David Funk v. Minister of National Revenue, [1983] CTC 2262, 83 DTC 223

D E Taylor:—This is an appeal heard in Vancouver, British Columbia, on January 17, 1983, against an income tax assessment for the year 1978 in which the Minister of National Revenue rejected the appellant’s claim for an amount of $5,518.55 as an investment tax credit provided for in section 127 of the Income Tax Act. The critical portions of the notice of appeal are:

1. The taxpayer owned and operated logging trucks as a proprietor during 1977 and 1978 which were used for logging in the area of Vanderhoof, British Columbia.

2. The taxpayer was subcontracted to haul logs by E Clemmenson, a contractor of Plateau Mills Ltd, Vanderhoof, BC which regards log hauling as a logging activity.

3. As per the attached schedule of log hauling activities, off-highway miles travelled by the taxpayer’s trucks comprised 80% to 85% of the travelled miles, with virtually 100% of revenue miles being off-highway.

4. Log hauling, and in particular off-highway log hauling, is recognized as a major component of logging activity, both by the logging and sawmill industry in general and by various Loggers Associations specifically.

5. The taxpayer was and continues to be a member of the Northern Independent Loggers Association.

6. Logging was a designated activity for purposes of the investment tax credit, as specified in paragraph 127(10)(c)(vii) of the Income Tax Act when the taxpayer acquired his logging equipment.

15. ...

The taxpayer was engaged in the transportation of logs which is one facet of logging operations, just as a feller buncher or a powersaw fells the trees, a rubber skidder or crawler tractor transports the trees, and a loader loads the trees onto trucks, all of which are also facets of the overall logging operations. We submit that the taxpayer’s log hauling was both transportation and logging With transportation of the logs being one step in the logging operations.

The respondent’s position was:

(a) the Appellant was not in the business of “logging” for the purpose of Section 127(10) (c) (vii) of the Income Tax Act;

(b) the Appellant was in the business of hauling or transporting logs only;

The only point at issue before the Board is whether the activity of the appellant falls within the appropriate definition of “logging”. The situation cannot be distinguished from the comments provided in Lor-Wes Contracting Ltd v Her Majesty The Queen, [1982] CTC 415; 83 DTC 5016, and the appeal is dismissed.

Appeal dismissed.