Heron Bay Investments Ltd. v. The Queen, 2009 DTC 1606, 2009 DTC 1288

In obiter dicta, Hogan, J. noted (at para. 66) that the prohibition against an inter-corporate dividend deduction in s. 112(2.1) would apply where an SFI in the business of lending money to third parties subscribed for preferred shares that were, in substance, identical to unsecured debt issued by its client, but that "if the same financial institution wanted to capitalize a subsidiary through an investment in preferred shares for a reason other than for its general business purpose of money lending or investing in shares of third parties, the shares might not be acquired in the 'ordinary course of business' ...

The taxpayer incurred an expense of $89,799 for the rezoning of a parking lot so that the construction of a condominium building would be permitted. The condominium project later was cancelled. The taxpayer sought to deduct the expenditure on the basis that this was equivalent to having added the expenditure to the cost of its parking lot, viewed as land inventory, and then deducting this amount in light of a decline in the value of the property. Hogan, J. dismissed the taxpayer's appeal with respect to this issue because no evidence or submissions were provided by it, and noted that in light of the jurisprudence "it could be argued that the cost incurred for the rezoning should be added to the land" (para. 124).

Hogan, J. indicated that if he accepted the taxpayer's evidence that a loan made by the taxpayer on a non-recourse basis to a related corporation was worth less than the amount advanced, this would not help the taxpayer in securing a doubtful debt deduction given that s. 69(1)(a) would have applied at the time the loan was made to reduce the cost of the loan to its fair market value.