The primary interpretation of the tax provision is based on:
A) Literal Rule
B) Golden Rule
C) Mischief Rule

The correct answer is 'Literal Rule'

Key Points

• Literal Rule:
  • The Literal Rule is a principle used in statutory interpretation where the words of a legal provision are given their ordinary, natural, and grammatical meaning.
  • This rule assumes that the legislature has expressed its intentions clearly through the words used in the statute, and therefore, the exact language must be adhered to.
  • It is the primary and most straightforward approach to interpreting legal provisions, including tax laws, as it ensures consistency and minimizes judicial discretion.
  • In the context of tax provisions, where precision and clarity are crucial, the Literal Rule is often applied to avoid ambiguity and ensure compliance with the statutory language.

Additional Information

• Golden Rule:
  • The Golden Rule is a modification of the Literal Rule. It is applied when the literal interpretation of a statute leads to an absurdity or an outcome contrary to the intention of the legislature.
  • It allows the court to modify the meaning of the words to avoid unreasonable or unjust results.
  • While useful in certain situations, the Golden Rule is not the primary approach for interpreting tax provisions, as tax laws require strict adherence to their literal wording.
• Mischief Rule:
  • The Mischief Rule focuses on identifying the "mischief" or problem that the statute was intended to address and interpreting the law in a way that suppresses the mischief and advances the remedy.
  • This rule is more purposive and is used to resolve ambiguities in the law by understanding the context and purpose behind the statute.
  • Although the Mischief Rule is helpful in certain legislative contexts, it is less commonly used in tax provisions, as tax laws demand precision and objective interpretation rather than a focus on legislative intent.
• None:
  • This option is incorrect because the Literal Rule is the primary and most appropriate method for interpreting tax provisions, and there is no ambiguity requiring alternative approaches.