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In assessing the appellant for its 1973, 1974, 1975 and 1976 taxation years the Respondent proceeded, inter alia, on the following assumptions of fact: (a) The Appellant is controlled by Calvin Bullock New York Ltd; (b) Since 1933, the activities of the Appellant have been the following: — Sale of shares, on an exclusive right basis, in two mutual funds corporations ie Canadian Investment Funds Ltd and Agro Fund Ltd; and — in conjunction with Calvin Bullock New York Ltd it assists Canadian Investment Fund Ltd in the management of its funds; (c) Since at least 1961, the Appellant uses its business profits to purchase Canadian Government Bonds and treasury bills which he [sic] then sells; (d) These said bonds and bills are purchased at a discount generally one year before maturity and sold a few months before maturity as evidenced by the attached schedule to be taken as included herein; (e) The profits realized on the sale of such bonds have always been considered income by the Appellant; (f) In 1976, the Appellant purchased a US Treasury Bill bearing no interest and sold it eighteen (18) days later thereby realizing a profit of $2,732.00 and a further profit of $59,748.00 resulted from the increase in value of the US dollar in relation to the Canadian dollar during the period it held the bill; (g) The detail of the income derived from Canadian bonds and treasury bills and treated as active business income by the assessments is as follows: 1973 1974 1974 1975 1975 1976 1976 Interest on bonds and bills $48,086.00 $63,923.00 $60,998.00 $58,933.00 Interest on cash deposit 5,773.00 193.00 1,445.00 795.00 Profit (loss) on sale of bonds and bills (700.00) 20,450.00 8,500.00 18,700.00 (h) For the years mentioned the Appellant claimed the deduction of the following amounts as dividend refunds: 1972 — Nil (no dividends paid) 1973 —$11,667.00 1974 — $29,333.00 1975 — $22,893.09 1976 — $27,758.37 9. ... This intention to sell has been present for the last 20 years; 7. there was always the secondary intention of reselling on a short-term period due to the possibility of the devaluation of the Canadian dollar; 8. the gain under review was easily half the income from the distribution of shares; 9. in the past the type of gain under review has been reported in the appellant’s income tax returns as being income from a business; 10. according to the Tip Top Tailors Limited v MNR, [1957] CTC 309; 57 DTC 1232, the appellant’s gain is considered to be from its normal course of conduct, consequently, it is business income; 11. in the case of MNR v Roy Louis W Spencer, [1961] CTC 109; 61 DTC 1079, the buying and selling of mortgages came to them by reason of their practice as solicitors. ...

The appellant reported its gross investment income for the years in appeal pursuant to paragraph 138(9)(b) of the Income Tax Act (“Act”),* [1] as it read at the time, by including in income such portion of its gross investment income which it considered to be applicable to the carrying on by it of its insurance business in Canada. The portion of the appellant’s gross investment income which is considered applicable to the carrying on by it of its insurance business in Canada is determined in accordance with subsections 2401(2) and (3)f of the regulations to the Act, as they read at the time, and may be calculated by the following formula: Gross investment revenue for Canadian investment fund for the year the year from all specified X Value for the year of specified Canadian assets Canadian assets The terms “Canadian assets” and “specified Canadian assets” are defined in subparagraphs 2404(l)(b) and (b.l) of the regulations to the Act as follows: (b) “Canadian asset” of an insurer means non-segregated property of the insurer that is (12)(o)(ii) and (iv) for the period ending with the year shall be determined in accordance with prescribed rules and the aggregate of taxable dividends for the purposes of each of paragraphs 138(6)(a), 138(6)(b) and 208(2)(b) shall be determined in accordance with rules prescribed for the purposes of each of those paragraphs respectively. ...

Nor is there any dispute that a corporation and its shareholders are separate entities and should be so considered in applying the law to the facts of this appeal. ... In a very comprehensive review and analysis of the words “gifts to registered charities”, as interpreted by the Courts over the years, the learned Mr Justice Muldoon concluded that if the intent as well as the wording of subparagraph 110(l)(a)(i) of the Act are considered, as indeed they must, then the basic concept of the words “gifts” and “charities” must not be restricted in any way for tax purposes but should retain the full range of meaning which is ordinarily accorded them in all other contexts. ...

The following criteria should be considered: the profit and loss experience in past years, the taxpayer’s training, the taxpayer’s intended course of action, the capability of the venture as capitalized to show a profit after charging capital cost allowance. ... One concern I have is whether or not the appellant’s employment could be considered “sideline”. ...

