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The Tax Court held that two Wilson Avenue properties were capital property until September 16, 2011, when financing fixed the shift to inventory.
Subsection 45(3) of the Income Tax Act, as it read at the end of 2017, applies to a partial change of use: where part of a property that had been used to produce income ceases to be used for that purpose and becomes the taxpayer's principal residence, the taxpayer may elect under s.45(3) to defer the deemed disposition that would otherwise arise under s.45(1); the wording "subsection 45(1) shall not apply" and the purpose of s.45(3) support an interpretation that is not limited to properties acquired exclusively for income production.
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The court dismissed a claim that a post-agreement capital loss should have been disclosed under a separation agreement. No loss existed when the agreement was signed.
Appeal dismissed: court upheld Tax Court finding that Keybrand and Vidabode were not dealing at arm's length at the time of the December 2010 acquisition (Keybrand effectively directed both sides given Vidabode's financial dependence and lack of negotiation), and that the loan was not incurred with a reasonable expectation of earning income; therefore ABIL and interest deduction denied.
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Subsection 138(11.3) of the Income Tax Act does not trigger the deemed disposition in the first taxation year that a Canadian resident life insurer commences to carry on an insurance business in another country (nor is it intended to apply to avoid taxation for non-residents entering Canada), because Parliament specifically addressed non-resident entrants in s.138(11.91) and did not intend immediate, tax-free deemed dispositions in the first year; accordingly SCDA’s statutory interpretation was rejected and the appeal dismissed.
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The Federal Court dismissed two judicial review applications by the Estate of Newton D. Biles, finding no jurisdiction over notice-of-objection issues and no basis to compel reassessment.
The Court found the sale and disposal of the restaurant equipment were acts done in the course of commercial activity so the appellant remained a person required to be registered under the ETA; therefore the appellant never ceased to be a registrant and subsection 171(3) (and s.200) did not apply. The appellant’s re-registration and evidence established its registration was valid throughout the period. Result: the reassessment based on deemed disposition was not supportable except for the appellant’s concession that GST on the $57,500 sale was owing ($2,875). The reassessment was sent back fo…
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The Federal Court of Appeal dismissed the Estate's appeal because the original final return contained a materially incorrect statement (omission of the Victoria Park recapture) constituting a misrepresentation under s.152(4)(a)(i), the Minister discharged the onus to prove the misrepresentation and that it was attributable to the Estate's neglect/carelessness in failing to exercise the care of a prudent person in reviewing the return, and filing an amended return under s.164(6) did not cure the original misrepresentation for purposes of allowing reassessment after the normal period.
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Subsection 138(11.3) applies only to property of an insurer that is a multinational in the relevant preceding year and to property that changes designated status while the insurer is subject to the designated‑property rules; the appellant was not a multinational in 2005 (so could not satisfy s.138(11.3) for 2006) and there was no change in the assets designated between 2006 and 2007; moreover the factual record shows the appellant did not carry on a Bermuda insurance business in 2006–2007 (activities were window dressing). Accordingly no cost‑base bump applied and the reassessments stand.
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The probate and ancillary legal fees were necessary to acquire the registrable title that was actually sold to purchasers and therefore the proportionate amounts of those fees attributable to the sold properties can be added to their adjusted cost base (alternatively, would be deductible as outlays for the disposition), and the proper proportional allocation produced an increase to ACB of $94,038; the assessment is remitted to the Minister to reduce tax for the deceased's final year by the lesser of the tax effect of that $94,038 increase in capital losses and $12,000.
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