Citation: 2010 TCC 346
Date: 20100625
Docket: 2009-1638(IT)I
BETWEEN:
GO SIMON SUNATORI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hershfield J.
Issue
[1] The Appellant
claimed Allowable Business Investment Loss (“ABIL”) deductions against his
employment income in
each of 2004, 2005, 2006 and 2007 taxation years as follows:
(a) For 2004, $21,831;
(b) For 2005, $23,000;
(c) For 2006, $24,000;
and
(d) For 2007, $25,000.
[2] The deductions
claimed were in respect of debts owed to the Appellant by HyperInfo Canada Inc.
(the “company”).
[3] The Minister of
National Revenue (the “Minister”) reassessed the taxpayer’s taxation years 2004
through 2007 and disallowed the ABIL deductions claimed. The Appellant appeals the
reassessments on the basis that he meets the statutory requirements for taking
such deductions.
[4] The relevant
provisions of the Income Tax Act (the “Act”) read as follows:
38(c) [allowable business investment loss] -- a taxpayer's allowable business investment loss
for a taxation year from the disposition of any property is 1/2
of the taxpayer's business investment loss
for the year from the disposition of that property.
39(1) Meaning of capital gain
and capital loss [and business investment loss] -- For the purposes of this
Act,
[…]
(c) a taxpayer's business
investment loss for a taxation year from the disposition of any property is the amount, if any, by which
the taxpayer's capital loss for the year
from a disposition after 1977
(i) to which
subsection 50(1)
applies, or
[…]
50(1) Debts established to be bad debts and shares
of bankrupt corporation
-For the purposes of this subdivision, where
(a)
a debt owing to a taxpayer at the end of a taxation year (other than a
debt owing to the taxpayer in respect of the disposition of personal-use
property) is established by the taxpayer to have become a
bad debt in the year, or
[…]
and
the taxpayer elects in the taxpayer's return of income
for the year to have this subsection apply in respect of the debt ---, the taxpayer shall be deemed to
have disposed of the debt ---, at the end of the year for proceeds equal to nil
and to have reacquired it immediately after the end of the year at a cost equal
to nil.
[5] The only issue in these appeals is whether the
requirement in paragraph 50(1)(a), that the taxpayer established that the
subject debts owing at the end of a particular year had become bad in that year,
has been satisfied.
Facts
[6] The Appellant was the sole
shareholder and employee of the company at all relevant times.
[7] The company is a research and development company
actively engaged in scientific research and experimental development (“SR&ED”).
Incorporated in 1989 with a view to developing software for internet
information access, the company was relatively inactive until 1995 when it
began ramping-up to full scale SR&ED by 2000. It was during these
ramping-up years that the Appellant began working full time for the company.
[8] The Appellant has been a professional engineer since
1984, entitled to practice as such by the Association of Professional Engineers
of Ontario.
[9] The company has had little success in commercially
exploiting any intellectual property developed in pursuit of its initial
business plan. One hopeful SR&ED project aimed at allowing access to
portions of textual material (as opposed to having to acquire an entire
publication) did reach a stage of commercial salability but revenues were
nominal. Projects involving three-dimensional imaging and other projects
incorporating the Appellant’s electrical engineering background were not
commercially successful.
[10] By 2000, the main focus of the company changed from the
internet highway, as the Appellant referred to it, to product development and
retail sales. At this point, it might be helpful to note two things:
- Exhibit A-2 lists
over 70 patents granted or pending that led to six product development projects
and several internet service projects; and
- Exhibits A-7 and A-10 show that the company’s research and development
work was being closely audited by the Canada Customs and Revenue Agency (now
the Canada Revenue Agency commonly referred to as the “CRA”). There is no doubt
the work of the company was regarded as fully qualifying for SR&ED credits and
for related investment tax credits under the Act. More particularly 85-100%
of the salaries paid to the Appellant by the company were recognized as
relating to qualifying research.
[11] The company paid the Appellant a salary on December 31
of each of the subject years as follows:
i) $44,000 for 2004;
ii) $46,000 for 2005;
iii) $48,000 for 2006; and
iv) $50,000 for 2007.
