Principal Issues: Whether intangible assets of an active business carried on by a corporation, such as goodwill, customer list, licenses, franchises and quotas would be “active assets” as defined in subsection 125(7) of the Income Tax Act.
Position: Whether a particular asset is used principally in an active business is a question of fact, which must be determined with reference to the circumstances of the case under review. The relevant circumstances include the actual use to which the asset is put in the course of the business, the nature of the business and the practice in the particular industry. If the withdrawal of the property would have a decidedly destabilizing effect on the corporate operations, the property would generally be considered to be used in the course of carrying on a business.
Reasons: Position based on previous ITRD positions and the decision in Ensite Limited v. Her Majesty the Queen.
