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Constitutional law - Taxation - Broadcasting licence fees - Part II licence fees - Distinction between tax and regulatory charge - Fees for licences required representing a percentage of licensee’s gross revenue from broadcasting activities in the year - Whether the levies paid by the licensees, pursuant to section 11 of the Broadcasting Licence Fee Regulations, 1997, SOR/97-144 a tax within the meaning of s. 53 of the Constitution Act, 1867?

Section 7 of the Broadcasting Act, S.C. 1991, c. 11 (the “Act”) empowers the Canadian Radio-television and Telecommunications Commission (the “CRTC”) to make regulations with respect to broadcasting licence fees. The CRTC is not, however, vested with the authority to impose a tax. On April 1, 1997, the Broadcasting Licence Fee Regulations, 1997, SOR /97-144 (the “Regulations”) came into effect and changed the basis for the determination of broadcasting licence fees. Under the new provisions, annual licence fees are split into two parts: Part I licence fees which represent each licensee’s proportional share of the total regulatory cost incurred by the CRTC in a given year, and Part II licence fees which represent a percentage of each licensee’s gross revenue from broadcasting activities in the year, subject to certain prescribed exemptions. In 2004, the Appellants Vidéotron et al. commenced an action seeking a declaration that s. 11 of the Regulations which provides for the Part II licence fees is ultra vires the authority conferred on the CRTC by s. 11 of the Act, as well as an order for the recovery of monies paid pursuant to the Regulations. The Appellants Canadian Association of Broadcasters et al. sought the same declaration and the two actions were consolidated. The Federal Court found that the Part II licence fees were a tax and therefore declared s. 11 of the Regulations to be ultra vires s. 11 of the Act, although the Appellants were not granted an order for the recovery of monies paid. The Federal Court of Appeal allowed the cross-appeals on the grounds that the Federal Court judge erred by mischaracterizing the legal test to be applied in distinguishing a tax from a regulatory charge and concluded that the fees were, in pith and substance, a regulatory charge and not a tax.