Table of Contents


Calgary (City) v. Canada, [2012] 1 S.C.R. 689, 2012 SCC 20

"undertaking" included constructing transit system

The Court found that the City's activity of acquiring public transportation facilities and assets would have been a "business" but for the fact that this activity was part of its making of exempt municipal transit services to the Calgary public. Rothstein J. stated (at para. 25) "I see no reason why the words 'undertaking of any kind whatever' would exclude the construction of a public transit facility."

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part VI - Section 24 122
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Recipient mere provision of earmarked funding did not render the Province a recipient 262
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply alleged separate supply: a preparatory component 291

See Also

Swift v. The Queen, 2020 TCC 115

“business” likely does not include an adventure

Before finding that the individual appellant had constructed a home for personal use and not as a builder and, in particular, not as part of an adventure in the nature of trade or in the course of a business, so that the individual was not required to self-assess under s. 191(1) upon substantial completion and occupancy, Sommerfeldt J stated (at para. 30):

[T]he definition of “business” in the ITA states that, except for certain specified purposes, the word “business” includes an adventure or concern in the nature of trade; however, the definition of “business” in the ETA does not contain that particular inclusion. For the purposes of these Reasons, without making a definitive decision in this regard, I will assume that the word “business,” as defined in the ETA, does not include an adventure or concern in the nature of trade. That assumption is consistent with the drafting structure in the concluding portion of paragraph (f) of the definition of “builder” [ in s. 123(1)].


Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Builder - Paragraph (f) home was constructed for personal use rather than as an adventure 310
Tax Topics - Excise Tax Act - Section 191 - Subsection 191(5) application of the Coates test that a builder is not required to self-assess on building a home for his own occupation even where there may be a secondary resale intent 400

630413NB Inc. v. The Queen, 2016 TCC 156 (Informal Procedure)

alleged business of assuming litigation not caried out in business-like manner

In 1995 Mr. West incorporated Peruvian and New Brunswick lottery businesses. In 2008 the corporations executed assignment agreements giving the Appellant the right to any proceeds from four different legal actions in which the Peruvian or the NB Corporations were still involved. According to the agreements, the Appellant was to help to resolve the legal disputes, pay all of the legal fees and costs and would be entitled to all proceeds from the assigned actions. The Minister denied the claim of the Appellant for input tax credits (“ITCs”) relating to legal fees paid between July 1, 2008 and March 30, 2011.

After quoting (at para. 27) Kaye v The Queen, 98 DTC 1659 that

if you want to be treated as carrying on a business, you should act like a businessman

Ouimet J dismissed the appeal on the basis that the Appellant did not acquire the legal services in the course of commercial activities, stating (at paras. 29 and 30):

…I believe it would not have made any commercial sense for the Appellant to get involved in a business that…it knew nothing about[,] to go into a business/commercial activity without having made proper financial projections and drawn up a business plan[,]…to sign an assignment agreement giving it control of a legal action that had already been resolved[,]…to give back the control of the legal proceedings to Mr. West while paying the legal fees and costs associated with those proceedings [or]… to let Mr. West pay the costs awarded by a court decision in relation to one of the assigned proceedings.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) no business of assuming litigation 69

University of Calgary v. The Queen, 2016 DTC 1006 [at 2522], 2015 TCC 321

all of university operation comprised one business

Before finding (at para. 93) that the appellant (U of C), which was a public service body “carried on a single business, namely, the operation of a university, and that it carried on all of its activities in the course of this business,” D’Arcy J stated (at para. 92):

Under the GST Act, a person’s business is broader than the person’s commercial activity. A business includes all of the activities of a person regardless of whether the activities involve the making of taxable supplies or of exempt supplies. This is an important distinction for the purposes of various provisions of the Act, including the input tax credit apportionment rules contained in section 141.01.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(2) s. 141.01(2) required allocation of indirect (common area) costs between taxable and exempt use 439
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(5) method based on actual use of traceable inputs was appropriately appplied to indirect inputs 171

Wadley v. The Queen, 2006 DTC 3401, 2006 TCC 440 (Informal Procedure)

The taxpayer let her neighbour's cattle graze on her pasture in consideration for a monthly fee per head, and agreed with her neighbour that he could crop-share her hay field. In finding that the activities of the taxpayer with respect to the pasture went beyond what was normally expected of the landlord in the maintenance of her rental property, Sheridan J. noted that the taxpayer cut brush and weeds along the fence line, trapped moles, harrowed the pasture to remove their burrows, kept water troughs full and salt supplies replenished. In finding that the taxpayer also was engaged in business activity with respect to the hay field, he noted that she had to fertilize and harrow the hay field and decide how often the hay should be cut in order to maximize the field production. In addition, her own equipment was used in the hay production and harvest and she cut brush, bailed hay and hauled bails.

