D’Anjou v. The Queen, 2019 TCC 208

Following his disposition in 2012 of a parcel of undeveloped land which he had acquired in 1997, the taxpayer treated the adjusted cost base of the property as having been increased by poorly documented expenses such as municipal and school taxes and financing expenses.

In finding that the Minister could reassess beyond the normal reassessment period to increase the capital gain as reported on the basis that the taxpayer had made a misrepresentation attributable to neglect, Favreau J noted that the same types of ACB adjustments had been denied for the disposition by the taxpayer of another parcel of vacant land in 2008 QCCQ 7197, and that the taxpayer thus “knew very well the rules applicable to computing the adjusted cost base of land insofar as this related to school and municipal taxes and interest on money borrowed to acquire real property” (para. 29, TaxInterpretations translation).

In finding that the adjusted cost base of a vacant property that the taxpayer had sold had not been increased by alleged expenses such as municipal and school taxes and financing expenses incurred during the holding of the property, Favreau J stated (at para. 37, TaxInterpretations translation):

[T]he additional expenses of $224,295 claimed by the appellant did not constitute capital expenditures which could be added to the cost of land given that they were not made or incurred to acquire property or for the purpose of effecting an improvement to land.