Principal Issues: What would the income tax implications be of financial assistance that is received from the government of NFLD where both residential and commercial property owners retain title to their property in return for individuals relocating and giving up their rights to all provincial services? That is, all provincial services in these communities will be discontinued.
Position: Depends on what the financial assistance amount is intended to replace. If the financial assistance is intended to replace/compensate individuals for the diminishing value of commercial and residential properties the amount would be considered proceeds of disposition for compensation for property injuriously affected pursuant to paragraph 54(e) of the definition of "proceeds of disposition". Financial assistance received by Residential Property Owners that is intended to compensate for moving / relocation expenses would not be taxable as this is compensation for personal expenses and would not be considered income from a source. The additional financial assistance that is received by Commercial Property Owners would be taxable pursuant to subsection 9(1) or paragraph 12(1)(x).
Reasons: Question of fact.