Murton v. R., [1998] 1 CTC 3036

Watson D.J.T.C.:

This appeal, dealing with the 1994 taxation year, was heard in Toronto, Ontario, on August 5, 1997 under the Informal Procedure.

In computing income for the 1994 taxation year, the Appellant claimed a taxable capital gains in the amount of $15,504.62 and a capital gains deduction in the amount of $23,490.82. In assessing the Appellant for the 1994 taxation year, the Minister of National Revenue (the “Minister”) revised the amount of taxable capital gains to $13,626.00 and the capital gains deduction to $13,626.00. The Minister made the following assumptions of fact in his assessment:

(a) in the 1993 taxation year, the Appellant had a net rental loss of $11,259.00;

(b) in the 1993 taxation year, the Appellant had carrying charges and interest expenses of $211.00;

(c) in the 1994 taxation year, the Appellant had a net rental income of $46,177.00, calculated as follows:

Partnership Losses	($2,411.)
Recapture C.C.A.	48,588.
$46,177.

(d) in the 1994 taxation year, the Appellant had carrying charges and interest expenses of $174.00;

(e) in 1994 the Appellant had a cumulative net investment loss of nil;

(f) the Appellant had taxable capital gains of $13,626.00 in the 1994 taxation year;

(g) the Appellant had an annual gains limit for the 1994 taxation year of $13,626.00.

At the hearing of the appeal, the Appellant admitted all the facts in paragraphs (a) to (g). The Appellant contends that he had a cumulative net investment loss (“CNIL”) balance of $13,997.00 in the 1993 taxation year which did not permit a capital gains deduction in the amount of $7,984.00 and, therefore, he should be permitted to deduct the $7,984.00 as a capital gains deduction in the 1994 taxation year. Since the facts are not in dispute, the issue to be decided is whether the Appellant is entitled to a capital gains deduction in 1994 in excess of his taxable capital gains in the amount of $13,626.00.

The applicable law in this appeal is set out in sections 3, 38 and 110.6 of the Income Tax Act, and more particularly in paragraph 110.6(3)(b). The maximum amount of capital gains deduction available to the Appellant in the 1994 taxation year was $13,626.00, representing the taxable gains realized and the annual gains limit available.

The appeal is dismissed.

Appeal dismissed.