A
J
Frost:—This
is
an
appeal
from
an
income
tax
assessment
dated
June
22,
1970
in
respect
of
the
appellant’s
1968
taxation
year,
wherein
a
payment
of
$1,890
advanced
under
the
Prairie
Grain
Advance
Payments
Act
was
added
to
the
appellant’s
income
for
the
said
year.
Upon
Notice
of
Objection
duly
signed
and
filed,
the
Minister
of
National
Revenue
reconsidered
the
assessment
and
confirmed
it
on
June
17,
1971
on
the
ground
that
the
amount
had
been
properly
included
in
the
appellant’s
income
for
1968
under
the
appropriate
provisions
of
the
Income
Tax
Act.
The
appellant
contended,
that
he
received
the
amount
in
question
about
December
10,
1968
as
a
non-interest-bearing
loan
from
the
government
and
that
this
loan
was
paid
off
the
following
year
when
he
sold
and
delivered
his
grain
to
the
Canadian
Wheat
Board.
He
accordingly
reported
the
proceeds
of
the
sale
of
this
grain
in
his
1969
tax
year
as
income
for
that
year.
The
appellant
in
his
argument
said
that
many
Western
farmers
considered
such
advances
under
the
said
Act
as
interest-free
loans
and
that
“Good
Farming”,
a
farming
magazine
had
used
this
terminology
in
a
number
of
its
articles
which
had
indicated
to
him
and
probably
to
many
others
that
advance
payments
could
properly
be
held
in
suspense
until
the
year
of
actual
delivery
of
grain.
The
appellant
pointed
out
that
the
cash
advance
method
(ie
cash
vs
accrual
basis
of
accounting)
could
put
1
/2
years’
income
into
one
calendar
year
and
that,
in
his
particular
case,
he
was
unwittingly
trapped
as
he
only
had
the
use
of
the
money
advanced
for
a
very
short
time
and
could
just
as
easily
have
waited
a
few
weeks
and
saved
himself
additional
taxes
of
$708.
As
1968
was
a
peak
year,
he
would
have
been
financially
better
off
to
defer
receipt
of
the
cash
payment
until
1969,
but
he
\
was.
unaware
of
the
consequences
of
that
payment
at
the
time.
The
appellant
impressed
the
Board
as
a
responsible
businessman
who
knew
exactly
what
he
was
talking
about.
He
argued
that
farmers
in
Western
Canada
rely
for
guidance
on
the
Farmer’s
and
Fisherman’s.
Guide
in
making
out
their
tax
returns
and
not
on
the
text
of
the
Income
Tax
Act
itself
which,
he
said,
is
not
readily
available
to
them
and
that
from
1957
to
1970
there
was
no
indication
that
cash
advances
from
the
Wheat
Board
were
to
be
treated
differently
from
loans
from
other
sources.
His
main
objection,
expressed
in
his
testimony,
was
that
he
had
been
caught
because
the
Department
of
National
Revenue
had
kept
its
interpretation
of
the
Act
secret
for
13
years.
Apart
from
this
general
statement
of
dissatisfaction,
the
appellant
claimed
that
because
the
Canadian
Wheat
Board.
charges
interest
on
default
loans
and
because
repayments
could
be
made
in
cash,
advances
are
in
fact
business
loans
to
farmers
to
assist
them
in
the
temporary
financing
of
their
crops.
Counsel
for
the
Minister,
in
his
argument,
contended
that
the
appellant
was
carrying
on
the
business
of
farming
during
1968
on
a
cash
basis
and
that
the
amount
of
$1,890
was
received
by
him
in
the
course
of
his
business
and
therefore.
must
be
reflected
as
a
receipt
in
respect
of
income
for
his
1968
taxation
year.
By
virtue
of
section
3
of
the
Prairie
Grain
Advance
Payments
Act,
a
farmer
is
entitled
to
apply
for
an
advance
payment
which
is
defined
under
subsection
2(1)
as
“a
payment
for
grain
made
to
a
producer
under
the
authority
of
this
Act”.
Subsection
3(1)
of
that
Act
reads
as
follows:
3.
(1)
Subject
to
this
Act,
the
Board
may
upon
application
therefor
make
a
payment
to
a
producer
in
respect
of
a
crop
year,
as
an
advance
on
the
initial
payment
for
threshed
grain
in
storage
otherwise
than
in
an
elevator,
prior
to
delivery
thereof
to
the
Board.
(2)
Notwithstanding
the
Canada
Grain
Act,
the
manager
or
operator
of
an
elevator
or
other
person
authorized
by
the
Board
to
make
advance
payments
on
its
behalf
may
make
advance
payments
by
means
of
cash
purchase
tickets.
(The
italics
are
mine.)
Subsection
5(1)
of
the
Act
provides
that:
5.
