Taylor.
T.CJ.:—This
is
an
appeal
heard
in
Edmonton,
Alberta,
on
July
29,
1991,
against
an
income
tax
assessment
for
the
year
1988.
The
point
at
issue
is
the
disallowance
by
the
Minister
of
National
Revenue
("respondent")
of
a
claim
by
the
taxpayer
for
an
“Allowable
Business
Investment
Loss"
("A.B.I.L.")
arising
out
of
his
payment
in
1988
to
Revenue
Canada
of
an
amount
of
a
$5,000
liability
for
the
unremitted
employees
income
tax
deductions
of
a
corporation,
Big
Valley
Enterprise
Ltd.
("the
Corporation”).
In
1988,
the
Corporation
was
no
longer
operative
or
active
in
any
way,
but
Mr.
Jackman
had
been
a
director
of
the
Corporation
in
earlier
years
when
the
liability
had
been
incurred.
Mr.
Jackman
had
not
received
any
"Notice
of
Assessment"
as
provided
for
under
subsection
227(10)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act"),
but
he
had
been
informed
by
Revenue
Canada
of
his
potential
liability
under
section
227.1
of
the
Act,
and
decided
to
pay
the
amount
without
further
distress.
The
agent
for
the
appellant
took
the
position
that
the
amount
qualified
as
an
A.B.I.L.
by
virtue
of
the
fact
that
in
becoming
a
director
of
the
company,
Mr.
Jackman
had
“guaranteed”
the
payment
of
the
deductions.
The
contention
that
the
“directors
of
a
corporation"
become
guarantors
for
the
payment
of
such
deductions
simply
because
of
the
wording
of
section
227.1
of
the
Act
is
not
tenable
in
my
opinion
and
there
is
no
relief
available
even
by
reference
to
subsection
227.1(6)
of
the
Act
also
suggested
by
the
agent
for
the
appellant.
That
leaves
for
determination,
the
position
of
the
respondent
in
relying
on
subparagraph
40(2)(g)(ii)
of
the
Act
which
reads
as
follows:
a
loss
from
the
disposition
of
a
debt
or
other
right
to
receive
an
amount,
unless
the
debt
or
right,
as
the
case
may
be,
was
acquired
by
the
taxpayer
for
the
purpose
of
gaining
or
producing
income
from
a
business
or
property
(other
than
exempt
income)
or
as
consideration
for
the
disposition
of
capital
property
to
a
person
with
whom
the
taxpayer
was
dealing
at
arm's
length.
The
respondent
claimed
that
none
of
the
several
specific
requirements
under
that
paragraph—"a
loss",
“disposition
of
a
debt",
"was
acquired
by
the
taxpayer",
etc.
had
been
met
in
this
situation,
but
most
importantly
the
amount
had
no
relationship
to
“the
purpose
of
gaining
or
producing
income
from
a
business
or
property".
It
seems
to
me,
that
the
respondent's
position
is
self-evidently
correct.
In
summary,
no
foundation
for
a
claim
as
an
A.B.I.L.
has
been
brought
forward
to
the
Court
as
a
result
of
a
director
paying
any
such
amount
arising
out
of
unremitted
corporate
employees
deductions.
The
fact
that
this
taxpayer
had
paid
the
amount
in
advance
of
receiving
a
personal
notice
of
assessment
under
subsection
227(10)
of
the
Act
is
quite
irrelevant
to
that
determination.
The
critical
problem
for
Mr.
Jackman
is
that
the
payment
of
the
corporate
liability
did
not
present
in
any
way
the
prospect
that
either
he
or
the
Corporation
could
gain
or
produce
any
income
therefrom.
Before
finalizing
these
comments,
I
should
like
to
note
that
the
references
above
to
subsections
227.1(1)
and
227.1(6)
of
the
Act,
deal
with
the
wording
to
be
found
in
the
English
version
of
the
Act.
Nothing
was
raised
by
the
agent
which
would
indicate
a
distinction
to
be
read
into
the
French
version
of
those
subsections,
and
from
my
own
brief
review
it
does
not
appear
to
me
that
there
could
be
any
relief
thereunder
in
the
particular
circumstances
of
this
case.
However,
I
do
observe
that
my
learned
colleague
Judge
Lamarre
Proulx
examined
those
subsections
in
Gilbert
Estate
v.
M.N.R.,
[1990]
2
C.T.C.
2185;
90
D.T.C.
1655
(French)
and
90
D.T.C.
1662
(English))
and
her
comments
therein
deserve
serious
consideration,
as
they
respect
the
possible
application
of
the
Civil
Code
of
Lower
Canada.
The
appeal
is
dismissed.
Appeal
dismissed.
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