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FEDERAL COURT                                                       SOLICITORS OF RECORD DOCKET:                                                    T-601-01 STYLE OF CAUSE:                                    IN RE THE EXCISE TAX ACT- AND- IN RE ONE OR MORE ASSESSMENTS BY THE DEPUTY MINISTER OF REVENUE OF QUEBEC PURSUANT TO THE EXCISE TAX ACT Plaintiff and ALAIN DEZIEL, FIDUCIE AVILLA, REPRESENTED BY TRUSTEES ALAIN DEZIEL AND CHANTAL GARCEAU, CHAMPLAIN REGISTRATION DIVISION REGISTRAR AND TROIS-RIVIÈRES REGISTRATION DIVISION REGISTRAR Defendants WRITTEN MOTION CONSIDERED IN MONTRÉAL WITHOUT APPEARANCE BY PARTIES REASONS FOR ORDER BY: RICHARD MORNEAU, PROTHONOTARY DATED:                                                       October 16, 2003 WRITTEN SUBMISSIONS: Ghislaine Thériault                                           for the plaintiff Stéphan Charles-Grenon                                 for the defendants SOLICITORS OF RECORD: Veillette & Associés                                       for the plaintiff Sainte-Foy, Quebec Charles-Grenon & Dion                                  for the defendants Shawinigan, Quebec ...

While beyond my jurisdiction, I would take the liberty of suggesting that either the Ombudsman should make a recommendation to the Provincial Government to refund the Plaintiffs overpayment or provide the Plaintiff with clear reasons as to why such a recommendation is considered inappropriate. ...

“start-up costs... cannot be considered as the basis for an alternative ground of decision.” ...

However, we considered the fact that you had significant equity in properties that you owned during the years 1991 to 2000 and could use this equity to meet your tax obligations and to cover the negative cash flows. ... As well, when it considered whether she had equity in her real estate holdings, CRA relied, in part, on its own appraised values of the Applicant’s properties ... The Decision alone has been considered on the issue of the adequacy of the reasons and has been found wanting ...

The defendant, on his mother’s death, considered converting the building into one big family home. ... I deal first with the defendant’s contention that, in effect, the whole of the land and premises ought to be considered as his principal residence. ... (g) ‘principal residence” of a taxpayer for a taxation year means a housing unit. a leasehold interest therein. or a share of the capital stock of a co-operative housing corporation. owned, whether jointly with another person or otherwise. in the year by the taxpayer. if the housing was. or if the share was acquired for the sole purpose of acquiring the right to inhabit a housing unit owned by the corporation that was, (1) ordinarily inhabited in the year by the taxpayer, his spouse or former spouse, or a child of the taxpayer who, during the year, was wholly dependent upon him for support and was a person described in subparagraph 109(1)(d)(i), (ii) or (iii), or (ii) property in respect of which the taxpayer has made an election for the year in accordance with subsection 45(2). except that. subject to section 54.1. in no case shall any such housing unit. interest or share. as the case may be, be considered to be a taxpayer's principal residence for a year (iii) unless it has been designated by him in prescribed manner to be his principal residence for that year and no other property has been so designated by him for that year, or (iv) by virtue of subparagraph (ii). if by virtue of that subparagraph the property would, but for this subparagraph. have been his principal residence for four or more previous taxation years. and for the purposes of this paragraph the “principal residence” of a taxpayer for a taxation year shall be deemed to include. except where the property consists of a share of the capital stock of a co-operative housing corporation, the land subjacent to the housing unit and such portion of any immediately contiguous land as may reasonably be regarded as contributing to the taxpayers use and enjoyment of the housing unit as a residence. except that where the total area of the subjacent land and of that portion exceeds one acre. the excess shall be deemed not to have contributed to the individual's use and enjoyment of the housing unit as a residence unless the taxpayer establishes that it was necessary to such use and enjoyment; While the building was not quite a duplex in its construction, it served, to my mind, the same practical function. ...

The Minister of National Revenue considered this sum to be taxable in its entirety under the Income Tax Act (RSC 1952, c 148, as amended) and issued an assessment accordingly. The defendant disputed the assessment and finally convinced the Tax Review Board that $4,280.92 of the $22,954.25 he had received should not be considered remuneration from his employment and therefore did not have to be included in his income for 1975. ... There is nothing to indicate that such a specific comparison was considered by the employer. ...

Generally, however, purchasers of stocks are considered to be investors. ... At the outset, the plaintiff considered himself to be an investor when he limited his purchase to “blue chip” stocks. ... In his judgment the learned judge discussed the evidence of a Mr Escaf which he considered to be credible in view of the conduct of the appellant and the purchase and sale of securities which were obviously not of “investment grade” but of “speculative grade”. ...

., at page 443 (D.T.C. 5282-83) It is, of course, obvious that a loan made by a person who is not in the business of lending money is ordinarily to be considered as an investment. It is only under quite exceptional or unusual circumstances that such an operation should be considered as a speculation. ... Under those circumstances, the outlay made by respondent in the last year, when the speculative nature of the undertaking was even more marked than at the outset due to financial difficulties, cannot be considered as an investment... it is clear that the monies were not invested to derive an income therefrom but in the hope of making a profit on the whole transaction. ...

Whether a payment is to be considered an allowance or a maintenance under the Act, depends on the circumstances and on the effect of an agreement, when there is one. ... In The Queen v Barbara Sills, [1985] 1 CTC 49; 85 DTC 5096, Heald, J, speaking on behalf of the Federal Court of Appeal, considered whether amounts were payable on a periodic basis and said at 52: So long as the agreement provides that the moneys are payable on a periodic basis the requirement of the subsections is met. ... In Gilles St Arnaud v MNR, [1982] CTC 2697; 82 DTC 1723, the Court clearly established “that it is not necessary for alimony to continue throughout the recipient’s lifetime in order to be considered alimony.’’ ...

If they had simply sold and assigned the option to the purchasers who could then have exercised the same, there could be no doubt but that they were simply disposing of a capital asset and the profit realized would have been considered to be a capital gain. ... That case concerned the exercise of an option to purchase for the purpose of resale at a profit and in that respect resembles, to some extent, the present case, but there the Board stated ‘‘the transaction being considered herein does constitute a plunge in the waters of commerce amounting to an adventure or concern in the nature of trade to a sufficient extent to bring it within the definition of business contained in paragraph (e) of subsection (1) of section 139 of the [former] Income Tax Act.” The difference between that case and the one being considered is that, in the latter, the determination to sell was occasioned by the state of business and the subsequent sale followed the taxpayer placing the land with a real estate agent to sell. ...