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Indeed the applicant had properly filed Notices of Objection to reassessment on two previous occasions: February 23, 1979 and October 2, 1979 and it is most unlikely — particularly since Mr Mulvihill had been retained by the applicant in March 1980 and had at the time the benefit of legal counsel — that the applicant was unable to appreciate the significance of the 90-day time limit in which to file its Notices of Objection. ... It would have been a simple matter and indeed a normal procedure for the applicant (or either one of its officers) to file the Notices of Objection or alternatively to inform the accountant and the legal advisor — who had been retained to assist the applicant with its tax problems — as soon as the Notices of Assessment had been received. This the applicant failed to do and Mr Mulvihill became aware of the Notices of Reassessment in October 1981 — some five and a half months after that, on December 8, 1981. ...

This counter-offer was not accepted by N & Z Investments Limited. 18. ... Capital Gain $ 2,926. Taxable Capital Gain $ 1,463. The taxable capital gain was reported for tax purposes as follows: (a) Donato Romano $648. (44%) (b) Gilda Gabriele $163. (11.2%) (c) Emilia Gabriele $163. (11.2%) (d) Elisa Latini $163. (11.2%) (e) Marie Latini $ 54. (3.7%) (f) Max Glassman $109. (7.5%) (g) Pietro Ciccocelli $163. (11.2%) 21. ... Whether an offer to purchase was received and a counter offer made by the appellants in 1970 is not material to the issue unless a secondary intention of selling the property — if the original plan were to fail — can be clearly shown to have existed at the time the property was acquired and that the sale of the property had been a motivating factor in their acquisition of the land. ...

The evidence on the points in contention can be summarized as follows: Item (a) — Bills and receipts were submitted totalling some $2,538.23 of the $2,818.94 originally claimed. ... Item (f) — Long-distance telephone calls from home and office and pay phones were more than $12 per week according to the appellant. ... (b) Automobile expenses » $784.48 Again the $95.45 for which there are no vouchers is. disallowed, but the $363.09 which the assessor apparently found unacceptable is allowed. ...

In assessing, the Minister assumed that the appellant: — is a dealer in real estate and a land developer; — has engaged in numerous land transactions both personally and through corporations controlled by him; — controls large inventories of the land held for development and speculation; — in September 1973, together with Ronyx Corporation Limited (Ronyx) formed a corporation known as Ronleigh Properties Limited (Ron- leigh) with each party contributing $20 on account of 20,000 common shares each, which number of common shares (40,000) constituted the entire authorized share capital of the corporation. ... Contentions For the appellant: — The transaction was not an adventure in the nature of trade (a sale of land), disguised as a sale of shares, but a legitimate sale of a 50% interest in an ongoing business. ... There was no intention on the part of — or at least a very secondary intention on the part of Ronleigh Proeprties Limited to derive rental income from this property. ...

Law — Case at Law — Analysis 4.01 Law The main provisions of the Income Tax Act involved in the present case are paragraphs 18(1)(a) and (e) and 20(1)(n). ...

It is also on record, Exhibit A-2, that Lane’s Bakeries Ltd expended for trays in 1966 $40,374 1967 56,981 1968 20,059 1969 — 1970 18,272 1971 — 1972 19,725 $155,411 3. ...

The first architect had a ski resort concept (fees — $750) which the appellant did not like. ... Law — Cases at Law — Analysis 4.01 Law Sections 3, 9, 38(1)(a), 39, 40 and 248(1) definition of “business”, are the provisions involved in this case. ... Mr Justice Noël in Racine, Demers & Nolin, (supra), gave a summary of the secondary intention test and I quote at 5103:... ...

He cited [supra] Front & Simcoe Limited v MNR; No 665 v MNR, Dewar v MNR; Her Majesty the Queen v Cadboro Bay Holdings Ltd; No 682 v MNR. ... Those special circumstances can be that the amount paid for the franchise is only a diminution of the price of the rent as in the case of Front & Simcoe Limited cited above. ... In the present case, the price of the rent is 11 % of gross sales, (paragraph 3.13 of the Facts) in fact more than the general rule. ...

RP/Ir Ends Mr John Howe, Chartered Accountant, now practising under his own name, but in the year under review with the firm of Winspear, Higgins, Stevenson & Co, Chartered Accountants of Niagara Falls, Ontario, had the responsibility for the preparation of the income tax returns filed with the Board. ... Howe’s evidence and cross-examination relating to the financial statements of the Company, showed that the following had been expenses charged in the accounting records of the Company: (1973)—Management salaries $115,000.00 (1974)—Retirement allowance 11,159.71 $126,159.71 That total, however, was paid out of the funds of the Company in the following manner: 1974— (To the appellant and Dell, from 1973 accrued management salaries) $ 41,766.00 1975— (To Industrial for the purchase of lAC’s for four shareholders) 84,393.71 $126,159.71 Particular reference was also made to one specific journal entry dated December 31, 1974: Dr Accrued Mgmt salaries $73,234.00 Dr Retiring allowance 11,159.71 Cr Term Deposit $65,000.00 Cr Bank $19,393.71 To record mgmt salary. According to Howe, the payment of the $41,766 in 1974 out of the 1973 accrued management salary expense of $115,000 left a balance in that account of $73,234 as at December 31, 1974 which together with the amount of the $11,159.71 expense from the year 1974 made up the total company payment of $84,393.71 (later established to have been made on February 4, 1975), for the purchase of IAC’s for the four shareholders. ($115,000 (1973) accrual) — $41,766 (1974 payment) + $11,159.71 (1974 journal entry charge) = $84,393.71 (1975 payment)) Several quotations from the cross-examination of Mr Howe dealing with this point are reproduced: Q Now, in 1973 a journal entry under December 31st was prepared which, I believe, debited management salaries and credited accrued salaries of or for $115,000, is that correct? ...

RP/Ir Ends Mr John Howe, Chartered Accountant, now practising under his own name, but in the year under review with the firm of Winspear, Higgins, Stevenson & Co, Chartered Accountants of Niagara Falls, Ontario, had the responsibility for the preparation of the income tax returns filed with the Board. ... Howe’s evidence and cross-examination relating to the financial statements of the Company, showed that the following had been expenses charged in the accounting records of the Company: (1973)—Management salaries $115,000.00 (1974)—Retirement allowance 11,159.71 $126,159.71 That total, however, was paid out of the funds of the Company in the following manner: 1974— (To the appellant and Dell, from 1973 accrued management salaries) $ 41,766.00 1975— (To Industrial for the purchase of lAC’s for four shareholders) 84,393.71 $126,159.71 Particular reference was also made to one specific journal entry dated December 31, 1974: Dr Accrued Mgmt salaries $73,234.00 Dr Retiring allowance 11,159.71 Cr Term Deposit $65,000.00 Cr Bank $19,393.71 To record mgmt salary. According to Howe, the payment of the $41,766 in 1974 out of the 1973 accrued management salary expense of $115,000 left a balance in that account of $73,234 as at December 31, 1974 which together with the amount of the $11,159.71 expense from the year 1974 made up the total company payment of $84,393.71 (later established to have been made on February 4, 1975), for the purchase of IAC’s for the four shareholders. ($115,000 (1973) accrual) — $41,766 (1974 payment) + $11,159.71 (1974 journal entry charge) = $84,393.71 (1975 payment)) Several quotations from the cross-examination of Mr Howe dealing with this point are reproduced: Q Now, in 1973 a journal entry under December 31st was prepared which, I believe, debited management salaries and credited accrued salaries of or for $115,000, is that correct? ...