This
appeal
was
heard
under
the
informal
procedure.
Facts
The
appellant
purchased
partnership
units
in
Go
Vacations
1988-B
Limited
Partnership
(the
"partnership")
on
December
30,
1988,
and
on
the
same
date
it
was
agreed
that
the
appellant
was
to
receive
what
he
called
a
rebate
in
the
amount
of
$4,700.
Extracts
from
the
agreement
signed
between
the
appellant
and
Go
Vacations
Capital
Inc.
("Go
Vacations”),
dated
December
30,
1988,
read
as
follows:
1.
Go
Vacations
agrees
to
advance
the
sum
of
$4700
to
the
Investor.
2.
Go
Vacations
agrees
not
to
charge
interest
on
this
advance
for
a
period
of
two
years
commencing
as
of
the
date
of
this
agreement
and
thereafter
shall
charge
interest
annually
at
a
rate
equal
to
the
then
current
prime
rate
plus
1.5
per
cent
3.
Go
Vacations
agrees
to
fully
forgive
the
advance
amount
if
the
Investor’s
return
on
investment
from
the
partnership
does
not
equal
20
per
cent
for
the
19
fiscal
year
of
the
partnership.
"Return
on
Investment”
shall
include
the
investor’s
net
annual
cash
flow
from
the
partnership
for
that
fiscal
period
or,
where
applicable,
the
adjusted
income,
when
adjusted
income
is
defined
in
the
prospectus
or
offering
memorandum
for
the
partnership.
The
appellant
claimed
a
limited
partnership
loss
of
$9,870
in
the
1988
taxation
year
from
the
partnership.
The
amount
of
$4,700
was
received
sometime
in
the
month
of
January
1989.
In
computing
his
income
for
the
1989
taxation
year,
the
appellant
did
not
report
the
amount
of
$4,700
received
from
Go
Vacations.
By
notice
of
reassessment
dated
January
17,
1992,
the
Minister
of
National
Revenue
(the
"Minister")
included
the
amount
of
$4,700
in
the
appellant's
income
as
an
inducement
or
reimbursement
payment
received
in
the
1989
taxation
year.
The
Minister's
assumptions
were:
1.
On
December
30,
1988,
the
appellant
purchased
4,700
units
of
a
partnership
known
as
Go
Vacations
1988-B
Limited
Partnership,
the
general
partner
was
Go
Vacations
Capital
Inc.
2.
In
the
first
or
second
week
of
January
1989
the
appellant
received
a
forgivable
loan
in
the
amount
of
$4,700
from
the
general
partner
as
an
inducement
or
reimbursement
payment.
3.
The
appellant
did
not
elect
under
subsection
53(2.1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
to
deduct
the
amount
of
$4,700
received
as
a
forgivable
loan
in
computing
the
adjusted
cost
base
of
his
share
of
the
partnership
on
or
before
the
date
on
or
before
which
his
return
of
income
for
the
1989
taxation
year
was
required
to
be
filed.
Issue
The
issue
is
whether
the
amount
$4,700
received
by
the
appellant
from
Go
Vacations
in
1989
is
on
income
account.
Analysis
In
this
case,
the
taxpayer
was
to
receive
a
$4,700
“forgivable”
"advance"
if
the
return
on
investment
from
the
partnership
did
not
exceed
20
per
cent.
The
taxpayer
thought
that
it
was
a
return
of
capital,
namely,
a
reduction
in
the
cost
of
the
partnership
unit,
however,
he
did
not
reduce
the
cost
of
his
partnership
share
to
reflect
this,
nor
did
he
make
the
proper
election
under
subsection
53(2.1).
Under
paragraph
12(1)(x)
the
amount
of
any
inducement,
reimbursement,
contribution
or
allowance
which
is
received
in
respect
of
the
cost
of
property
is
included
in
the
taxpayer's
income.
This
paragraph
is
drafted
in
very
broad
terms.
It
casts
a
wide
net
and
embraces
many
types
of
payments.
The
intent
of
the
paragraph
is
to
subject
to
taxation
amounts
received
as
inducements.
An
inducement
can
take
many
forms,
not
the
least
of
which
are
rebates,
forgivable
loans,
and
reimbursements.
Regardless
of
what
name
is
attached
to
a
payment,
if
it
can
reasonably
be
regarded
as
having
been
received
as
an
inducement
the
amount
falls
within
the
scope
of
paragraph
12(1)(x).
In
this
case
I
find
the
$4,700
("forgivable"
"advance")
was
part
of
the
inducement
to
the
taxpayer
to
subscribe
for
the
partnership
units
of
Go
Vacations.
And
the
taxpayer
received
in
the
1989
taxation
year
this
inducement
from
Go
Vacations
in
return
for
his
participation.
As
such,
I
have
concluded
that
the
assessment
by
the
Minister
was
in
accordance
with
the
provisions
of
the
Act.
The
taxpayer,
at
trial,
has
also
raised
the
issue
of
promptness
after
he
filed
his
notice
of
objection.
(The
notice
of
objection
was
filed
on
March
2,
1992.
The
Minister
reassessed
on
September
1,
1993.)
The
question
is
therefore:
did
the
Minister
respond
to
the
notice
of
objection
with
all
due
dispatch?
In
Apfelbaum
v.
M.N.R.,
[1991]
1
C.T.C.
2599,
91
D.T.C.
800,
at
page
2601
(D.T.C.
802),
Associate
Chief
Judge
Christie
of
this
Court
said:
If
the
respondent
has
not
acted
within
that
time
the
taxpayer
can
bring
the
matter
to
a
head
by
appealing
to
this
Court
under
paragraph
169(b).
.
.
.the
remedy
and
the
only
remedy
that
a
taxpayer
has
if
the
respondent
fails
to
discharge
his
duty
under
paragraph
165(3)(a)
is
to
appeal
under
paragraph
169(b).
Failure
of
the
respondent
to
act
under
paragraph
165(3)(a)
does
not
make
a
reassessment
that
has
been
objected
to
liable
to
be
vacated
by
this
Court
regardless
of
the
lapse
of
time
since
the
service
of
the
notice
of
objection.
I
therefore
conclude
the
reassessment
in
this
case
is
not
a
proper
case
to
be
vacated,
on
the
issue
of
due
dispatch.
Conclusion
The
Minister
properly
included
the
amount
of
$4,700
in
the
appellant’s
income
in
accordance
with
the
provision
of
subparagraph
12(1)(x)(iv)
of
the
Act
as
the
amount
was
received
by
the
appellant
as
an
inducement
payment
in
the
1989
taxation
year.
Decision
The
appeal
is
dismissed.
Appeal
dismissed.
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