[OFFICIAL ENGLISH TRANSLATION]
Date: 20020704
Docket: 2000-3681(IT)G
BETWEEN:
CLAUDE BOULANGER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN:
1999-3011(IT)G
PIERRE DUFOUR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Lamarre, J.T.C.C.
[1] The appellant
Claude Boulanger appeals from assessments made by the
Minister of National Revenue ("Minister") under the
Income Tax Act ("Act") whereby, for the
1996 taxation year, the Minister refused to consider a capital
loss of $140,143.83 as a business investment loss and disallowed
a mining business loss of $7,447.00 and a rental loss of
$17,320.00 for that same year. Furthermore, the Minister also
disallowed the deduction of a rental loss of $31,783.00 for the
1995 taxation year.
[2] The respondent no longer disputes
the deduction of the mining business loss and rental losses, as a
result of which the sole outstanding issue is now whether the
capital loss was deductible as a business investment loss for the
1996 taxation year.
[3] As to the appellant
Pierre Dufour, he appeals from assessments made under the
Act by the Minister refusing to treat as a business
investment loss a capital loss of $63,233.33 incurred by his
spouse, Valérie Dufour, and attributed to him for the
1996 taxation year. Furthermore, the appellant had previously
been able to deduct a business investment loss of $35,331.00 in
1996. The point for determination then is whether the
three-quarters of the capital loss of $63,233.33 (that is
$47,425.00), which is attributed to him, may be added to the loss
of $35,331.00 as a business investment loss for 1996 and be
carried over to 1997. If so, in calculating the balance of the
available non-capital losses for the 1997 taxation year, that
loss will have to be included as an additional business
investment loss, the whole in accordance with the provisions of
the Act.
[4] The parties filed a partial
agreement on the facts that restated the amounts that are still
in issue. That partial agreement on the facts is reproduced
below:
[TRANSLATION]
1. Claude Boulanger incurred a
capital loss of $140,143.83 during the 1996 taxation year.
2. The point for determination is
whether Claude Boulanger may deduct three-quarters of the
amount of $140,143.83, that is, $105,107.87 as an allowable
business investment loss ("ABIL") in computing his
income for the 1996 taxation year.
3. Valérie Dufour incurred
a capital loss of $63,233.33 in the 1996 taxation year. That loss
must be attributed to Pierre Dufour for his 1996 taxation
year and may be carried over to the following years as needed in
accordance with the provisions of the Income Tax Act.
4. The point for determination is
whether Pierre Dufour may deduct three-quarters of the sum
of $63,233.33, that is, $47,425.00 as an ABIL in computing his
income for the 1996 taxation year.
5. To the extent that the amount of
$47,425.00 is deductible as an ABIL in computing
Pierre Dufour's income for the 1996 taxation year, that
amount is added to the amount of $35,331.00 previously allowed by
the Minister of National Revenue for 1996.
6. To the extent that the amount of
$47,425.00 is deductible as an ABIL in computing
Pierre Dufour's income for the 1996 taxation year, the
calculation of the balance of available non-capital losses for
Pierre Dufour's 1997 taxation year will have to take
into account that additional ABIL and the calculations stated by
the Income Tax Act for 1997 and the following years will
be made as required.
Point at Issue
[5] The only point at issue is whether
the capital loss of $63,233.33 incurred by Pierre Dufour and
of $140,143.83 incurred by Claude Boulanger, resulting from
the disposition of their respective shares of a mortgage claim on
a lot belonging to 170663 Canada Inc. ("Corporation")
may be considered as a loss three-quarters of which would be
deductible as a business investment loss ("BIL") within
the meaning of paragraph 39(1)(c) of the
Act.
Facts
[6] The appellants testified that, in
1989, they developed a plan in which a full range of
automobile-related services, such as sales by various dealers,
after-sales service, bodywork, painting and window tinting
services and administrative and other services, would be offered
at a single location. The plan was conceived for the purpose of
bringing together the various businesses relating to the
automotive sector and of allocating operating expenses.
[7] The appellants, both lawyers, were
not the only persons involved in this project. They were
supported by a certain Roch Potvin, owner of a car
dealership (Normandie Jeep Eagle) and Rock Dompierre, a real
estate agent who, like the appellants, had clients in the
automotive field.