This argument was recently considered and rejected by the Federal Court of Appeal in Bolton v. ... Ginsberg) [2] where it had considered a similar argument in the context of subsection 152(1), which requires the Minister to examine a taxpayer’s income tax return “... with all due dispatch...”, and concluded that delay in doing so by the Minister could not lead to the result that he lost the jurisdiction to assess, with the further result that the taxpayer would enjoy a holiday from taxation for the year in question. ...

Taylor- as he then was- of the Tax Review Board considered the case of a taxpayer who had not reported certain income and, as a result, was facing penalties imposed by the Minister. ... Such professional help may be one point to be considered along with other factors such as the taxpayer’s own conduct, competence and contact in the preparation of the return; the complexity of the return; the practicality of any review; and the extent of such review before filing. ...

Section 118.4: Nature of Impairment (1) For the purposes of subsection 6(16), sections 118.2 and 118.3 and this subsection, (a) an impairment is prolonged where it has lasted, or can reasonably be expected to last, for a continuous period of at least 12 months; (b) an individual’s ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living; (c) a basic activity of daily living in relation to an individual means (i) perceiving, thinking and remembering, (ii) feeding and dressing oneself, (iii) speaking so as to be understood, in a quiet setting, by another person familiarwith the individual, (iv) hearing so as to understand, in a quiet setting, another person familiar with theindividual, (v) eliminating (bowel or bladder functions),or (vi) walking; and (d) for greater certainty, no other activity, including working, housekeeping or a social or recreational activity, shall be considered as a basic activity of daily living. ... Paragraph 118.4(l)(d) of the Act states that working, housekeeping or social or recreational activities shall be considered as a basic activity of daily living. ...

I have read and considered the definition of “single family residence” set out in clause l(l)(ja) of the Act. ... I have read and considered the definitions of “non- resident corporation” and “non-resident person” set out respectively in clauses 1(1)(f) and (g) of the Act and each of the following persons to whom or in trust for whom the land is being conveyed in the above-described con- veyance is a “non- resident corporation” or a “non-resident person” as set out in the Act. (...) ...

(C) … for the purposes of computing the tax payable under this Part by the individual for the year, there may be deducted an amount determined by the formula A X $3,236 where A is the appropriate percentage for the year. 118.4(1) For the purposes of sections... and 118.3, (a) a person shall be considered to have a severe and prolonged impairment only if by reason thereof he is markedly restricted in his activities of daily living and the impairment has lasted or can reasonably be expected to last for a continuous period of at least 12 months; and (b) the Minister may obtain the advice of the Department of National Health and Welfare as to whether a person has a severe and prolonged impairment. For 1991 and 1992 these provisions read: 118.3(1) Where (a) an individual has a severe and prolonged mental or physical impairment, (a.1) the effects of the impairment are such that the individual’s ability to perform a basic activity of daily living is markedly restricted, (a.2)... for the purposes of computing the tax payable under this Part by the individual for the year, there may be deducted an amount determined by the formula AX $4,118 where A is the appropriate percentage for the year. 118.4(1) For the purposes of... sections 118.2 and 118.3 and this subsection, (a) an impairment is prolonged where it has lasted, or may reasonably be expected to last, for a continuous period of at least 12 months; (b) an individual’s ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living; (c) a basic activity of daily living in relation to an individual means (i) perceiving, thinking and remembering, (ii) feeding and dressing oneself; (iii) speaking so as to be understood, in a quiet setting, by another person familiar with the individual, (iv) hearing so as to understand, in a quiet setting, another person familiar with the individual, (v) eliminating (bowel or bladder functions), or (vi) walking; and (d) for greater certainty, no other activity, including working, housekeeping or a social or recreational activity, shall be considered as a basic activity of daily living. ...

The two relevant provisions of the Act read as follows: Subparagraph 256(1)(b): For the purposes of this Act, one corporation is associated with another in a taxation year if at any time in the year, (b) both of the corporations were controlled, directly or indirectly in any manner whatever, by the same person or group of persons; Subsection 256(5.1): For the purposes of this Act, where the expression “controlled, directly or indirectly in any manner whatever,” is used, a corporation shall be considered to be so controlled by another corporation, person or group of persons (in this subsection referred to as the “controller”) at any time where, at that time, the controller has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, except that, where the corporation and the controller are dealing with each other at arm’s length and such influence is derived from a franchise, licence, lease, distribution, supply or management agreement or other similar agreement or arrangement, the main purpose of which is to govern the relationship between the corporation and the controller regarding the manner in which a business carried on by the corporation is to be conducted, the corporation shall not be considered to be controlled, directly or indirectly in any manner whatever, by the controller by reason only of such agreement or arrangement. ...