Brulé
T.C.J.:
This
is
an
appeal
by
the
appellant
from
an
assessment
and
reassessment
in
which
the
Minister
of
National
Revenue
(the
“Minister”)
alleged
that
the
appellant
had
made
a
profit
from
the
sale
of
his
residential
property
of
$48,000
over
and
above
the
actual
worth
of
the
property.
Facts
On
or
about
the
20th
day
of
February,
1990,
property
known
as
1214
Plateau
Drive,
North
Vancouver,
British
Columbia,
was
sold
by
Arthur
W.
King
and
Setsuko
King
to
Shema
Information
Centre
Canada
Ltd.
for
$370,000.
At
the
date
of
sale
the
subject
property
was,
and
had
been,
for
twelve
years
the
principal
residence
of
Arthur
W.
and
Setsuko
King.
On
the
sale
date
of
the
subject
property,
Arthur
W.
King
held
positions
of
office
with
Shema
Holdings
Canada
Ltd.
and
a
subsidiary,
Shema
Properties
Canada
Ltd.
and
Setsuko
King
held
office
with
the
purchaser,
Shema
Information
Centre
Canada
Ltd.
In
so
reassessing
the
appellant,
the
Minister
relied,
inter
alia,
on
the
following
assumptions
in
his
Reply:
-at
all
material
times
the
appellant
was
president
of
Shema
Holdings
Canada
Ltd.
(“SHCL”)
and
Shema
Properties
Canada
Ltd.
(“SPCL”);
-at
all
material
times
Shema
Information
Centre
Canada
Ltd.
(“SICCL”)
and
SPCL
were
wholly
owned
subsidiaries
of
SHCL,
and
the
appellant
and
those
corporations
did
not
deal
with
one
another
at
arm’s
length;
-at
all
material
times
the
appellant’s
spouse,
Setsuko
King
(“Ms.
King”)
was
an
officer
of
SICCL;
-the
property
had
not
been
listed
for
sale
on
the
open
market
prior
to
being
purchased
by
SICCL.
All
of
the
above
assumptions
were
accepted
as
true
facts.
Analysis
In
addition
to
the
facts
above
it
was
necessary
to
have
valuations
of
the
property
to
impose
the
assessment.
These
are
not
discussed
as
the
Court
does
not
believe
they
are
necessary.
As
well
evidence
presented
claimed
that
the
appellant
reported
a
$50,000
bonus
from
SPCL
as
T4
income
in
his
1990
tax
return,
that
the
remaining
$50,000
of
the
bonus
was
received
by
the
appellant
from
SICCL
by
virtue
of
SICCL
paying
over
and
above
the
fair
market
value
or
excess
(“Excess”)
and
that
the
payment
by
SICCL
of
the
Excess
was
a
benefit
received
by
the
appellant
in
his
1990
taxation
year
in
respect
of,
in
the
course
of,
or
by
virtue
of
his
office
or
employment
with
SICCL.
He
was
not
an
officer
of
SICCL.
It
was
obvious
that
the
bonuses
discussed
had
nothing
to
do
with
the
sale
of
the
property,
at
least
they
were
not
properly
contested
by
the
Minister,
while
a
suitable
explanation
was
given
by
the
appellant.
The
important
fact
in
the
case
comes
in
the
argument
by
counsel
for
the
Minister
wherein
he
said
that
if
the
Court
finds
that
there
was
an
arm’s
length
sale
then
there
was
no
case
for
the
Justice
Department
(“Justice”).
In
this
appeal
evidence
was
given
that
the
appellant’s
spouse,
Setsuko
King,
was
an
officer
of
SICCL,
spoke
Japanese
and
negotiated
with
her
employer
over
the
purchase
price
of
the
property.
Originally
the
appellant
believed
he
could
get
$375,000
but
settled
for
$370,000
despite
his
valuation
of
a
lower
figure.
In
view
of
this
the
Court
finds
there
was
an
arm’s
length
purchase
and
sale
and
therefore
there
is
no
case
for
Justice.
The
appeal
is
allowed
with
costs.
Appeal
allowed.
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