A Prolog model of the income tax act of Canada

ABSTRACT

The use of computers in Canadian tax planning has until now been concentrated on numerical analysis. The computer is indeed an excellent tool for calculating tax effects where the legal results of transactions are known. However, I maintain that it can be equally useful as a tool for analysing transactions to determine what those legal results are. The complexities of the Canadian tax system are such that a given transaction could have unintended tax results, where the facts resulting from the transaction fit the words of a rule which may have been designed for, and is perceived as applying to, different circumstances altogether. In this paper I consider the structure and form of the Income Tax Act and show how it is well-designed for computerization. I then review the primary design considerations for a computer-based tax planning system. Finally, I describe the implementation of a partial tax analysis system which I have programmed in Prolog, and review its deficiencies and the extensions which would be required to make it a useful planning tool for tax practitioners. NOTE: this paper is a greatly condensed version of a Master of Laws (LL.M.) thesis, “Blueprint for a Computer-Based Model of the Income Tax Act of Canada”, York University, September 1986. Important detail, references and examples have been omitted due to lack of space. Interested readers are invited to contact the author for a copy of the thesis.

REFERENCES

• 1: See also David H. Sherman, ~Comparative Analysts of U.S. and Canadian Approaches to Income Tax Legislative Design and Implications for Computer~zat~on', LL.M. course paper, Osgoode Hall Law School, December 22, 1983.
• 2: Layman g. Allen & C. Rudy Ensholm, ~Normal~zed Legal D~afcin$ and the query Method', 29 Journal of Le~ Education 380-412 (1978).
• 3: L. Theme HcCarty, "Reflections on TAX/qAN: An Experiment in Artificial Intelligence and Legal Reasoning', 90 Harvard Law Review 837-893 (1977). See also Technical Reports LRP-TR-~ through LILP- TR-14, Laboratory for Computer Science Research, Rutgers Universi~y, Hay 1980 to Septembe~ 1982.
• 4: M. J. Sergot , F. Sadri , R. A. Kowalski , F. Kriwaczek , P. Hammond , H. T. Cory, The British Nationality Act as a logic program, Communications of the ACM, v.29 n.5, p.370-386, May 1986 [doi>10.1145/5689.5920]
• 5: Robert Hellawell, *CHOOSE: A Computer Program for Legal Planning and Analysts', 19 Columbia Journal of Transnational Law 339-357 (1981).
• 6: C. Duncan MacRae, "User Contzol Knowledge in a Tax Consulting System', U.S. Department of Housing and Urban Development, 1985. C. Duncan HacRae & Elizabeth Chase HacRae, "An Expert System for Tax Research' Interacting with Knowledgeable Users", Second Annual Conference on Law & Technology, University of Houston, June 1985.
• 7: David Sherman, "Towards a Comprehensive Computer-Based Problem Solving Hodel of the income Tax Act: A Suggested Approach and Implementation of Examples from Corporate Reorganizations", LL.~f. course paper, Osgoode Hall Law School, June 1984.
• 8: Robert Kowalski, LoKic fo__xr Problem SolvinK (New York' North-Holland, 1979).
• 9: Anthony J, Bonnet, "A PROLOG Framework for ReasontnS about Permissions and Obltsations, with Applications to Contract Law", seminar paper, Dept. of Computer Science, Rutgers University, May 1985.
• 10: Robert Kowalski & Marek SerBot, A~lc-based Calculus of Events, Department of ComputinS, Imperial Collese of Science and Technology, University of London, February 1985.
• 11: "Tsx Advisor: A Prolog Program Adalyz{ng Income Tax Issues", B_~. Dobb' s Journal, March 1985, pp. 64- 92.

INDEX TERMS

Primary Classification:
  I. Computing Methodologies
  I.2 ARTIFICIAL INTELLIGENCE
      I.2.1 Applications and Expert Systems
          Subjects: Law

Additional Classification:
  H. Information Systems
  H.3 INFORMATION STORAGE AND RETRIEVAL
      H.3.3 Information Search and Retrieval
          Subjects: Retrieval models

  I. Computing Methodologies
  I.2 ARTIFICIAL INTELLIGENCE
      I.2.5 Programming Languages and Software

          Nouns: Prolog
      I.2.7 Natural Language Processing
          Subjects: Language models

  K. Computing Milieux
  K.5 LEGAL ASPECTS OF COMPUTING

General Terms:
Design, Languages, Legal Aspects