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Law — Cases at Law — Analysis 4.01 Law The main provisions of the Income Tax Act involved in the present case are 153(1)(a), 227(8), 227(9) and 227(10). ... It is really a salary, and not a gift as it is contended in the Coopers & Lybrand Limited case. ... The Board finds that the numbered company was in the same situation as Venus company in the Coopers & Lybrand Limited case. ...

Consequently, men and materials had to be carried by employees’ vehicles, including that of the appellant. 3.05 In addition to the written contract (Exhibit 1-1) which contains the following clauses: — Work outside of Quebec City: the salary remains the same and the expense allowance will be determined with the employers, — It is agreed that expense or allowance cheques will not be included in forms T4 and TP4, a verbal agreement was made setting use of the appellant’s vehicle for company purposes at $0.25 a mile. ... Mileage Total Total 1973 10,867 x 0.25¢ = $2,716.75 1974 14,633 x 0.25¢ = $3,658.25 1975 25,482 x 0.25¢ = $6,370.50 1976 11,194 x 0.25¢ = $2,798.50 3.07 In assessing the years 1973 to 1976, the respondent added the foregoing amounts. ...

The balances of loans owed by the company to the appellant, as recorded on the books and records of the company as of December 31 in each of 1972, 1973, 1974 and 1975 were as follows: 1972 $138,929.84 1973 $182,630.12 1974 $244,516.98 1975 $265,255.45 4.05 During the years 1973, 1974 and 1975 the appellant withdrew from the company the following sums, which withdrawals were not recorded in the company’s books of account: 1973 $10,921.31 1974 $12,011.80 1975 $ 8,420.00 4.06 Prior to the incorporation of the company in 1969, the appellant acquired several rental properties in Toronto’s east end. ... (S.N. p 31, lines 8 to 12) 4.12 In fact, if the appropriate entries would have been made the figures would have been as follows: SUMMARY OF THE INDEBTEDNESS OF S TOBIS INVESTMENTS LIMITED TO SAMUEL TOBIS: DECEMBER 31, 1972 — DECEMBER 31, 1975 Column 1 Column 2 Column 3 Column 4 Column 5 Balance of Increase in Amount with Net increase Correct bal the share the share held from in the com ance of the holder loan holder loan the company pany’s in company’s account on account during during the debtedness dur indebted Year Dec.31st the year the year ing the year ness on Dec. 31st 1972 $138,929.84 N/A N/A N/A $138.929.84 1973 $182,630.12 $ 43,700.28 $10,921.31 $32,778.97 $171,708.81 1974 $244,516.98 $ 61,886.86 $12,011.80 $49,875.06 $221,583.87 1975 $265,255.45 $ 20,738.47 $ 8,420.00 $12,318.47 $233,902.34 $126,325.61 $31,353.11 $94,972.50 Explanatory Notes 1. ... Law — Precedent Cases — Analysis 5..01 Law The main provision of the Income Tax Act involved in the present case is paragraphs 15(1)(a), (b) and (c) which read as follows: 15(1) Where in a taxation year (a) a payment has been made by a corporation to a shareholder otherwise than pursuant to a bona fide business transaction, (b) funds or property of a corporation have been appropriated in any manner whatever to, or for the benefit of, a shareholder, or (c) a benefit or advantage has been conferred on a shareholder by a corporation the amount or value thereof shall be included in computing the income of the shareholder for the year. sections 131, 132 and 133 of the Ontario Judicature Act, RSO 1970, c 228 were also quoted. ...

Since the incorporation of Velan Engineering Ltd the appellant has been the sole owner of its legal capital which was as follows: (a) Common shares of $100 par value, authorized, issued and fully paid 250 shares (b) Preferred shares, 5% non-cumulative, par value of $100 — authorized 2,750 shares — issued and paid 1,530 shares On December 31, 1964, the appellant sold to Canadian Aviation Electronics Ltd (hereinafter referred to as “CAE”) 50% of all his shares, that is to say, 125 common shares and 765 preferred shares, for an amount of $750,000. ... Total price $770,400.00 Less: Value of preferred shares $100 x 765 shares 76,500.00 Price for 137,500 common shares $693,900.00 Price per common share $ 5.04 In 1968 the appellant made another gift of common shares of Velan Engineering Ltd — this time to his three sons, Ivan, Peter and Thomas — and declared the value of these shares to be $5.90 each. ... The appellant, who pleaded his own case, did his utmost to show that the shares given to his son Peter had a value of only $2.80 per share and even went so far as to introduce new evidence in his written argument — which procedure, of course, is not permissible because the new alleged facts have not been proven. ...

