Bonner,
TCJ:—In
June
of
1970
the
appellants
jointly
acquired
a
rectangular
25.12-acre
parcel
of
land
situated
at
Pickering,
Ontario.
The
improvements
on
the
land
consisted
of
a
modernized
older
home,
a
barn,
horse
shelter
and
tool
shed.
The
buildings
were
clustered
at
the
rear
of
the
property
and
the
only
access
thereto
was
by
a
driveway
of
some
1,100
feet
in
length
from
the
public
sideroad
to
the
residence.
The
property
was
expropriated
by
the
Crown
in
Right
of
Canada
for
purposes
of
a
proposed
airport.
The
Minister,
in
assessing
tax
for
the
appellants’
1978
taxation
years,
included
taxable
capital
gains
in
the
income
of
each
appellant.
He
computed
the
gains
as
follows:
|
Total
Proceeds
of
Disposition
|
|
$178,938.43
|
|
Less:
proceeds
applicable
to
principal
residence
|
|
|
and
2
acres
|
|
93,003.96
|
|
Proceeds
of
23.12
acres
and
buildings
thereon
|
|
$
85,934.47
|
|
Less:
Adjusted
Cost
Base
of
25.12
acres
|
$75,000.00
|
|
|
less
adjusted
cost
base
of
principal
residence
|
|
|
and
2
acres
|
38,000.00
|
(37,000.00)
|
|
Capital
gain
on
23.12
acres
|
|
$
48,934.47
|
|
Taxable
Capital
Gain
(one-half)
|
|
24,467.23
|
|
Appellant’s
share:
one-half
|
|
12,233.61
|
The
appellants
appealed
from
the
assessments.
The
appeals
were
heard
together
on
common
evidence.
At
the
commencement
of
the
hearing
the
Minister
advised
the
Court
that
he
consented
to
judgment
allowing
the
appeals
and
referring
the
assessments
back
for
reconsideration
and
reassessment
on
the
basis
that
the
taxable
capital
gain
of
each
of
the
appellants
was
to
be
computed
as
follows:
|
Principal
|
|
|
Residence
Land
|
Barns
|
Total
|
|
(2
acres)
(23.12
acres)
|
|
|
Proceeds
|
$74,000.00
$50,392.36
$18,000.00
$142,392.96
|
|
Disturbance
|
7,741.85
|
|
|
Interest
5%
|
|
|
(para
33(3)(b)
|
|
|
Expropriation
Act)
|
7,930.92
|
5,400.78
|
1,929.27
|
|
|
Total
|
89,672.77
|
55,793.14
|
19,929.27
|
|
|
Deduct
ACB
|
|
|
(Dec
31,
1971)
|
38,000.00
|
22,000.00
|
15,000.00
|
75,000.00
|
|
33,793.14
|
4,929.27
|
|
|
Capital
Gain
|
$38,722.41
|
|
|
Taxable
Capital
Gain
|
$19,361.20
|
|
|
One-Half
Taxable
Capital
Gain
|
9,680.60
|
|
It
will
be
seen
that
the
Minister
treated
the
principal
residence
as
including
two
acres
of
land.
The
Minister’s
counsel
stated
that
the
two
acres
were
intended
to
include
one
acre
of
land
subjacent
to
the
house
and
one
acre
for
access.
The
appellants’
first
contention
was
that
the
entire
property
fell
within
the
definition
of
“principal
residence”
laid
down
by
paragraph
54(g)
of
the
Income
Tax
Act.
The
relevant
portion
of
that
definition
1s:
.
.
.
the
“principal
residence”
of
a
taxpayer
for
a
taxation
year
shall
be
deemed
to
include
.
.
.
the
land
subjacent
to
the
housing
unit
and
such
portion
of
any
immediately
contiguous
land
as
may
reasonably
be
regarded
as
contributing
to
the
taxpayer’s
use
and
enjoyment
of
the
housing
unit
as
a
residence,
except
that
where
the
total
area
of
the
subjacent
land
and
of
that
portion
exceeds
one
acre,
the
excess
shall
be
deemed
not
to
have
contributed
to
the
individual’s
use
and
enjoyment
of
the
housing
unit
as
a
residence
unless
the
taxpayer
establishes
that
it
was
necessary
to
such
use
and
enjoyment;
Mr
Watson
testified
that
the
property
was
purchased
as
a
retirement
home.