[8] According to the appellants, this
was a new concept by which they intended to make a profit by
eventually reselling their shares in the project. A plot of land
formed from three lots was thus acquired by the Corporation
created for that purpose to be operated under the name
"Carrefour de l'automobile" the shares of which had
been issued to the management companies belonging to each of the
four investors. The land was located on St-Joseph Blvd. at
the Hull city limit, in the area where there were already a
number of automotive businesses.
[9] At that time (1989), the investors
met with an engineer to ensure that the land was not polluted and
with an architect, Pierre Cayer, to develop the concept. An
overall plan was then drawn up.
[10] Construction of a three-storey building
was planned to house the administrative services and a sketch was
prepared to carry out the project on the three assembled lots in
accordance with the preliminary plans prepared by the architect
Cayer. Mr. Cayer was apparently paid by the appellant
Boulanger on behalf of the Corporation. An exterior development
plan showing the various ground levels was prepared along with
surveys to ensure that the land was solid, in order to verify
that the project as a whole could be carried out. A progress
report for the project's construction was prepared by a
general contractor (Exhibit A-2, Tab P-8),
but no agreement was signed.
[11] To finance construction of the
project's first phase, the investors subsequently applied for
a loan from the Caisse Populaire that already held the hypothec
on the lots acquired by the Corporation (see
Exhibit A-2, Tab P-3). The Caisse Populaire
refused to grant the loan since the additional guarantees it had
requested were not given. According to the appraisal report
required by the Caisse Populaire, the loan application was likely
turned down around June 1990 (Exhibit I-1, Tab 6). The
investors thus attempted to find another partner. In the
meantime, on July 11, 1990, Rock Dompierre, who was in
serious financial difficulty, resold to the appellants'
management companies the shares that his management company held
in the Corporation as well as the $54,375.00 claim he held
against the Corporation as a result of advances that he had made,
the whole for the value of the claim (see
Exhibit I-2). He declared bankruptcy shortly
thereafter.
[12] Lastly, the construction company
Taillefer Développement Inc. ("Taillefer")
purchased a portion of the land (130,000 square feet) for
approximately $900,000.00 according to the appellants, in
December 1990 (the date corresponds to the date of the transfer
to the Caisse Populaire of a debt that Taillefer owed to the
Corporation on the balance of the selling price
(Exhibit A-2, Tab P-3).
[13] Taillefer then financed construction of
a 13,000 square-foot building in accordance with the plans
prepared by another architect (which construction plans partly
incorporated architect Cayer's preliminary plans) and
for which a building permit had already been granted. According
to the architect Cayer, it was the portion of his
preliminary plan that provided for the installation of a car
dealership that was built. Taillefer took advantage of this to
extend the water and sewer services to the portion of the land
still belonging to the Corporation (82,000 square feet) in
anticipation of the entire project's completion. Once the
building was completed, Taillefer, wishing to ensure that it
produced income from its building, leased an area of
8,000 square feet to Roch Potvin's management
company for the operation of its automobile dealership. The
appellants had to ensure that the rest of the area would be
rented. It appears that the appellants convinced the Lada
dealership ("Lada") to set up shop on the premises and
to sublet the area not occupied by Roch Potvin's
business. Lada thus purportedly paid rent of $63,000.00 a year,
which rent was guaranteed by the appellants. According to the
appellants, that was how their initial plan started to
materialize. Unfortunately, all this was short-lived since,
first, the City of Hull made a zoning change and, second, Lada
experienced financial problems, then Roch Potvin declared
bankruptcy in July 1996, dragging Taillefer in his wake into
bankruptcy as well.
[14] One or two years earlier, the
appellants had purportedly attempted to sell their land but to no
avail. In December 1996, the appellants finally resigned
themselves to transferring, for $100, their claims and the shares
their management companies held in the Corporation to a certain
Jean-Pierre Lacasse, a person with whom they were
dealing at arm's length. Mr. Lacasse had previously (in
1994) redeemed a portion of the claim that the appellant Dufour
had transferred to his spouse. Mr. Lacasse wished to
continue in the venture alone. By that transaction, he assumed
all the Corporation's debts. The appellants thus incurred a
loss they now claim as a BIL, which is at issue in the instant
case.
[15] According to the Corporation's
financial statements at October 31, 1992, the
Corporation's sole assets were the unsold portion of the land
and the balance of the selling price that Taillefer owed the
Corporation. The Corporation's only income during that same
period was rental income from the subletting of the building
constructed on that land and interest income from the balance of
the selling price paid by Taillefer at the time the other portion
of the land was sold. The rental expenses represented the amount
of rent for which the Corporation had given Taillefer a guarantee
in respect of the area not leased to Roch Potvin.
