Procon Mining – Tax Court of Canada finds that shares which were acquired as part of a mining contract business were capital property

A mining contractor subscribed for shares of junior mining companies as an inducement to be awarded mine development work and as an investment. It argued that because it acquired the shares in order to generate business income, therefore, they were acquired on income account.

Boyle J thought this was almost backwards from the correct test, which he articulated as:

Inventory is a property acquired or produced for resale. All property held to produce income from the business other than inventory is capital property.

Losses realized on the shares after the companies failed to proceed with the mines were capital losses - which were denied, because they were "superficial" (i.e., suspended) losses.

Neal Armstrong. Summary of Procon Mining & Tunnelling Ltd. v. The Queen, 2022 TCC 71 under s. 18(1)(b) – capital loss v. loss.