings. Further, the Tax Court found that the Canadian tax savings could have been obtained without acquiring the shares in the non-resident corporation.
" On the basis of these considerations and the record of evidence before it, the Tax Court concluded that the taxpayers’ acquisition of shares in the non-resident corporation did not result in an avoidance of Canadian tax. In substance, the Tax Court rejected the submission that the taxpayers’ principal purpose was to manipulate share ownership of the non-resident corporation to meet the test for “foreign affiliate” in subdivision i of Division B of Part I of the Act and gain a Canadian tax benefit."
When multi-nationals are involved, to decide whether tax laws are abused, you want to be able to see how the entire international corporate group is taxed. Ensuring that appropriate tax is paid may be something one can only do through international cooperation and tax treaties. In fact, the OECD is studying this question. It describes some of its work this way:
"Action Plan on Base Erosion and Profit Shifting
"Taxation is at the core of countries' sovereignty, but in recent years, multinational companies have avoided taxation in their home countries by pushing activities abroad to low or no tax jurisdictions. The G20 asked OECD to address this growing problem by creating this action plan to address base erosion and profit shifting. This plan identifies a series of domestic and international actions to address the problem and sets timelines for the implementation."
See Canada v. Lehigh Cement Limited, (2014 FCA Stratas)