[16] According to the financial statements
at October 31, 1993, the Corporation held the same assets
and produced only rental income during that period. According to
the financial statements produced by the Corporation for its
fiscal years ending on October 31, 1994, 1995 and 1996
(Exhibit I-1, Tab 5), the Corporation earned no
income in 1994 and 1995 and income whose source was not
identified of $20,000.00 in 1996. The assets for those same years
also consisted of the unsold portion of the land and the debt
payable by Taillefer at the time of the sale of the other portion
of the land as well as an account receivable for which no
explanation was given at the hearing.
[17] The architect Cayer testified,
repeating much of what the appellants had stated in their
testimony with respect to the conceptualization of the project.
His role ended after he had completed the first preliminary
plans. He said that he had considered buying shares in the
project, but he ultimately did not invest since, in his view,
there was a risk the project would take a certain amount of time
before actively starting up.
Arguments of the Parties
[18] The appellants contend that the
Corporation constituted a qualified business entitling them to a
BIL under the conditions set by paragraph 39(1)(c) of
the Act, which reads as follows:
SECTION 39: Meaning of capital gain and capital
loss.
(1) For the purposes of this Act,
. . .
(c) a taxpayer's business
investment loss for a taxation year from the disposition of any
property is the amount, if any, by which the taxpayer's
capital loss for the year from a disposition after 1977
. . .
(i) to which subsection 50(1) applies, or
(ii) to a person with whom the taxpayer was
dealing at arm's length
of any property that is
(iii) a share of the capital stock of a small business
corporation, or
(iv) a debt owing to the taxpayer by a
Canadian-controlled private corporation (other than, where the
taxpayer is a corporation, a debt owing to it by a corporation
with which it does not deal at arm's length) that is
(A) a small business
corporation,
. . .
[19] The sole point for determination is
whether the Corporation, in the year of the loss, was a small
business corporation, as required by
clause 39(1)(c)(iv)(A) of the Act.
[20] The appellants assert that that is the
case. In their written argument, they contend as follows at
pages 2 and 3:
[TRANSLATION]
We humbly submit to the Court that the evidence brought by the
appellants shows on the contrary that the Corporation did not
carry on a property rental business but that its purpose and
activity were to group together within itself automotive services
companies to enable those companies to achieve savings and
enhance their efficiency by pooling a number of services
(administrative, accounting, advertising, customer reception and
so on) and equipment (lifts, lubrication and oil-changing
devices, painting, body work tires, windows, etc.). The evidence
showed that the Normandie Jeep Eagle dealer (property of one of
the corporation's shareholders) and the Lada dealer shared
services and equipment in the way intended by the
corporation.
The corporation's officers undertook significant planning
and made many efforts to carry out the corporation's
objectives. In material terms, plans were prepared for
construction of the first phase of the project, development of
the land and so on. In other areas, the work was planned at
length and steps were taken to implement the corporation's
mission first and to solve the problems that emerged thereafter
as a result of the inability of the group of shareholders and
officers to provide the additional guarantees requested by the
lending institution because of the economic crisis it
apprehended.
The shareholders and officers, including the appellants, not
only devoted considerable time and effort to meet the
corporation's objectives but also invested significant
amounts of money according to their means.
The corporation did not lease properties to third parties; it
owned no properties for lease. It earned some income from
subletting a lease that it had been required to take back when it
sold the first phase of the project to the Taillefer group. One
stream of that sublease income (approximately $40,000.00) came
from Canada Post, which had subleased the premises for the length
of the strike by its employees. We humbly submit that that
unexpected and incidental income cannot vitiate the
corporation's purpose. The Lada dealership also occupied the
premises on which the corporation guaranteed the rent to the
owner Taillefer. The income earned from that transaction was
modest and, like the previous income, was used to alleviate to
some degree the corporation's obligations.
In addition, all the corporation's assets were used in its
business. Even the hypothec of $310,000.00 payable by the
Taillefer group as the balance of the selling price of a portion
of the land was used by the business and had been given as
security to the corporation's financial institution,
replacing the hypothec that the banking institution had lost on
the portion of the land that was sold.
Even the portion of the land sold to the Taillefer group and
the building that Taillefer built and which constituted the first
phase of the project was consistent with the initial concept of
development put forward by the corporation. The overall project
launched by the corporation could still be realized with the
Taillefer group, if all the conditions were met.