[12] The method of payment of the salaries was by delivery
of a cheque to the Appellant on December 31 of each of the subject years. On
the same day, the Appellant gave the company a cheque for the same amount as a
loan. Neither cheque was ever presented for payment but the Appellant believes
the end result is that the salary was paid and the loan back was effected. The asserted
remaining payable is essentially a bookkeeping entry of the indebtedness of the
company for this loan the Appellant made to the company. On the same day as
these cheques were delivered, a determination was also made by the Appellant,
in his personal capacity as a creditor, that the loan to the company was a bad
debt.
[13] The Appellant elected in his returns for each of the subject
years to have subsection 50(1) of the Act apply in respect of the debt
created at the end of that year as required under that subsection.
[14] The Appellant testified that he included the salary
amounts in his income as amounts received in the year.
The CRA accepted the salaries as paid, or at least as incurred, for SR&ED
purposes and refundable investment tax credits were paid to the company on that
basis. The Appellant also testified that Employment Insurance withholdings and
remittances were covered by the company as were Canada Pension Plan contributions.
Respondent’s counsel did not take issue with these assertions.
[15] Returning to the business of the company, the
Appellant’s testimony was that it had scant financial resources and essentially
no income to speak of, in spite of his diligent and earnest pursuits on the
company’s behalf. His suggestion is that earning refundable credits on his salaries
has been a primary method of financing the business. Indeed, according to the
Appellant such financing was encouraged by the CRA itself. The Appellant understood
that the manner in which he effected salary payments and loans back would give
rise to two avenues of tax planning (refundable tax credits and ABILs). He
understood that they were both legislative incentives aimed at encouraging and
financially assisting SR&ED.
[16] Turning now to the Appellant’s determination of the
loans being bad, it is clear that he relied on the nominal revenues of the
company to evidence that the company was insolvent and had no money to repay
the loans. However, it should be noted that although revenues from the products
and intellectual property developed by the company were nominal, the point of commercial
exploitation potential had been reached in a few instances. One product ready
for commercial sales in the latter part of 2005 for example was an auto-retracting
ballpoint pen.
Indeed, this item was advertised in the summer of 2006 on a television
infomercial at a cost to the company of some $35,000. The Appellant suggested
that his hopes for this product were for profits in the millions. In
anticipation of such success, he took delivery of 10,000 units manufactured in China for the company.
[17] Other products available for retail sale are a bird
feeder and a spice rack.
These products, like the pen, are available online at the company’s website and
through EBay and Amazon.com.
[18] However, to put matters in
perspective, gross receipts from all product and software sales in the subject
years were:
(a) 2004 - $370,
(b) 2005 - $4,117,
(c) 2006 - $1,564,
and
(d) 2007 - $900.
[19] Clearly then, it cannot be
disputed that the company had no revenues to fund repayment of the loans at the
time they were advanced which is the time the Appellant made the bad debt
determinations.
Appellant’s Argument
[20] The Appellant’s position is
straightforward. He said he reasonably determined at the end of each year that
the loan made in that year, arising from salaries that the company could not
afford to pay other than in the manner he employed, was a bad debt of the
company.
[21] He saw no reason why he should
be denied the ABIL deduction simply because he knew at the time he made the
advances that they could not be paid back at that time or anytime soon
thereafter. The salary payments that permitted access to the tax credits were bona
fide as were the loans that gave rise to the ABIL. These were both there, in
the Act, as a legislative incentive for the company to carry on its
SR&ED. The tax cost to him personally of his company deriving such
incentive financing would undermine the entire incentive scheme if it were not
for the ABIL deduction. If and when the loan could be repaid, the entire
receipt amount would be a capital gain. The net result was a tax deferral aimed
at permitting the financial incentives his company was receiving.
Respondent’s Argument
[22] The Respondent’s position is
similarly straightforward. The Respondent suggests that the Appellant’s
enthusiasm and admitted expectation of earning profits throughout the years in
question, both of which continue to this day, is inconsistent with his
determination that the debts owed to him were bad. Logically, it is not
credible to make a loan because you believe in a company’s viability and
profitability, and at the very same point in time, say there is no chance of
repayment.
[23] The Respondent suggests that there is no basis to think
that the ABIL deduction is there to assist the company’s generation of
qualifying SR&ED expenditures. However, if that was the reason for the
Appellant declaring the advances as bad, how can he be said to have personally
considered at that time the relevant factors required to be considered
in making an honest and reasonable determination as whether the debt was bad?