Unreported interest of $14,083 remained ($83,372- $69,289 ($24,880 + $44,409) = $14,083) (Exhibit 1-1). ... Law — Cases At Law — Analysis 4.01 Law The provision of the Income Tax Act involved in the instant case is subsection 163(2). ... Dona Legros & Barbara M Legros v MNR, [1981] CTC 2142; 81 DTC 99; 3. ...

It would range between — that particular year it ranged between 5 and 11. ... The children, the supply — of course they are transported by buses, but the buses do not stay and I have always taken my car there in case of illness or in case of an emergency trip to the hospital. ... Law — Cases at Law — Analysis 4.01 Law The main provisions of the Income Tax Act involved in the present case are 8(1)(h), (j) and (2). ...

Whatever the appellant’s intention may have been when he acquired the wood lots, there is evidence that in 1965 and in later years the appellant decided — for whatever reason — to sell the right to cut timber on his land and thereby became involved in the timber business. ... Even if the appellant did buy the land solely for investment purposes — which, in my opinion, is far from definite — the nature of the amounts received by the appellant from the sale of timber, in the circumstances of this case, became income from a commercial source when he decided to use the property and the products of his land and began to sell timber. ... The auditor felt that the income from the timber berths — which he considered income from a business — amounted to $15,000 in each of the years under review, as indicated in the income tax returns for those years. ...

In computing his income for 1974 the appellant claimed a capital loss of $7,442, which the Minister pleaded was calculated as follows:* [1] Proceeds of Disposition $201,000 Adjusted Cost Base $196,172 Outlays & Expense 12,270 208,442 Capital Loss $ 7,442 Allowable Capital Loss as above 3,721 In making the reassessment under appeal the Minister included a taxable capital gain of $12,038, which he pleaded was calculated as follows: Proceeds of Disposition $201,000 Less: Residence and one acre of land 46,650 $154,350 Less: V-Day value of property $150,000 V-Day value of residence and one acre of land 30,650 $119,350 Gain $ 35,000 Portion of Expenses Applicable: 154,350 x 14,225 201,000 $ 10,924 Capital Gain $ 24076 Taxable Capital Gain $ 12,0381 [2] Although the notice of appeal is unclear, it became apparent at the hearing that the issues in this appeal are issues of value and allocation which required determination of: A. the V-Day value of the farm, exclusive of the value of the principal residence, including such land as falls within that term by virtue of paragraph 54(g) of the Income Tax Act; and B. the portion of the 1974 sale price attributable to the farm, exclusive of the principal residence so defined. ...

And I’d suggest that here we have a situation where he and the company were carrying on, as he individually had always carried on, and he put this company between himself and some of the public; not to leave the money-lending business — if that had been the case, he would not have continued at all — but rather, to shield himself from some of the undesirable attitudes, some legal, some non legal, with respect to that business. ... While the notices of appeal indicated a certain reliance on a second contention — that the appellant was in the business conducted by Ship’s School — counsel did not assert this perspective at the hearing. ... The circumstances cannot be equated to those described in MNR v Henry J Freud, [1968] CTC 438; 68 DTC 5279, wherein the funds loaned to the US corporation were for the •purpose — one last effort — to make the company profitable by producing the prototype car. ...

From 1971 to 1976 inclusive the activities, the expenses and the incomes of the appellant are as follows: Races Expenses Income Income 1971 15 $ 2,503 $ 300 1972 15 3,188 nil 1973 5 4,000 1,250 1974 5 12,000 500 1975 5 9,000 675 1976 5 9,000 375 He also explained that he decided to claim his 1973 loss because of the decision in Ken Huband v MNR, [1974] CTC 2001; 74 DTC 1039, in which the taxpayer, an amateur racer with less experience, was allowed his expenses as business losses, that in 1974 he was sponsored for the sum of $1,500 worth of some racing car parts, that when he has to take time off to do his racing his employer allows him to take it with pay. ...