The evidence also showed that, despite the economic crisis
that hit the corporation hard (bankruptcies of
Rock Dompierre, Roch Potvin, Jeep Eagle dealership, and
Lada; the Caisse Desjardins' refusal to provide financing),
the corporation continued looking for partners in the automotive
and finance fields. In the circumstances, however, the
corporation also decided to sell the remaining portion of the
land at a profit.
The Supreme Court attaches considerable importance to the
taxpayer's intention. It even speaks of subjective intention.
This is the case in Stewart v. Canada, a judgment
rendered on May 23, 2002, . . . . The
intention of 170663 Canada Inc. and its shareholders and officers
in this case was clearly to organize a pool of goods and services
of automobile-related businesses. The intention was not at all to
carry on a property rental business.
[21] In their written argument, the
appellants also relied on the decisions in Klein v.
R., [2001] 3 C.T.C. 2200 (T.C.C.); Turner v.
R., [2000] 3 C.T.C. 460 (F.C.A.); Vogel v.
R., 96 DTC 1321 (T.C.C.); and Brown v. R.,
96 DTC 6091 (F.C.T.D.) in concluding that the fact that the
Corporation's objectives could not be fulfilled because of
unfavourable economic conditions in no way altered the
Corporation's primary purpose of operating a business related
to the automobile business. According to the appellants, the
Corporation was a qualified corporation within the meaning of
paragraph 39(1)(c) of the Act.
[22] For her part, the respondent argues not
that the Corporation was a property rental corporation but that
it never began operating an active business or, at the very
least, that it did not constitute a small business corporation
since all or substantially all of the fair market value of its
assets were not attributable to assets that were used principally
in an active business, as required by the definition of
"small business corporation" in subsection 248(1)
of the Act, which reads as follows:
ARTICLE 248: Definitions.
(1) In this Act,
. . .
"small business
corporation"¾"small business
corporation", at any particular time, means, subject to
subsection 110.6(15), a particular corporation that is a
Canadian-controlled private corporation all or substantially all
of the fair market value of the assets of which at that time is
attributable to assets that are
(a) used principally in an active business
carried on primarily in Canada by the particular corporation or
by a corporation related to it,
(b) shares of the capital stock or indebtedness of one
or more small business corporations that are at that time
connected with the particular corporation (within the meaning of
subsection 186(4) on the assumption that the small business
corporation is at that time a "payer corporation"
within the meaning of that subsection), or
(c) assets described in paragraphs (a) and
(b),
including, for the purpose of paragraph 39(1)(c), a
corporation that was at any time in the 12 months preceding that
time a small business corporation, and, for the purpose of this
definition, the fair market value of a net income stabilization
account shall be deemed to be nil;
[23] In the respondent's view, the
rental income generated by the Corporation merely constituted
very incidental income, not in any way active business income.
Counsel for the respondent contends that the appellants'
project always remained at the project stage because the
structure of the projected business was never put in place. The
respondent contends that, after the land was purchased in 1990,
the elements on which the project was based collapsed. The loan
for construction of the building was not granted, one of the
investors had to withdraw at the outset (in July 1990), the
Corporation had to sell a substantial portion of the land to
Taillefer, which financed the construction of the building,
although it refused to become a partner in the Corporation, and
the Corporation emerged from that with a small portion of the
land and a hypothec claim given by Taillefer when the other
portion of the land was sold. Shortly thereafter, another
investor went bankrupt, and then Taillefer went into bankruptcy,
as a result of which the project remained inactive. The
respondent contends that all the steps taken, such as the
acquisition of the land and the making of the preliminary plans,
were merely intended to bring together the basic elements of the
structure of a new business, which was never actually put in
place. Counsel contends that the expenses relating to preliminary
stages in establishing a business that does not exist do not give
rise to a business loss if those steps do not go beyond the
project stage (see Samson et Frères Ltée v.
Canada, [1995] T.C.J. No. 1385 (Q.L.)).
[24] The respondent submits that the
Corporation did not begin any activity giving rise to business
income. The purpose of all its activities was to establish the
structure of the business itself, which ultimately never saw the
light of day. Moreover, it was Taillefer, not the Corporation,
that constructed the building. Taillefer was not a partner in the
Corporation. It is difficult in the circumstances to contend that
the Corporation had commenced the process of operating a business
(see Goren v. Canada, [1997] T.C.J. No. 391
(Q.L.)).