[24] As authority for arguing that the Appellant cannot assert
that a company is unable to repay loans at the end of a year when he was still
lending it money, reliance is placed on Giahinejad v. Her Majesty the Queen.
At paragraph 8 of that case, Justice Mogan makes that very finding:
[8] Referring
to the Appellant not being able to recover the loans in 1997, on the evidence
before me, I could not possibly find that these debts owing to the Appellant by
the numbered company were bad debts at any time in 1997. Even on December 1,
1997, the Appellant issued a cheque to the company for $1,830 which cheque was
deposited on December 4; and then again on December 28, she issued an even
bigger cheque for $2,975, which was deposited on December 29, 1997. She was
still investing money in this company in the last month of the year and,
indeed, in the last three or four days of the year. I cannot find, therefore,
that the company was insolvent or unable to pay her loans when she was still
lending money at the end of the year. On that basis alone, the Appellant's appeal
cannot succeed.
[25] The Respondent also cites several authorities for the
proposition that a taxpayer must seriously and carefully examine the position
of the debtor’s business and its financial condition and honestly and
reasonably determine that a debt is bad in a pragmatic and businesslike manner.
Essentially, what the Respondent is suggesting is that the determination in
this case that the debts were uncollectible was tainted because they were
created without concern for their collection given that their sole purpose was
to generate corporate financing from another source. That, in turn, carries
with it an implicit suggestion that I should not regard the loan as bona
fide.
Analysis
[26] I see several problems in this appeal. For one, I am
left somewhat dumbfounded by a bizarre scenario that has, ultimately at least,
caused me to concede that the Appellant has succeeded in creating a reality out
of transactions that never actually happened except in an obtuse legal sense.
Before dealing with this notable feat and other issues arising in these
appeals, there are three non-issues that need to be addressed.
[27] The first non-issue is that the purpose of the ABIL
deduction is not to help finance SR&ED expenditures as suggested by the
Appellant.
[28] ABIL deductions are in the Act as an incentive for
investors to invest in small business companies in Canada. That does not suggest that they
are there as a means of generating additional government financing for a small
business company’s SR&ED expenditures. Nothing in the Act suggests
that at all. More generally, the deduction is there to allow investors better
recognition and utilization of near certain economic losses at a time when that
determination has been reasonably made. The benefit to the company is the
financing received before such determination. Further benefits to the company,
generated by the use of the money, do indirectly factor into the investment
benefit to the investor but that is not a sufficient link to suggest that the
construction and application of the ABIL deduction provisions should be more or
less strictly construed or applied depending on the use of the funds by the
company.
[29] Still, the Appellant is entitled to arrange his affairs
and structure his transactions so as to enjoy tax benefits afforded by the
express language of the Act whether the Act contemplated such
benefits or not.
[30] The second non-issue relates to counsel for the
Respondent having referred to the non-arm’s length relationship between the
Appellant and the company. A taxpayer’s entitlement to an ABIL will not be lost
due to the non-arm’s length relationship of the parties where the requirements
of section 50 are met. Only if those requirements are not met will an ABIL be
restricted to arm’s length parties who meet the other requirements of
subparagraphs 39(1)(c)(iii) to (viii) of the Act which defines a
business investment loss.
[31] The last non-issue is whether the absence of interest
payable on the loans disqualifies them as not having been made to gain or
produce income.
The Respondent accepts that this requirement has been met even if there is no
interest payable on the loans. The acceptance seems to be based on the idea
that the monies were advanced to assist the company in its pursuit of profit. As
the sole shareholder of the company, there is a sufficient link or nexus that
exists between the taxpayer as lender and the dividend income potential that
might flow from the company. There is ample authority for this position in
cases such as Byram v. R. Accepting
that the loan was advanced to assist the company in its pursuit of profit
follows from accepting of the view that an un-cashed cheque has income earning
potential when delivered to the company. While I accept that this was what the
parties must have intended and acknowledge that my analysis will recognize such
intentions, it is not necessary for me to go so far as to express agreement
with the Respondent regarding the failure of the loans to bear interest. There
are other considerations that will result in the Appellant losing his appeals
in any event.
[32] That takes me to consider the troublesome issues raised
by this case. I will deal with them under separate headings.
Are
the Loans Bona Fide?
[33] In answering this question a
distinction need be made between findings of fact and determinations of law.
