Rogers – Tax Court of Canada implies that a capital gain can arise from a property which is not capital property

Mathieu found that stock option surrender proceeds were not a taxable s. 6(1)(a) benefit when received by a non-arm’s length employee prior to the introduction of s. 7(1)(b.1). Rogers also found that such a benefit is not "remuneration" under s. 5(1) – nor was it a shareholder benefit as Mr. Rogers surrendered his options to Rogers Communications Inc. for their fair market value.

Hogan J found obiter that the cash surrender proceeds received by Mr. Rogers were a capital gain. He indicated that under s. 39(1), a capital gain is "the taxpayer’s gain . . . from the disposition of any property" other than property specifically excluded under that provision (such as eligible capital properties and resource properties) except to the extent that the gain was already taxable under s. 3. Therefore, the disposed-of property need not be a capital property to give rise to a capital gain. However, the bit he left out in the above quote is that the gain is to be computed "under this subdivision" (i.e., the taxable capital gains subdivision), so that he did not address a plausible argument that the taxable capital gains subdivision applies only to "capital property" in its usual sense.

Neal Armstrong. Summaries of Rogers v. The Queen, 2014 TCC 348 under s. 7(3)(a), s. 39(1)(a), s. 15(1), s. 5(1) and s. 9 – capital gain v. profit – options.