(1)
Before
an
advance
payment
is
made
to
a
producer
he
shall
execute
an
undertaking
in
prescribed
form
in
favour
of
the
Board
to
the
effect
that
(a)
as
soon
as
general
acreage
quotas
enable
him
to
do
so,
he
will,
in
addition
to
any
deliveries
described
in
subsection
11(2),
deliver
and
sell
grain
to
the
Board
until
the
aggregate
of
the
deductions
from
the
initia!
payments
for
the
grain
under
subsection
4(2)
in
respect
of
those
deliveries
and
sales
of
grain
to
the
Board
is
equal
to
the
advance
payment
made
to
him;
(b)
upon
default
he
will
pay
to
the
Board
the
amount
in
default
with
interest
at
the
appropriate
prescribed
rate
per
annum
on
the
amount
in
default
from
the
date
of
the
making
of
the
advance
payment;
and
(c)
if,
pursuant
to
subsection
(2),
he
discharges
his
obligation
to
the
Board
otherwise
than
in
the
circumstances
set
out
in
subsection
(3)
or
(4),
he
will
pay
to
the
Board
interest
on
any
payment
made
to
the
Board
at
the
appropriate
prescribed
rate
per
annum
from
the
date
of
the
making
of
the
advance
payment.
(2)
A
recipient
may
at
any
time
discharge
his
obligation
to
deliver
grain
to
the
Board
by
payment
to
the
Board.
(The
italics
are
mine.)
Subsection
7(1)
of
that
Act
also
provides
as
follows:
7.
(1)
Subject
to
this
section,
the
amount
of
an
advance
payment
to
a
producer
in
respect
of
the
grain
of
any
kind
deliverable
under
the
permit
book
specified
in
the
application
shall
be
the
quantity
of
threshed
grain
of
that
kind
(irrespective
of
its
grade)
that
the
applicant
has
in
storage
otherwise
than
in
an
elevator
and
undertakes
to
deliver
to
the
Board,
less
any
undelivered
grain
of
that
kind
in
respect
of
which
a
previous
advance
payment
was
made,
multiplied
by
the
advance
payment
rate
per
bushel
prescribed
for
that
kind
of
grain.
(The
italics
are
mine.)
And
subsection
8(1)
provides:
8.
(1)
At
the
time
an
advance
payment
is
made
to
a
producer
he
shall
deliver
to
the
person
who
approves
of
his
application
on
behalf
of
the
Board
the
permit
book
described
in
his
application
and
an
endorsement
shall
be
made
therein
in
prescribed
form
indicating
that
amounts
in
respect
of
all
grain
delivered
under
that
permit
book
shall
be
deducted
and
paid
to
the
Board,
in
accordance
with
the
authorization
given
by
the
producer
under
subsection
4(2),
until
the
producer
has
discharged
his
undertaking.
The
above
provisions
of
the
Prairie
Grain
Advance
Payments
Act
make
available
to
prairie
farmers
a
facility
for
receiving
cash
for
their
threshed
grain
despite
the
Wheat
Board’s
inability
to
accept
physical
delivery
of
the
grain.
The
producer
stores
the
grain
for
the
Wheat
Board
and
receives
an
advance
payment
in
the
ordinary
and
normal
course
of
business.
The
farmer’s
obligation
under
his
contract
is
to
deliver
grain
to
the
Wheat
Board.
There
is
no
obligation
to
repay
in
actual
cash
except
in
case
of
default.
Parliament
has
established
a
system
whereby
a
producer
can
get
immediate
payment
for
his
grain
against
future
delivery.
Under
these
circumstances,
there
is
no
doubt
that
the
payment
of
$1,890
to
the
appellant
must
be
construed
as
an
advance
payment
for
grain
which
was
threshed
and
was
ready
for
delivery
but
which
could
not
be
physically
received
by
the
Wheat
Board
due
to
the
shortage
of
storage
space.
Having
thus
defined
the
nature
of
the
said
receipt
of
$1,890
by
the
appellant
in
the
1968
taxation
year,
it
appears
to
fall
squarely
within
the
provisions
of
subparagraph
85B(1)(a)(i)
of
the
Income
Tax
Act
which
reads
as
follows:
85B.
(1)
In
computing
the
income
of
a
taxpayer
for
a
taxation
year,
(a)
every
amount
received
in
the
year
in
the
course
of
a
business
(i)
that
is
on
account
of
services
not
rendered
or
goods
not
delivered
before
the
end
of
the
year
or
that,
for
any
other
reason,
may
be
regarded
as
not
having
been
earned
in
the
year
or
a
previous
year,
.
.
.
shall
be
included;
and
leaves
the
Board
no
other
choice
but
to
conclude
that
for
income
tax
purposes
the
advance
payment
of
$1,890,
received
by
the
appellant
in
his
1968
taxation
year,
was
income
for
the
1968
taxation
year
and
not
a
loan.
Appeal
dismissed.
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