Rip,
TCJ:—This
is
an
appeal
from
a
notice
of
reassessment
made
by
the
Minister
of
National
Revenue
of
the
appellant’s
income
tax
for
1978.
Andrew
Hrycej
was
a
resident
of
Cedoux,
Saskatchewan,
prior
to
his
death
on
October
21,
1978.
The
executors
and
trustees
(hereinafter
referred
to
as
“Executors”)
of
the
deceased’s
estate
filed
an
income
tax
return
for
the
period
January
1
to
October
21,
1978,
and
reported
the
deemed
disposition
immediately
prior
to
death
of
certain
farm
machinery
and
equipment
to
take
place
at
their
undepreciated
capital
cost
in
accordance
with
subsection
70(6)
of
the
Income
Tax
Act;
the
Minister
reassessed
the
appellant
on
the
basis
that
the
farm
machinery
and
equipment
were
deemed
to
be
disposed
of
immediately
prior
to
death
of
the
deceased
at
amounts
determined
in
accordance
with
paragraph
70(5)(b)
of
the
Act.
The
relevant
portions
of
Mr
Hrycej’s
last
will
and
testament
read
as
follows:
I
GIVE,
DEVISE
AND
BEQUEATH
all
my
property
whatever
and
wherever
including
any
property
over
which
I
may
have
a
general
power
of
appointment
(except
property
otherwise
effectively
disposed
of
by
this
Will
or
any
codicil
thereto)
to
my
Trustees
UPON
THE
FOLLOWING
TRUSTS:
Should
my
wife
survive
me
I
direct
my
trustees
to
hold
all
my
farmland
(including
buildings)
in
trust
for
the
use
and
benefit
of
my
wife
ROSELIA
HRYCEJ,
during
her
lifetime
in
accordance
with
the
following
provisions:
(1)
...
(2)
...
(3)
...
I
give
to
my
daughter,
GENNA
LIGTERMOET,
the
option
to
purchase
all
or
a
part
of
my
farm
machinery,
hardware
and
tools
at
market
value
less
ten
percent.
My
said
daughter
must
exercise
this
option
within
60
days
following
the
ascertainment
of
the
market
value
of
the
machinery
as
hereinafter
provided.
If
this
option
is
not
exercised
or
if
all
my
machinery
is
not
purchased
pursuant
to
this
option,
then
either
all
or
part
of
my
machinery
as
the
case
may
be
shall
fall
into
and
become
part
of
the
residue
of
my
estate.
If
my
daughter
and
my
trustees
cannot
agree
upon
the
market
value
of
my
farmland
or
machinery
within
60
days
of
my
death,
I
direct
that
my
trustees
shall
appoint
a
professional
appraiser
or
appraisers
whose
decision
as
to
the
market
value
of
my
farmland
or
machinery
or
both
shall
be
final
and
binding.
I
give
the
residue
of
my
estate
to
my
wife,
ROSELIA
HRYCEJ,
should
she
survive
me
for
a
period
of
30
days.
Should
my
wife
predecease
me
or
die
within
30
days
of
my
death,
I
give
the
residue
of
my
estate
to
my
children
in
equal
shares.
It
was
agreed
Mr
Hrycej’s
daughter,
Genna
Ligtermoet,
exercised
the
option
to
purchase
all
of
the
farm
machinery,
hardware
and
tools
(hereinafter
referred
to
as
“farm
equipment”)
within
the
60-day
period
provided
for
in
the
will.
The
transaction
of
purchase
and
sale
took
place
in
accordance
with
the
terms
of
the
will
in
early
1979.
The
residual
assets
of
the
estate
were
distributed
to
Mrs
Hrycej
on
October
23,
1979,
notwithstanding
that
in
Saskatchewan
the
executors
have
two
years
after
the
date
of
death
to
administer
the
estate.
