Moose Factory – Tax Court of Canada finds that arrangements were not structured to give rise to a debt

After quoting the statement in Sattva that “While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement,” Owen J found that, contrary to the taxpayer’s understanding of the arrangements as reflected in its financial statements, the arrangements at issue had not in fact been structured so as to give rise to a debt owing to the taxpayer by a corporation that subsequently became bankrupt. Hence, no business investment loss (or capital loss).

Neal Armstrong. Summary of Moose Factory Restaurant Properties Ltd. v. The Queen, 2019 TCC 156 under s. 39(1)(c)(iv) and s. 12(11) – investment contract.