[25] Lastly, counsel for the respondent
contends that the recent judgment by the Supreme Court of Canada
in Stewart v. Canada, 2002 S.C.C. 46, [2002]
S.C.J. No. 46 (Q.L.), in no way alters the point at issue
here. The point for determination in the instant case is whether
the Corporation had started the business and, if so, whether that
business was active. According to counsel for the respondent,
Stewart deals with the tests for determining whether there
is a source of income. Here, it is undisputed that there was a
source of income. It is the respondent's view that the
Corporation produced income from property, not income from an
active business, as a result of which it does not qualify for the
purposes of the BIL.
Analysis
[26] First of all, I agree with counsel for
the respondent that Stewart, supra, cannot assist
the appellants in the instant case. In that case, the Supreme
Court of Canada established that "in order to determine
whether a particular activity constitutes a source of income, the
taxpayer must show that he or she intends to carry on that
activity in pursuit of profit and support that intention with
evidence. The purpose of this test is to distinguish between
commercial and personal activities..." (see paragraph 5
of Stewart).
[27] That approach based on the
taxpayer's intention serves above all to determine whether
the taxpayer has a source of income consisting either of a
business or of a property for the purpose of computing income, as
defined in section 9 of the Act. Moreover, the
Supreme Court of Canada also referred to the fact that
"business income is generally distinguished from property
income on the basis that a business requires an additional level
of taxpayer activity" (see Stewart,
paragraph 51).
[28] Thus, in the instant case, the
respondent does not contend that the Corporation did not have a
source of income. The Corporation in fact reported rental and
interest income. What the respondent contends in this case is
that the Corporation did not qualify as a small business
corporation within the meaning of subsection 248(1) of the
Act for the purposes of converting a capital loss to a BIL
in accordance with paragraph 39(1)(c) of the
Act. I therefore reject the appellants' argument that
the mere intention to operate a business is sufficient to qualify
the Corporation as a small business corporation for the purposes
of deducting a BIL.
[29] In the instant case, the point for
determination is whether the Corporation operated or had
previously operated an active business in the 12 months
before the appellants disposed of the hypothec claim they had on
the Corporation in December 1996.
[30] In my view, the appellants failed to
show that the commercial structure of a business had taken shape
at any time, as was the case, for example, in M.N.R. v.
M.P. Drilling Ltd., 76 DTC 6028, in which
Judge Urie considered in obiter the question of when a
corporation begins operating a business.
[31] In M.P. Drilling Ltd., it was
held that a corporation constituted for the purpose of marketing
liquefied natural gas, which had begun negotiations on markets
and supply and conducted technical studies through consultants,
could be considered as having commenced its business operations
at that moment. The Court considered the fact that the company
was already in existence and had done everything that any new
business normally had to do to market its merchandise. The Court
also considered the ongoing efforts to make available to clients
the company hoped to attract by its promotional campaign the
products it hoped to obtain from its suppliers through
negotiations. All this, in Judge Urie's view,
constituted commercial activity relating to the existence of a
business. In M.P. Drilling Ltd., however, it must be
emphasized that the company had begun talks with a number of
suppliers and potential foreign clients, had opened its own
office and hired its first employees, and had hired a full-time
general manager to develop a market and negotiate with actual and
potential suppliers. Thus, in the Federal Court's view, there
was a structure, a market and products, and thus a business. Even
though the operation had not begun to produce income, it could be
said that the process of operating a profit-making entity had
commenced (see Goren, supra, paragraph 9).
[32] A similar question was raised in
Hudon v. Canada, 2001 F.C.A 320; [2001] F.C.J.
No. 1616 (Q.L.). Although land, buildings and hydro-electric
assets had been transferred to the corporation in question in
1969, it was held that that corporation had not begun to operate
a business up until a first market study was commissioned in 1978
to determine whether it could proceed to develop a waterfall for
the purpose of supplying power. The shareholders of the
corporation had previously prepared a business plan for the
company, which involved the sale of lots, some of which were
moreover sold. Subsequently, starting in 1978, extensive efforts
were made to promote the development of the hydro-electric
potential. It was therefore held that a business was operated
from that point on, even though satisfactory arrangements had not
yet been made respecting the price of the sale of
electricity.
