Christie,
TCJ
[ORALLY]:—These
appeals
were
heard
together
on
common
evidence
by
agreement
of
the
parties
and
the
consent
of
the
Court.
The
issue
is
whether
the
appellants
are
entitled
to
deduct
claimed
business
investment
losses
in
their
1981
taxation
years.
The
loss
claimed
by
R
F
Single
is
$17,479
in
respect
of
the
purchase
by
him
of
29,522
common
shares
of
International
Peatco
Ltd
(hereinafter
referred
to
as
“Peatco”),
a
corporation
incorporated
under
the
laws
of
British
Columbia,
for
which
he
paid
$34,958.
The
loss
claimed
by
the
appellant,
Shirley
Single,
is
$18,443
in
respect
of
the
purchase
by
her
of
30,150
shares
of
the
same
corporation
for
$36,886.
Paragraph
50(1
)(b)
of
the
Income
Tax
Act
(“the
Act”)
provides
that,
in
the
computation
of
income,
where
a
share
of
the
capital
stock
of
a
corporation
is
owned
by
a
taxpayer
at
the
end
of
the
taxation
year
and
the
corporation
has,
during
the
year,
become
bankrupt
within
the
meaning
of
subsection
128(3)
of
the
Act,
the
taxpayer
shall
be
deemed
to
have
disposed
of
the
share
at
the
end
of
the
year
and
to
have
reacquired
it
immediately
thereafter
at
a
cost
equal
to
nil.
Subsection
128(3)
provides
that
“bankrupt”,
has
the
meaning
assigned
to
it
by
the
Bankruptcy
Act,
RSC
1970,
c
B-3.
Section
2
of
the
Bankruptcy
Act
provides
that
“bankrupt”
means
a
person
who
has
made
an
assignment
or
against
whom
a
receiving
order
has
been
made
or
the
legal
status
of
such
a
person
and,
of
course,
by
operation
of
section
28
of
the
Interpretation
Act,
RSC
1970,
c
I-23,
“person”
includes
a
corporation.
“Assignment”
is
also
defined
in
the
Bankruptcy
Act.
It
means
“an
assignment
filed
with
the
official
receiver”.
Subsection
50(4)
of
the
Bankruptcy
Act,
provides
that
a
bankruptcy
commences
at
the
time
of
the
filing
of
an
assignment
with
the
official
receiver.
Paragraph
38(c)
of
the
Act
provides
that,
for
its
purposes,
a
taxpayer’s
allowable
business
loss
for
a
taxation
year
from
the
disposition
of
any
property
is
one
half
of
his
business
investment
loss
for
the
year
from
the
disposition
of
that
property.
Pursuant
to
subparagraph
39(l)(c)(i)
of
the
Act,
the
appellants’
business
investment
losses
for
their
1981
taxation
years
were
their
capital
losses
of
$17,479
and
$18,443
if
there
was
a
deemed
disposition
of
their
shares
in
that
year
in
accordance
with
paragraph
50(1)(b)
of
the
Act.
Although
the
phrase
“business
investment
loss”
in
paragraph
39(l)(c)
is
a
capital
loss,
such
loss
is
not
by
reason
of
section
3
of
the
Act,
confined
in
its
deductibility
to
taxable
capital
gains,
but
may
be
deducted
from
income
from
all
sources
inside
or
outside
of
Canada.
In
the
ordinary
course,
under
the
existing
law,
50
per
cent
of
capital
losses
may
be
deducted
from
taxable
capital
gains
except
that,
in
the
case
of
an
individual,
if
the
losses
are
not
thereby
fully
offset,
deductions
to
a
maximum
of
$2,000
may
be
made
from
other
sources
of
income.
On
December
22,
1981,
a
meeting
of
the
directors
of
Peatco
was
held
at
Sardis,
British
Columbia.
The
minutes
of
that
meeting
record
that:
After
due
consideration,
and
upon
motion
duly
made
and
seconded,
it
was
resolved
that
an
assignment
in
bankruptcy
be
made
by
the
corporation.
It
was
further
resolved
that
the
president,
Cornelius
Regier,
be
and
he
is
hereby
authorized
on
behalf
of
the
Board
of
Directors
to
make
an
assignment
under
the
Bankruptcy
Act
and
to
execute
all
documents
and
effect
the
sale
of
the
company
to
all
deeds,
instruments,
conveyances
and
other
documents
as
required
by
the
trustee
in
bankruptcy.
The
undisputed
evidence
before
me
is
that
the
assignment
was
made
on
January
4,
1982.
That
fact,
regarded
in
light
of
the
statutory
provisions
previosly
referred
to,
precludes
the
appellants
from
bringing
themselves
within
the
scope
of
paragraph
50(1
)(b)
of
the
Act
during
1981.
Both
notices
of
appeal
state
that
the
shares
of
Peatco
lost
all
value
as
a
result
of
what
transpired
at
the
directors’
meeting
on
December
22nd.
Mr
Harms,
who
appeared
on
behalf
of
the
appellants,
emphasized
that
point
during
the
course
of
the
hearing.
That
may
well
be
so,
but
it
does
not
assist
the
appellants
in
this
litigation.
Subparagraphs
54(c)(ii)(A)
and
(C)
of
the
Act
provide
that
in
subdivision
C
thereof,
which
contains
section
39:
“disposition”
of
any
property,
except
as
expressly
otherwise
provided,
incudes
..
.
any
transaction
or
event
by
which
.
.
.
any
property
of
a
taxpayer
.
.
.
that
is
a
share
.
.
.
is
redeemed
in
whole
or
in
part
or
is
cancelled
.
.
.
and
.
.
.
any
transaction
or
event
by
which
.
.
.
any
share
owned
by
a
taxpayer
is
converted
by
virtue
of
an
amalgamation.
The
words
“except
as
expressly
otherwise
provided”
have
no
application
to
these
cases.
Furthermore,
there
has
been
no
redemption,
cancellation
or
amalgamation.
The
definition
does
not
purport
to
be
exhaustive,
but
regardless
of
what
else
may
constitute
a
disposition,
I
am
of
the
opinion
that
the
fact
that
the
shares
in
the
corporation
became
worthless
does
not,
of
itself,
constitute
a
disposition
of
those
shares
by
the
shareholder
within
the
meaning
of
subparagraphs
39(l)(c)(ii)
and
(iii)
of
the
Act.
The
appeals
are
dismissed.
Appeals
dismissed.
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