9127-6287 Québec – Court of Quebec prorates the s. 18(3.1) equivalent between the construction of golf course buildings and work on the golf course

The taxpayer, during the taxation years at issue, suspended the operation of its golf course to backfill two artificial lakes in its driving range and to replace its clubhouse and garage – as well as to partially construct (but never complete) a mini-golf course. The ARQ denied the various expenses incurred during such taxation years, such as insurance, interest, licence and consulting fees, property taxes, and utilities, on the basis of applying the Quebec equivalent of ITA s. 18(3.1).

Bourgeois JCQ found that the wording of the s. 18(3.1) equivalent “cannot apply to work done on the driving range, golf course maintenance or the various tasks involved in building a mini-golf course,” since the costs thereof did not relate to the types of land referred to in the provision, e.g., contiguous land, such as a “yard” or “garden,” necessary for the use of the buildings.

He then exercised his “judicial power” to find that that the denial under the provision applied only to 50% of the above expenses incurred during the building-construction period, so that the balance of the expenses were allowed.

Neal Armstrong. Summaries of 9127-6287 Québec Inc. v. Agence du revenu du Québec, 2023 QCCQ 4688 under s. 18(3.1) and s. 3(a) – business source.