Delmer
E
Taylor:—This
is
an
appeal
heard
on
December
6,
1978,
at
the
City
of
London,
in
the
Province
of
Ontario,
from
income
tax
assessments
for
the
taxation
years
1972
and
1973,
in
which
the
Minister
of
National
Revenue
taxed
on
income
rather
than
on
capital
account
during
the
years
in
question
the
respective
gains
realized
as
a
result
of
certain
transactions
in
real
property.
The
respondent
relied,
inter
alia,
upon
sections
3,
9
and
248
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63
and
amendments
thereto.
Facts
The
appellant,
during
the
times
material,
lived
and
was
employed
in
London.
In
computing
his
income
for
the
1972
and
1973
taxation
years,
he
included
only
one
half
of
the
net
gains
made
on
the
sale
of
three
real
properties
in
1972
and
two
real
properties
in
1973
and,
therefore,
failed
to
include
the
sums
of
$1,251.56
and
$1,572.80
for
the
1972
and
1973
taxation
years
respectively,
the
amounts
being
one
half
of
the
net
gains.
Contentions
The
appellant’s
position
as
detailed
in
the
notice
of
appeal
was
that:
A
city
lot
was
purchased
and
a
semi-detached
duplex
was
built
and
rented
with
full
intentions
of
retaining
them
indefinitely
as
an
investment.
This
real
estate
investment
was
started
to
set
up
a
rental
program
as
I
have
no
pension
plan
to
look
forward
to
on
my
retirement.
I
had
no
immediate
plans
to
add
to
this
investment
program.
All
properties
were
disposed
of
due
to
unforeseen
circumstances
and
it
may
be
noted
that
the
net
proceeds
from
the
first
three
units
purchased
resulted
in
losses.
There
were
three
losses
and
two
gains
in
the
five
transactions
which
were
dictated
by
undesirable
circumstances
which
happened
to
have
a
profitable
ending
more
by
chance
than
by
good
management.
If
the
end
result
had
been
a
loss
I
would
not
have
expected
the
Minister
to
allow
nor
would
I
have
claimed
a
business
loss
as
I
did
not
consider
myself
in
business
at
any
time
before
or
after
the
closing
of
any
of
these
transactions.
It
may
be
noted
that
I
abandoned
this
investment
program
as
soon
as
I
could
and
have
not
continued
it
as
of
this
date.
Conversely,
the
Minister
made
the
following
assumptions:
—in
1971,
the
appellant
purchased
a
lot
in
the
City
of
London,
constructed
a
semidetached
duplex
and
upon
completion
rented
the
premises
municipally
known
as
203-205
Taylor
Street
until
1972,
when
he
sold
it
in
the
1972
taxation
year
for
a
net
loss
of
$1,056.46;
—on
or
about
the
5th
day
of
April,
1972,
the
appellant
purchased
for
rental
purposes
a
six-plex
building
municipally
known
as
22
Langton
Road,
London,
and,
on
or
about
November
21,
1972,
he
sold
it
by
way
of
trade
for
a
premises
municipally
known
as
1238
Sparton
Street,
London,
in
the
1972
taxation
year
for
a
net
loss
of
$905.54;
—
in
1972,
the
appellant
purchased
a
12
unit
apartment
municipally
known
as
1576
Caledonia
Street,
London,
and
in
the
latter
part
of
the
1972
year
he
sold
it
by
way
of
trade
for
a
permises
municipally
known
as
308
Egerton
Street,
London,
in
the
1972
taxation
year
for
a
net
gain
of
$4,465.12;
—on
or
about
November
23,
1972,
the
appellant
purchased
by
way
of
trade,
a
15
unit
apartment
building
municipally
known
as
308
Egerton
Street,
London,
and
on
or
about
March
20,
1973,
he
sold
it
in
the
1973
taxation
year
for
a
net
gain
of
$3,809.25;
—on
or
about
November
21,
1972,
the
appellant
purchased
by
way
of
trade
a
single
family
dwelling
municipally
known
as
1238
Sparton
Street,
London,
and,
on
or
about
February
15,
1973,
he
sold
it
in
the
1973
taxation
year
for
a
net
loss
of
$663.65;
—
in
the
1972
and
1973
taxation
years,
the
appellant
realized
net
gains
of
$2,503.12
and
$3,145.60
respectively
on
the
sales
of
the
aforesaid
properties;
—the
appellant
dealt
in
the
aforesaid
properties
in
the
1972
and
1973
taxation
years
in
the
same
way
that
a
regular
trader
in
property
of
the
same
type
would
ordinarily
do;
—a
motivating
factor
of
the
appellant
at
the
time
of
the
acquisition
of
the
aforesaid
properties
was
the
possibility
of
resale
at
a
profit,
and
the
properties
were
purchased
or
acquired
with
a
view
to
dealing
in,
trading
in,
or
otherwise
turning
the
same
to
account
for
profit.
Evidence
and
Argument
The
appellant
provided
the
Board
with
a
history
of
the
circumstances
and
situations
which
surrounded
the
various
transactions.
In
his
opinion
they
showed
that
each
transaction
had
been
occasioned
by
his
intention
to
invest
rather
than
turn
the
property
over
at
a
profit.
It
certainly
can
be
seen
that
he
encountered
substantial
difficulties
and
it
would
be
possible
to
also
conclude
that
his
efforts
and
involvement
reflected
some
inexperience
in
the
general
real
estate
field—although
he
was
employed
in
the
construction
industry,
had
some
knowledge
of
economic
conditions
in
the
area,
and
exposure
to
the
business
of
dealing
in
land
and
residential
development.
Without
going
into
detail,
the
Board
has
no
difficulty
in
concluding
that
except
for
minor
variations,
the
contentions
of
the
Minister
were
substantiated
by
the
evidence
of
the
appellant.
Counsel
for
the
Minister
also
noted
this
aspect
at
the
hearing.
Findings
An
examination
of
the
income
tax
returns
of
the
appellant
for
the
years
in
question
shows
that
he
was
in
receipt
of
income
from
several
sources
and
was
aware
of
the
application
and
limitations
of
the
relevant
provisions
of
the
Act.
When
the
series
of
real
estate
transactions
at
issue
in
this
appeal
is
placed
in
that
context,
in
my
view
it
would
be
unrealistic
to
attribute
to
the
appellant
the
lack
of
profit-making
purpose
he
asserts,
or
to
delimit
his
motives
only
to
those
of
long-range
income-producing
investments.
The
interpretation
of
the
respondent
placed
upon
the
events
and
the
net
gain
realized
therefrom
is
more
plausible.
Decision
The
appeal
is
dismissed.
Appeal
dismissed.
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