There are a number of different findings of fact that I have considered, each
giving rise to different tax consequences. Of
the different possible findings of fact noted in footnote 13, Scenario 3 seems
to be only one that I can accept on the evidence before me.
Scenario 3: The
instrument delivered to the Appellant as his wage for the year was acknowledged
by the Appellant as “payment”. There was a reciprocal acknowledgement by the
company that the instrument the Appellant gave to the company was an asset with
value that was to be treated as a loan. This has the same result as would occur
had the cheques been cashed except the payments are in-kind. It is the result
intended by the parties.
[34] On the salary side of this scenario, the instruments given
to the Appellant in the form of a negotiable instrument (the “in-kind salary
instruments”) were accepted by the Appellant as payment for his services
performed that year. He did not intend to volunteer his services which he
valued at the amounts reflected by the face amounts of the in-kind salary
instruments he received. That value was accepted by the CRA for SR&ED
purposes. Each year those in-kind salary instruments were treated as effectively
realized (paid) in consideration of the company acknowledging an equivalent
realization (receipt) of an advance by the Appellant to the company. That is,
on the loan side of this scenario, the negotiable instruments given to the
company by the Appellant were regarded as in-kind payments given with the
intent that they be treated as having value and that they be regarded as enforceable
loans. There is no reason to believe that the cheques delivered to the company
by the Appellant had no value. In the absence of evidence to the contrary, I
can only presume that they would be honoured. That finding of fact dictates a
finding at law that they were bona fide loans.
[35] The problem remains however that we have conflicting
evidence of the value of the various instruments exchanged. That the value of
the in-kind salary instruments were accepted by the parties, including the CRA,
to be their face amounts is clear even though they were not presented for
payment. There is no evidence contradicting the Appellant’s evidence that T4s
were issued in such amounts, that the Appellant reported such amounts in his
income, that the required statutory withholdings were accounted for on the
basis that such amounts were paid and the CRA accepted such amounts as the salaries
for SR&ED purposes. The conflicting evidence then relates to the value of
the loans.
[36] It is hard, faced with these facts, which I must accept
as proven, to find that the in-kind loan instruments in question had no value
at the time of their delivery. I have already said that they did have value
which confirmed the finding that the loans were bona fide. The Appellant
can only succeed in the within appeals then if I accept that his conflicting
evidence that the loans had no value from the outset overrides that which I
accept as proven. That I cannot do, not only because it flies in the face of accepted
evidence but because I do not accept that the loan instruments here had no
value at the time of their delivery. To the contrary, I accept that they had
value and that the Appellant is misguided in arguing that they had none. He
based his argument on the earnings of the company and on an asserted insolvency
at a moment in time. He has neither proven the insolvency nor convinced me of
its relevance in the context of these appeals.
Has the Appellant Proven the
Insolvency of the Company at the End of Each of the Subject Years?
[37] I only have the Appellant’s
testimony, supported by evidence of nominal revenues, that the loans could not
be repaid. While I accept that oral testimony as to what is readily apparent
might be sufficient in some cases, I am not satisfied in this case as to what
exactly is readily apparent.
[38] The Appellant has not explained, for example, where
money came from to pay for some expenses that were obviously considerable. The
company bought and paid for the delivery of 10,000 packaged auto-retractable
pens and paid $35,000 for an infomercial. What would a balance sheet show? I am
concerned that at least by the end of 2005, it might be reasonable to assume
that the company had access to funds to repay the loans or to at least erode
the impression that the determination that the loans were bad was made in
accordance with requirements of section 50.
Even presenting the un-cashed loan cheques for payment would help considering
that they had value.
[39] The burden of proof is on the Appellant to clear up
such questions. Financial statements or financing documents, or other evidence
of the financial standing of the company, other than revenues, needed to
be considered in making the required determination. The evidence confirms that
the repayment of the loans was not considered, let alone analyzed, in this way.
The Appellant relied on advice that there was no need to actually fund salaries
in order to generate SR&ED and related investment tax credits, so there was
no need for the Appellant to consider the payment possibilities in the normal,
required, way. That is, it is apparent to me that he did not even address his
mind to present or future collection possibilities. He was focused only on his
tax plan.
[40] All said then, I cannot find the Appellant’s
determination of the subject debts being bad as having been made as required to
be made under section 50 of the Act.
