Hébert – Tax Court of Canada finds that a corporation whose only activity was unsuccessful efforts to sell its remaining equipment was carrying on an active business

The market for the business of the taxpayer’s corporation (“Radio Progressive “) of selling and repairing radio telecommunication equipment had virtually disappeared by 2007, so that from that time on, it did not make any sales, and essentially its only activity related to the efforts of the taxpayer (Mr. Hébert) to sell off its remaining stock of equipment. It was dissolved in August 2011.

Ouimet J found that Radio Progressive qualified as a “small business corporation” at some point within the preceding 12 months, so that Mr. Hébert’s loss on its dissolution qualified as a business investment loss. Since the stock of unsold equipment (which was essentially its only asset) related to its previous commercial activity of selling (and repairing) such equipment, Mr. Hébert’s efforts to sell that stock represented the continued carrying-on of that business, notwithstanding that no sales resulted.

Neal Armstrong. Summary of Hébert v. The Queen, 2018 CCI 48 under s. 248(1) – small business corporation.