Hugessen,
J
[ORALLY]:—Subparagraph
40(
l)(a)(iii)
of
the
Income
Tax
Act
allows
a
taxpayer
to
take
a
reserve
in
respect
of
such
of
the
proceeds
of
disposition
of
the
property
that
are
not
due
to
him
until
after
the
end
of
the
year.
In
the
present
case,
part
of
the
proceeds
of
disposition
were
represented
by
a
promissory
note
expressed
to
be
payable
“on
demand
after
December
31,
1976’’.
In
the
now
classic
words
of
Parke,
B,
in
Norton
v
Ellam,
2
2M
&
W
461:
a
promissory
note,
payable
on
demand,
is
a
present
debt,
and
is
payable
without
any
demand
(at
page
464).
That
case
has
been
many
times
approved.*
The
learned
trial
judge
held
that
in
the
absence
of
a
demand
in
the
year
1977
the
note
in
question
was
not
“due”
to
the
taxpayer
in
that
year.
She
said:
.
.
.
what
was
intended
was
to
tax
the
taxpayer
not
at
the
time
he
was
entitled
to
the
money
but
at
the
time
when
it
was
required
to
be
paid
to
him.
With
respect
we
think
that
she
was
wrong
and
that
the
words
“due
to
him”
look
only
to
the
taxpayer’s
entitlement
to
enforce
payment
and
not
to
whether
or
not
he
has
actually
done
so.
Here,
the
taxpayer,
alone
and
at
his
sole
option,
was
entitled
to
enforce
payment
of
the
note
in
1977.
From
January
1,
1977,
it
became
a
present
debt
and
could
be
sued
on
without
any
demand.
It
was
owing
and
payable.
It
was,
therefore,
“due
to
him”.
The
appeal
will
therefore
be
allowed
with
costs
here
and
in
the
Trial
Division.
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