The Relevance of Insolvency at a Moment
in Time
[41] Even if I was satisfied that
the company was insolvent at the end of each year in question, that alone would
not meet the requirements of subsection 50(1). The relevance of solvency at a
moment in time will depend in part, at least, on the term of the loan and in
this case that gives rise to a problem for the Appellant.
[42] The Appellant has not established the term of the loans.
Indeed, none was specified.
[43] That the loan transactions did not have a specified
term suggests two possible legal consequences. Firstly, the general absence of
contractual terms that govern the loans, including the term of the loans,
suggests that there is no enforceable contract.
However, this is not a case that warrants such a finding. As I have said, I
accept the loans in this case as being bona fide loans made with the
intention to be legally enforceable. The second consequence is that a court
could impose terms as the circumstances require.
[44] The uncertainty of the term of the loan, in this case,
can only be resolved at a particular time considering what the intentions of
the parties would be in the circumstances existent at that time. That is, the
legal justification for determining whether a loan is due at a particular time
would require a finding of what the intentions of the parties would be at that
time.
[45] This, at least, is the most likely way the problem in
this case would be dealt with. The
principles to imply a term have been set in Canadian Pacific Hotels Ltd. v.
Bank of Montreal,
and M.J.B. Entreprises Ltd. v. Defence Construction (1951) Ltd. Based on these two
cases, the three ways to imply a term into a contract are: “based on custom or usage;
as a legal incident of a particular kind of contract; or based on the presumed
intention of the parties where the implied term must be necessary to give
business efficacy to a contract or as otherwise meeting the officious bystander
test as a term which the parties would say, if questioned, that they had
obviously assumed”.
[46] Cleary, the business efficiency test and officious
bystander test both dictate a finding that the loans in question would not be
due and payable immediately but would be payable, presumably on demand, once
the intended and relied upon indulgence of the creditor could no longer be
reasonably expected by the debtor. The continued pattern of indulgent loans
might well suspend such a contingent payable date for some time but as vague as
that may sound, it is sufficient in my view to find that payment could not have
been enforced on the day it was advanced. If collection of the subject debts
was not a legally enforceable option for the creditor on December 31 of each of
the subject years, then unless there is an accelerating event such as a
financial crisis or repudiation of the debt, the only way the debts could be
found bad is if it was reasonable to conclude on such dates that future
prospects of being repaid were not more than a faint hope.
[47] This is how a debt not yet due would have to be “proved”
to be bad.
[48] This part of the analysis raises a question that
requires some clarification. There are authorities that suggest that future
repayment considerations are not relevant in determining a debt is bad
at a particular time.
[49] While I find any such suggestion as being limited to
the facts of those cases, I will make mention of one that some would argue expressly
states that the normal rule is that the due date is not a relevant factor.
[50] In Rich v. Canada,
Rothstein J.A. then of the Federal Court of Appeal, speaking for the majority,
enumerated factors to be considered that not only did not include future
prospects but expressly de-emphasized them:
[13] I would summarize factors that
I think usually should be taken into account in determining whether a debt has
become bad as:
1. the history and age of
the debt;
2. the financial
position of the debtor, its revenues and expenses, whether it is earning income
or losses, its cash flow and its assets, liabilities and liquidity;
3. changes in
total sales as compared with prior years;
4. the
debtor's cash, accounts receivable and other current assets at the relevant
time and as compared with prior years;
5. the
debtor's accounts payable and other current liabilities at the relevant time
and as compared with prior years;
6. the
general business conditions in the country, the community of the debtor, and in
the debtor's line of business; and
7. the past experience of
the taxpayer with writing off bad debts.
This list is not exhaustive and, in different
circumstances, one factor or another may be more important.
[14] While future prospects of the
debtor company may be relevant in some cases, the predominant considerations
would normally be past and present. If there is some evidence of
an event that will probably occur in the future that would suggest that the
debt is collectible on the happening of the event, the future event should be
considered. If future considerations are only speculative, they would not be
material in an assessment of whether a past due debt is collectible. (Emphasis
added.)
[51] Expressly de-emphasizing the relevance of speculative
future events, must, in my view, be understood in the context of normal
considerations in respect of a debtor that is not just insolvent at a moment in
time but is in such financial straights as to cause a creditor such degree of
concern as to reasonably foresee at the end of the year, that a loan, even one
not then due, will never be repaid. Those were the facts of that case. As well,
general business considerations (factor 6 above) or the age of a debt (factor 1
above) are factors that can be assessed from a forward looking perspective when
determining whether a debt not then due is bad at a particular time.