[33] In the instant case, the appellants
prepared a preliminary plan in an attempt to develop a business
that offered various services in the automotive field. The
Corporation had been created for that purpose and land had been
bought. However, the only activities carried on for the
Corporation consisted of the production of preliminary sketches,
supported by a construction progress report, but for which no
contract had been entered into. The architect Cayer moreover
was not paid by the Corporation but by the
appellant Boulanger, who considered the payment as an
advance to the Corporation. Although the appellants obtained a
building permit, the Corporation had no employees or office and
no market or profitability study had been conducted.
[34] I agree with counsel for the respondent
that the elements essential to the project's implementation
collapsed even before the project saw the light of day. The
Corporation did not obtain the necessary financing to start its
project, and the Corporation was unable to conduct any major
transaction with respect to the type of business it was supposed
to carry on. No sufficient organizational structure was
established that could enable the Corporation to commence
activities relating to the operation itself, such as looking for
suppliers, developing markets for products, and looking for the
necessary labour. All this simply did not exist and, in that
sense, it is hard to conceive, as stated in Samson et
Frères Ltée, supra, that a business had begun
even before those essential elements relating to the structure of
such a business were brought together.
[35] Moreover, the Corporation transferred
most of its land in 1990 to Taillefer, which constructed a
building in accordance with its own building plan to house an
automobile dealership. Taillefer refused to take shares in the
Corporation, and the appellants cannot claim that their project
began with the construction of that building. That was not their
project but indeed the project of Taillefer, which had no
interest in the Corporation. It is difficult to claim that the
Corporation actively operated an automotive centre in 1996, when
the only building constructed on the land purchased for that
purpose did not even belong to the Corporation (see on the
subject Goren, supra). In my view, the Corporation
was, to all intents and purposes, merely an inactive corporation
without the capital needed to implement the automotive services
project it intended one day to operate.
[36] In that sense, it cannot be said that
the Corporation carried on an active business and thus that it
was a small business corporation at the time the appellants
disposed of their claims in the Corporation in 1996. That is an
essential condition set by paragraph 39(1)(c) and
subsection 248(1) of the Act for entitlement to
deduct a BIL and that condition was not met in the
circumstances.
[37] Furthermore, the other decisions to
which the appellants referred in their written argument also fail
to support them. They are all decisions on specific cases the
facts of which distinguish them from one another.
[38] In Klein, supra, the
point for determination was whether a corporation had ceased to
operate a business, not, as in the instant case, whether a
business had commenced doing business. The organizational
structure of the business was already in place, and it had to be
decided whether the operations were still being carried on
actively, which was demonstrated in the circumstances of that
case. In Turner, supra, the issue was whether it
was reasonable to expect, at the end of a taxation year, that a
corporation would be dissolved or wound up and would not begin to
operate a business, for the purpose of determining whether there
was a disposition of a share of that corporation in accordance
with clause 50(1)(b)(iii)(D) of the Act. That
same question does not arise here since it was admitted that a
claim was disposed of to a person dealing at arm's length,
thus ruling out the application of section 50 of the
Act.
[39] In Vogel, supra, the
evidence showed that, in installing an office and hiring staff,
the corporation in question had begun to operate an active
business. That case, which was heard under the informal
procedure, differs from the instant case in its factual
situation.
[40] Lastly, in Brown, supra,
the point at issue was whether the taxpayer had advanced money to
a corporation of which he was a shareholder in order to gain or
produce income from a business or property for the purposes of
subparagraph 40(2)(g)(ii) of the Act (which
determines whether the loss incurred may be considered nil). Once
again, that is not the question I must ask myself here since the
capital loss has been recognized.
[41] I therefore find that none of those
cases is relevant in deciding the instant case.
[42] Accordingly, I will confirm the
assessments made by the Minister for both appellants having
regard to the refusal to consider as a BIL the capital loss that
each incurred, that is, $140,143.83 for Mr. Boulanger and
$63,233.33 for Mr. Dufour, during the 1996 taxation
year.
Decision
[43] The appeals of Claude Boulanger
are allowed for 1995 and 1996 merely to allow him the mining and
rental losses, which were conceded by the respondent in her
Amended Reply to the Notice of Appeal. In all other respects, the
assessments remain unchanged. The appeals of Pierre Dufour
from the assessments made for the 1996 and 1997 taxation years
are dismissed.
[44] The respondent is entitled to her
costs. However, since the appeals were heard on common evidence,
costs will be limited to those that would be applicable in a
single appeal.
Signed at Ottawa, Canada, this 4th day of July 2002.
J.T.C.C.
Translation certified true
on this 23rd day of September 2003.
Sophie Debbané, Revisor
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