He
stated
that
it
was
the
acreage
that
appealed
to
him.
The
appellants
planned
to
occupy
themselves
by
conducting
a
horse-boarding
operation.
The
argument
that
the
surrounding
land
was
necessary
having
regard
to
the
intended
use
of
the
property
ignores
the
statutory
definition.
The
excess
land
must
be
shown
to
be
necessary
to
the
use
and
enjoyment
of
the
house
“as
a
residence”.
The
definition
cannot
be
treated
as
if
the
words
“as
a
residence”
have
no
meaning.
In
this
regard
I
refer
to
Betty
Madsen
v
MNR,
[1980]
CTC
3022;
81
DTC
1.
Mr
Watson
stated
that
both
when
the
property
was
acquired
and
when
it
was
expropriated
it
could
not
be
severed.
He
referred,
I
assume,
to
the
prohibition
contained
in
section
29(2)
of
the
Planning
Act,
RSO
1970,
c
349.
The
argument
seemed
to
be
that
in
order
to
use
the
house
and
in
particular
to
have
access
to
it
the
whole
parcel
was
necessary
because
it
was
not
possible
to
convey
the
house
and
a
strip
of
land
required
for
the
driveway
without,
at
the
same
time,
conveying
the
rest
of
the
parcel.
In
my
view
the
definition
of
“principal
residence”
contained
in
paragraph
54(g)
is
such
that
considerations
as
to
what
can
lawfully
and
effectively
be
conveyed
are
irrelevant.
The
amount
of
land
which
contributes
to
the
use
and
enjoyment
of
a
housing
unit
is
not,
by
paragraph
54(g)
of
the
Income
Tax
Act,
made
to
depend
on
what
can
lawfully
be
bought
and
sold.
Next,
it
was
argued
on
behalf
of
the
appellants
that
the
applicable
zoning
by-law
made
the
entire
parcel
necessary
to
the
lawful
use
of
the
house.
The
by-law
entered
in
evidence
does
not
support
that
contention.
Theminimum
lot
area
laid
down
by
section
6.2.1
of
the
by-law
is
.8
hectares.
That
works
out
to
about
two
acres.
It
will
be
seen
that
the
Minister,
both
by
the
assessments
in
issue
and
in
the
consent
which
he
gave,
treated
two
acres
as
the
land
component
of
the
principal
residence.
Next
it
was
contended
that
the
Minister
erred
in
including
interest
received
in
the
computation
of
proceeds
of
disposition.
Assuming
that
the
Minister
did
so
err,
that
error
operated
to
reduce
the
amount
of
tax
assessed.
If
the
interest
had
not
been
included
in
the
computation
of
proceeds
of
disposition
then
it
would
have
been
included
in
the
computation
of
income.
This
Court
has
no
jurisdiction
to
purport
to
allow
an
appeal
and
refer
the
assessment
back
with
a
direction
which
will
result
in
the
assessment
of
an
increased
amount
of
tax.
Finally,
it
was
contended
that
the
expropriation
compensation
included
an
amount
paid
by
virtue
of
subsection
24(6)
of
the
Expropriation
Act,
RSC
1970,
c
16
(1st
Supp),
and
that
the
amount
so
paid
should
be
allocated
to
the
principal
residence
alone.
No
evidence
was
adduced
in
support
of
the
submission
that
a
subsection
24(6)
amount
was
included
in
the
compensation.
In
those
circumstances
I
am
unable
to
conclude
that
the
Minister
erred.
For
the
foregoing
reasons
the
appeals
fail,
save
to
the
extent
conceded
by
the
Minister
at
the
outset.
Judgment
will
go
accordingly.
Appeal
allowed
in
part.
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