[52] As well, consider Rothstein
J.A.’s comment in a later paragraph:
[24] Here, the question is whether it was honest and reasonable for
the appellant to consider the debt to be bad on December 31, 1995. If there was
some evidence to suggest that a work out or refinancing might have been
available to enable collection of some or all of the loan, I would agree that
the appellant, being intimately involved with the company, would have to show
that he had at least attempted some proactive steps before declaring the loan
bad.
[53] I suggest that the refinancing possibility spoken of brings into
consideration a future event and underlines the case the Court was looking at;
namely, a case where but for refinancing, the debtor would never be able to
meet its obligations. There is insufficient evidence of that gloomy picture, in
the case at bar, particularly in light of the continuing bright light cast by
the Appellant on the company’s future and given its apparent access to funds as
illustrated by the financing of infomercials and an inventory of saleable
products.
[54] Similarly, in Giahinejad,
it is implicit that the future potential for collection is relevant. Making
advances implicitly suggests something positive in the future which contradicts
a bad debt determination at the time of the advance. Following that rationale,
a loan not due for some time cannot reasonably be found to be bad today, where
the prospects of collection when due are promising as shown by recent advances
and by the commitment and drive and ongoing work of the debtor whose actions
reflect no sign of an imminent failure of the business.
[55] All this is to say that just
because the Appellant was satisfied that the loans could not be repaid at the
end of the years in question, does not mean it was reasonable to consider that
they were bad. If it was, then all temporary, short term, insolvency
situations would lead to an explosion of bad debt claims. Nothing in the
language of the subject provisions warrants such an explosion.
[56] Yet another aspect of these
appeals, related to the subject debts not being treated as being due, is that the
Appellant was obviously not ready at any time during the years in question, or
even now, to seek collection of the outstanding loans. While collection actions
are not always essential, the absence of any action being taken to demonstrate
that the debts have been proven to be bad is inconsistent with any requirement
to prove a debt has become bad. It may well be that he could have caused, and
could still today cause, the company to wind down and cease operations so as to
give him his losses but that cannot determine the outcome of the case before
me. There must be, at least, some evidence of an imminent threat to the Appellant
ever getting the loans paid or, as noted earlier, some evidence of future
prospects being such as to reasonably foresee that the chance of recovery is
only a faint hope. No such evidence exists in the present case where there has
been uninterrupted profit seeking activity by a going concern which, looking
forward from each year in question, does not appear to be facing any future
financial crisis that would suggest that the loans will never be repaid.
[57] I can only add in closing that it
seems to me that the Appellant may have misunderstood any CRA suggestion that
salaries need not be funded in order to give rise to the targeted refundable
investment tax credits. It is the incurrence of the expense, not the payment of the
expense that generates an SR&ED expenditure that generates the refundable
credits. That is, the
company need only have incurred the salary expenses on the accrual
basis to obtain refundable credits. If
none of the instruments referred to above had been exchanged, the credits would
appear to have been payable to the company without the Appellant being required
to report any income in the year the company incurred the expense since his
remuneration from the company is reportable on the cash basis. Section 5 of the
Act only includes in income wages “received” in the year. He would have
been allowed a one year deferral under subsection 78(4) of the Act. The Appellant’s tax plan seems then
to have unnecessarily accelerated a tax liability.
[58] As I stated at the outset of
this analysis the proven facts of this case have caused me to concede that the
Appellant has succeeded in creating a reality out of transactions that common
sense suggests never actually happened. While faced with the possibility of finding
that the delivery of un-presented cheques was a non-event, I am reminded of the
following words that seem appropriate here by Thurlow J. in Donald Applicators Ltd. et al., v. Minister of National
Revenue:
[…] the very foundation of the taxation appealed
from is the assumption of the reality of these corporations and of their having
made the profits in respect of which they have been assessed. The case
therefore falls to be decided, despite the stark unreality of the situation, as
disclosed by the evidence, on the basis that these appellants were corporations
which in fact engaged in business and thereby realized the profits in question.
[59] As it stands then, for all
these reasons, the appeals must be dismissed, without costs.
Signed at Ottawa, Canada this 25th day of June 2010.
"J.E. Hershfield"
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