Delmer
E
Taylor:—This
is
an
appeal
heard
in
the
City
of
St
John’s,
Newfoundland,
on
July
12,
1979,
against
income
tax
assessments
in
which
the
Minister
of
National
Revenue
increased
the
taxpayer’s
reported
income
for
each
of
the
years
1975
and
1976
in
order
that
the
profit
realized
by
him
from
certain
real
estate
sales
should
be
treated
as
income
rather
than
as
capital
gain.
In
reassessing
the
appellant,
the
Minister
relied,
inter
alia,
upon
sections
3,
4,
9,
10,
subsection
13(21),
paragraph
20(1)(a),
subsections
69(1),
74(1)
and
248(1)
of
the
Income
Tax
Act,
RSC
1952,
c
148
as
amended
by
section
1
of
c
63
of
SC
1970-71-72.
Facts
The
essential
facts
of
the
matter,
arising
either
out
of
agreement
between
the
parties
or
from
the
evidence
presented
at
the
hearing,
are
as
follows:
—The
appellant
was
born
and
raised
in
the
small
village
of
Kippens,
Newfoundland,
on
the
property
in
question.
—
In
1963,
he
purchased
from
his
father
a
long
narrow
strip
of
land
which
was
Cut
in
two
by
the
main
road
running
through
Kippens.
On
the
one
portion
of
the
thus
divided
strip
of
land
he
built
his
home.
—
He
is
reasonably
well
educated,
and
had
several
job
offers,
including
positions
in
Montreal
and
Cornerbrook,
but
he
did
not
want
to
reside
away
from
Kippens.
—
In
1972,
using
almost
all
of
his
savings,
he
purchased
from
relatives
(who
had
inherited
it
from
his
father)
an
additional
strip
of
land
adjacent
to
part
of
his
original
property.
He
now
had
more
than
15
acres,
some
of
which
had
limited
farming
possibilities,
some
of
which
was
covered
in
bush
or
swamp.
It
was
of
an
unusual
configuration,
difficult
to
farm,
but
not
impossible
for
root
crops
and
some
animals.
—The
economic
and
employment
history
of
the
area
around
Kippens
had
for
many
years
been
unstable,
but
there
were
some
prospects
in
that
a
new
“linerboard”
mill
was
being
constructed
in
Stephenville,
a
few
miles
away.
—
Except
for
the
limited
family
farming
in
the
area,
Kippens
depended
almost
exclusively
on
the
economy
of
Stephenville
for
support.
Many
residents
(the
appellant
among
them)
commuted
to
work
in
Stephenville.
—The
appellant
obtained
employment
at
the
linerboard
mill
in
Stephenville,
and
remained
living
at
his
home
in
Kippens.
—
In
the
years
1973
and
1974,
he
was
approached
by
fellow
employees,
first
enquiring
who
owned
the
property
in
question,
and
ultimately
asking
to
purchase
building
lots.
—
Having
decided
to
sell
some
of
the
property
by
1975,
he
cleared
some
land,
put
in
an
access
road
and
prepared
a
subdivision
plan.
—Some
of
the
sales
of
property
in
1976
involved
in
this
appeal
were
transfers
to
his
sister-in-law
and
to
his
wife,
which
were
immediately
resold
at
a
profit.
Contentions
Basically,
the
appellant
asserts
that
he
was
prepared
to
reside
on
the
property,
farm
it
in
the
best
way
possible
and
live
on
the
proceeds
no
matter
how
inadequate,
rather
than
move
to
another
locality,
or
be
continually
dependent
on
the
employers
in
the
area,
with
their
record
of
instability.
He
had
not
anticipated
a
position
with
the
linerboard
mill.
There
was
no
indication
in
1972
that
there
would
be
a
demand
for
building
lots
in
the
Kippens
area
since
there
appeared
to
be
sufficient
accommodation
in
Stephenville
for
any
new
arrivals
for
the
mill.
The
respondent
contends
that
at
the
time
of
the
purchase
in
1972,
the
appellant’s
intention
was
to
resell
the
whole
of
his
property
since
the
acquisition
in
1972
had
rendered
the
two
properties
together
suitable
for
subdivision.
Conclusion
The
Board
must
decide
whether,
by
the
expenditure
of
almost
all
of
his
savings
to
acquire
a
relatively
undesirable
piece
of
property
(which,
however,
had
been
part
of
his
family
farm
and
was
adjacent
to
his
own
residence
property),
the
appellant
planned
to
use
it
to
make
at
least
a
part
of
his
living
from
farming;
or
whether
he
foresaw
the
substantially
increased
demand
for
residential
housing
in
Kippens,
and
proceeded
to
place
himself
in
a
position
to
capitalize
on
it.
I
am
prepared
to
accept
that
he
probably
saw
considerably
more
merit,
satisfaction
and
reward,
in
entertaining
the
prospect
of
farming
the
land
than
he
could
have
forseen
in
thinking
about
subdividing
it
and
selling
it.
Decision
The
appeal
is
allowed
and
the
matter
referred
back
to
the
Minister
for
reconsideration
and
reassessment
accordingly.
Appeal
allowed.
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