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Docket: 2002-4608(IT)I
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BETWEEN:
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GORDON ROGERS,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Appeal heard on April 7, 2003 at Vancouver, British
Columbia
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Before: The Honourable Judge L.M. Little
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Appearances:
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For the Appellant:
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The Appellant himself
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Counsel for the Respondent:
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Nadine Taylor Pickering
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____________________________________________________________________
JUDGMENT
The
appeal from the assessment made under the Income Tax Act
for the 2000 taxation year is dismissed, without costs, in
accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 22nd day of April
2003.
J.T.C.C.
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Citation: 2003TCC225
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Date: 20030422
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Docket: 2002-4608(IT)I
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BETWEEN:
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GORDON ROGERS,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Little, J.
A. FACTS
[1] In 1976 the Appellant and his wife
purchased a parcel of land (the "Property") consisting
of 19.6 acres and located near Powell River, British
Columbia.
[2] In 1980 the Appellant constructed
a house on the Property where he resided with his wife and two
sons.
[3] In the 2000 year the Appellant was
employed as a lab technician at a pulp mill owned by Pacifica
Papers Inc. (now Norske Canada Ltd.).
[4] Commencing in 1980 and up to and
including the year 2000 the Appellant sold timber from his
property for various reasons. The timber sales made by the
Appellant and the reasons for the sales may be summarized as
follows:
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Year
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Amount
Received
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Reason for
Removal of Timber
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1980
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$ 2,025.00
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To clear timber for road construction and to provide a
location for the home.
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1986
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$ 4,900.00
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To clear land (½ acre).
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1994
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$35,746.00
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To obtain money from the sale of logs to pay for a
divorce settlement and to purchase the interest of his wife
in the Property.
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1995
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$24,193.00
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To remove diseased trees.
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1998
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$19,599.00
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To clear land.[1]
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2000
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$24,050.00
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To remove diseased trees and to clear land.
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[5] The Appellant made an arrangement
with logging contractors to remove the standing timber from the
Property except in the 1998 year.
[6] When the Appellant filed his
income tax return for the 2000 taxation year the Appellant
reported the gain realized on the sale of standing timber as a
capital gain.
[7] The Appellant never reported for
income tax purposes any of the payments received by him from the
sale of logs or timber received in the 1980, 1986, 1994, 1995 and
1998 years.
[8] By Notice of Reassessment issued
on the 24th day of September 2001 the Minister of National
Revenue (the "Minister") reassessed the Appellant's
2000 taxation year to treat the amount of $24,050.00 received on
the sale of logs as income.
B. ISSUE
[9] Is the Appellant required to
include as income the amount of $24,050.00 received by him in the
year 2000 on the sale of logs?
C. ANALYSIS
[10] The Minister included the amount of
$24,050.00 in the Appellant's income for the 2000 taxation
year because she concluded that the Appellant was engaged in an
"adventure in the nature of trade" when he sold the
logs in 2000.
[11] The term "adventure in the nature
of trade" has frequently been considered by Canadian Courts.
In Jake Friesen v. The Queen, [1995] 2 C.T.C. 369
Mr. Justice Major of the Supreme Court of Canada said at
pages 374-375:
An adventure in the nature of trade is not
defined in the Act but is a term which has a meaning
established by the common law.
. . .
The concept of an adventure in the nature of
trade is a judicial creation designed to determine which purchase
and sale transactions are of a business nature and which are of a
capital nature. This question was particularly important prior to
1972 when capital transactions were completely exempt from
taxation. The question was succinctly stated by Clerk L.J. in
Californian Copper Syndicate v. Harris (1904), 5 T.C. 159
(Ex., Scot.), at page 166:
Is the sum of gain that has been made a mere
enhancement of value by realising a security, or is it a gain
made in the operation of business in carrying out a scheme for
profit-making?
The first requirement for an adventure in the
nature of trade is that it involve a "scheme for
profit-making". The taxpayer must have a legitimate
intention of gaining a profit from the transaction.
[12] In a number of decisions, the Court has
stated that one of the important tests used to determine if a
transaction was an adventure in the nature of trade is whether
the taxpayer had engaged in similar transactions. If the taxpayer
had carried out frequent transactions he was usually found to be
a trader. In this case the Appellant sold logs or standing timber
on six different times while he owned the Property.
[13] In reviewing the evidence and the Court
decisions I have concluded that when the Appellant sold logs or
standing timber from the Property in the year 2000 he was engaged
in an adventure in the nature of trade and therefore the amount
of $24,050.00 was income.
[14] The appeal is dismissed, without
costs.
Signed at Vancouver, British Columbia, this 22nd day of April
2003.
J.T.C.C.
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