Cases
Loewen v. The Queen, 94 DTC 6265, [1994] 2 CTC 75 (FCA)
The taxpayer, who paid $200,000 for an SRTC debenture that was redeemable by both the company and him for $140,000, realized a gain of $40,000...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | generation of tax gain but with no prospect of commercial profit was not an adventure in the nature of trade | 323 |
Eidinger v. The Queen, 86 DTC 6594, [1987] 1 CTC 36 (FCA)
The taxpayer sold shares of his family company ("Franco") to an arm's length company ("Charter") and remained as general manager of Franco....
Hall v. The Queen, 86 DTC 6208, [1986] 1 CTC 399 (FCTD)
The taxpayers incorporated a Canadian corporation ("Quebec") to purchase a business (of which they were key employees) from the U.S. company...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | shareholder benefit not affected by book entry of shareholder | 103 |
Becker v. The Queen, 83 DTC 5032, [1983] CTC 11 (FCA)
The taxpayer purchased the bulk of a lumber company's shares for $1 and subsequently loaned money to the company and guaranteed loans made to it...
The Queen v. Meronek, 82 DTC 6187, [1982] CTC 248 (FCTD)
Gains enjoyed by the taxpayer, upon the redemption of preferred shares held by her in a company and the partial payment of company indebtedness...
Perkins v. The Queen, 80 DTC 6154, [1980] CTC 199 (FCA)
Non-interest bearing book debts owing by companies (the "Jones companies") in financial difficulty were found to have been acquired (at a fraction...
The Queen v. John Woods, 77 DTC 5411, [1977] CTC 597 (FCTD)
As part of the purchase by the taxpayer of a car dealership (which was determined to be a capital transaction) the taxpayer acquired a loan...
Steeves v. The Queen, 77 DTC 5230 (FCA)
After a corporation ("Paving") that was 50% owned by the taxpayers began experiencing financial difficulty, the taxpayers agreed with the other...
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| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Account Receivable | 101 |
Minister of National Revenue v. Sissons, 69 DTC 5152, [1969] S.C.R. 507, [1969] CTC 184
Following the purchase by the taxpayer of two companies on the verge of bankruptcy ("Sonograph" and "Semco"), the acquisition by him of debentures...
Wood v. M.N.R., 69 DTC 5073, [1969] S.C.R. 330, [1969] CTC 57
The taxpayer, a lawyer, who acquired approximately 1 1/2 mortgages per year at a discount out of his personal savings and who made the...
Minister of National Revenue v. Curlett, 67 DTC 5058, [1967] CTC 62, [1967] S.C.R. 280
The taxpayer, who made a practice of personally advancing money, at a substantial discount, on second mortgage loans to customers of a corporation...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Inventory | 33 |
Lloyd Estate v. MNR, 63 DTC 1349 (Ex Ct), briefly aff'd 65 DTC 5031 (SCC)
A dentist, whose largest source of income was interest, discounts and bonuses received by him on mortgages which he purchased at a discount, was...
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| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | bonuses or discounts not interest where market interest coupons | 239 |
| Tax Topics - Income Tax Act - Section 76 | 127 | |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | 176 | |
| Tax Topics - Income Tax Act - Section 9 - Nature of Income | 160 |
Minister of National Revenue v. MacInnes, 63 DTC 1203, [1963] S.C.R. 299
The taxpayer, who was a businessman engaged in the business of manufacturing soap, purchased in each year first residential mortgages with an...
Scott v. Minister of National Revenue, 63 DTC 1121, [1963] S.C.R. 223
The taxpayer, who was a senior lawyer, purchased from building contractors agreements (often in the form of lease-option agreements) for the sale...
MNR v. Mandelbaum, 62 DTC 1093 (Ex Ct)
A Corporation ("Sunnibilt") was pressured by its bank to sell conditional sales contracts and mortgage receivables owing to it in order to pay...
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| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | no-application where mortgage receivables on income account | 162 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | individuals purchased mortgages in similar manner to dealers, so that an adventure | 111 |
Curlett v. MNR, 61 DTC 1210 (Ex Ct), briefly aff'd 62 DTC 1320, [1967] CTC 62, [1967] S.C.R. 280
The taxpayer regularly made mortgage loans at a 15% discount from the face amount and then, within a month of the loan, sold the mortgage loan to...
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| Tax Topics - General Concepts - Illegality | profits allegedly received in breach of fiduciary duty | 89 |
See Also
Barrington Lane Developments Limited v. The Queen, 2010 TCC 388, 2010 DTC 1244 [at 3734]
The taxpayer lent money to a related company. In 1998, the taxpayer wrote off the loan as a bad debt, mistakenly reporting it as both a capital...
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| Tax Topics - Statutory Interpretation - Specific v. General Provisions | 33 |
Bernick v. The Queen, 2003 DTC 839, 2003 TCC 433
A U.K. zero coupon bond purchased by a Bahamian partnership of which the taxpayer was a partner was found not to be a long-term investment but,...
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| Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) | 154 |
Bondar v. The Queen, 97 DTC 517 (TCC)
The taxpayer, who was the general manager of a corporation ("HSS"), acquired debt of another corporation ("LTM") for consideration that was found...
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| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | cost of shares acquired in consideration for largely worthless loan obligation was nil | 146 |
Stanley Drug Products Ltd. v. MNR, 90 DTC 1664, [1990] 2 CTC 2646 (TCC)
A gain on the redemption of scientific research tax credit promissory notes was realized on capital account:
"[The transaction] had little of the...
Financial Collection Agencies (Quebec) Ltd. v. MNR, 90 DTC 1040, [1990] 1 CTC 2178 (TCC)
Before going on to find that the deemed gain on a redemption of an SRTC debenture was realized on income account, Rip J. distinguished Loewen on...
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| Tax Topics - Income Tax Act - Section 39 - Subsection 39(4) | 62 |
Smith v. MNR, 89 DTC 331, [1989] 2 CTC 2069 (TCC)
A gain on a "quick flip" of an SRTC debenture was realized on income account. "The purpose of the transaction was not to earn income from the...
Administrative Policy
12 April 2002 External T.I. 2002-0122495 F - PRIME PAYEE SUR OBLIGATION
After indicating that a premium on a bond acquired as capital property produces a capital loss at maturity, CCRA went on to indicate:
The fact...
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| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | premium on bond acquired as capital property produces a capital loss at maturity | 132 |
| Tax Topics - Income Tax Regulations - Regulation 7000 - Subsection 7000(1) - Paragraph 7000(1)(b) | determination of Reg. 7000(1)(b) proportions made on a taxpayer-specific basis | 110 |
30 October 2006 Internal T.I. 2006-0199721I7 F - Escompte sur vente de compte clients
In rejecting the proposition that the fact that the proceeds from the sale of accounts receivable were used to effect transactions on capital...
84 C.R. - Q.41
The gain to an investor/purchaser on "quick flip" (SRTC) investments is income.
Commentary
Treatment of mortgage and other loan discounts
Where a taxpayer acquires loans with a view to such loans representing a secure source of interest...