Counsel
for
the
appellant
argued
that
Mrs
Hrycej
was
vested
with
the
farm
equipment
immediately
on
the
death
of
Mr
Hrycej
although
the
vesting
was
subject
to
divestment
if
she
did
not
survive
for
30
days
from
death.
Therefore,
in
his
view,
there
was
a
bequest
to
the
wife
on
death
pursuant
to
paragraph
70(6)(a)
of
the
Act,
followed
by
sale
of
the
farm
equipment
by
the
trust
to
the
daughter.
And
since
there
was
a
bequest
to
the
wife,
subsection
70(6)
of
the
Act
applies:
accordingly
the
farm
equipment
was
disposed
of
to
the
deceased’s
wife
immediately
prior
to
death
for
proceeds
of
disposition
equal
to
the
deceased’s
undepreciated
capital
cost
of
the
farm
equipment.
Counsel
for
the
appellant
argued
that
although
the
farm
equipment
was
vested
in
the
wife
on
the
death
of
her
husband,
the
eventual
sale
to
the
daughter
was
made
by
the
trust
created
by
the
will.
I
agree
the
sale
of
the
farm
equipment
was
a
transaction
between
the
trustees
of
the
trust
created
by
the
will,
who
are
also
the
executors
of
the
estate
of
the
deceased,
and
the
daughter
of
the
deceased.
However
I
cannot
accept
the
appellant’s
argument
that
on
the
death
of
Mr
Hrycej
the
farm
equipment
was
forthwith
vested
in
Mrs
Hrycej.
For
the
appellant
to
be
successful
it
must
establish
that
the
farm
equipment,
on
or
after
Mr
Hrycej’s
death,
had
been
transferred
or
distributed
to
Mrs
Hrycej
and
that
the
farm
equipment
had
become
vested
in
Mrs
Hrycej
within
15
months
after
the
death
of
her
husband,
or
such
reasonable
time
thereafter,
depending
on
the
circumstances.
It
is
admitted
the
farm
equipment
remained
in
the
possession
of
the
executors
and
was
not
transferred
or
distributed
to
Mrs
Hrycej.
The
will
is
quite
clear
that
the
interest
in
the
farm
equipment
was
vested
in
the
executors
from
the
moment
of
Mr
Hrycej’s
death
and
that
the
executors
were
to
deal
with
the
farm
equipment
in
accordance
with
the
will.
The
will
provided
that
Mrs
Ligtermoet,
the
deceased’s
daughter,
had
an
option
to
purchase
the
farm
equipment
from
the
executors
at
a
market
value
determined
by
the
executors
and
the
daughter;
the
transaction
of
purchase
and
sale
was
to
be,
and
in
fact
was,
between
the
executors
and
Mrs
Ligtermoet.
Mrs
Hrycej
was
never
given
an
absolute
interest
or
placed
in
possession
of
the
farm
equipment.
I
find
it
difficult
to
find
the
farm
equipment
was
ever
vested
in
Mrs
Hrycej;
under
the
terms
of
the
will
the
farm
equipment
would
be
vested
in
Mrs
Hrycej
only
if
she
first
survived
her
husband
and
that
secondly,
her
daughter
did
not
exercise
the
option
to
purchase
the
farm
equipment
within
the
60-day
period.
That
Mrs.
Hrycej
received
the
cash
proceeds
of
the
sale
of
the
farm
equipment
as
part
of
the
residue
does
not,
in
my
view,
alter
the
fact
that
the
farm
equipment
was
never
transferred
or
distributed
to
her
and
that
the
farm
equipment
was
not
vested
in
her.
Accordingly
the
farm
equipment
is
deemed
to
have
been
sold
by
Mr
Hrycej
immediately
prior
to
death
for
deemed
proceeds
of
disposition
in
accordance
with
paragraph
70(5)(b)
of
the
Act.
The
appellant’s
appeal
for
1978
is
therefore
dismissed.
Appeal
dismissed.
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