Richter & Associates Inc v. The Queen, 2005 TCC 92

litigation support services provided by trustee for bankrupt financial institution were an "undertaking"

The trustee in bankruptcy for a company ("Castor") which had essentially only engaged in investing in high-yield loans brought an action in its capacity of trustee for the Castor estate against the former auditors ("C&L") for $40 million in damages for breach of contract, and also began a "litigation support business" of providing assistance to most of the creditors (the "Participating Creditors"), including hiring professionals and experts, in connection with their action sounding in negligence against C&L for $800 million in damages. To the extent that, on settlement of the litigation, Richter was not able to recover its costs out of the proceeds of an award made to it on its own claim, Richter at such time would invoice the creditors for its remaining unrecovered costs, to be paid by set-off against loans they had made to it in the interim.

After noting (at para. 21) that "the word ‘undertaking' has been defined in … Drumheller v. M.N.R., 59 DTC 1177, 1180 (Exch. Ct.), as embracing ‘. . . trades, manufactures, professions, or callings, and any other conceivable kinds of enterprise as well," Archambault J stated (at para. 32):

[T]he litigation support services to the Participating Creditors constitute, if not a profession as defined in the Maxse case [[1919] 1 K.B. 647], at least an undertaking as this term is used in the definition of a "business". Given the nature of these activities and the continuous involvement required from the Estate in order to provide the services during the relevant period and that will be required from it in future years, this undertaking amounts to a business being carried on by the Estate.

See summary under s. 141.01(2).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(2) allocation between costs incurred by trustee in bankruptcy for bankrupt financial institution to provide litigation services to creditors, and costs incurred in connection with its action qua trustee 392
Tax Topics - Excise Tax Act - Section 141.01 - Subsection 141.01(5) allocation between own suit and litigation support 77
Tax Topics - Excise Tax Act - Section 141.1 - Subsection 141.1(3) - Paragraph 141.1(3)(b) action brought by trustee for bankrupt financial institution deemed to be not in course of commercial activity 200
Tax Topics - Excise Tax Act - Section 265 - Subsection 265(1) - Paragraph 265(1)(f) trustee's own suit and litigation support activity were related 295
Tax Topics - General Concepts - Illegality Act applied to what has occurred irrespective of legality 145
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business litigation support services provided by trustee for bankrupt financial institution were an "undertaking" 286

Institute of Chartered Accountants in England and Wales v. Customs & Excise Commissioners, [1997] BTC 5355 (C.A.)

In finding that the taxpayer, which exercised delegated powers to issue licenses and certificates to its members and exercised public control over those engaged in financial services, auditing and insolvency practice, was not engaged in a "business", Beldam L.J. referred to community jurisprudence that rested on the touchstone of "economic activities" and then stated (at p. 5365):

"... The concept of 'an economic activity' is an activity which typically is performed for a consideration and is connected with economic life in some way or another. But it is not an essential characteristic that it should be carried on with a view to profit or for commercial reasons but it must be an activity which is analogous to activities so carried on. An activity which consists in the performance of a public service to which the idea of commercial exploitation with a view to profit or gain is alien is not of an economic nature particularly where the activity is one typically of a public authority."

Administrative Policy

15 January 2015 Ruling 151911r

net rental profit reported for income tax purposes

An individual purchased vacant land (the Property) to hold as investment property jointly with an unrelated individual, with each owning a one-half interest. In a subsequent year the co-owners leased the Property to the neighbouring farmer, which the correspondent stated was to protect against a potential claim of adverse possession. The individual subsequently sold her interest in the Property. In the meantime, for income tax purposes, she reported her share of the rents as rental income and claimed her portion of the property taxes as the only expense. The representative stated that other expenses incurred, such as legal fees and travel expenses, were not claimed for income tax purposes. After ruling that this sale was not exempt under s. 9(2) of Part I of Sched. V, on the basis that immediately before the sale the Property was used primarily in a business carried on by the individual with a reasonable expectation of profit, CRA stated.

[T]he fact that the gross income generated from the lease of the Property was greater than the expenses attributed thereto for most of the years the Property was rented suggests that the business had a reasonable expectation of profit.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Schedules - Schedule V - Part I - Section 9 - Subsection 9(2) - Paragraph 9(2)(a) net rental profit reported for income tax purposes 223

13 June 2013 Interpretation Case No. 109782

promotional contest part of retail business

ACo was a registrant which, in order to promote sales of its products, provided purchasers with a chance to win a cash prize directly from it by participating in a "game of chance [which] is conducted through having certain labels affixed to a product's packaging." In finding that s. 188(1) did not permit ACo to claim an input tax credit with respect to the payment of the cash prizes, CRA found that the promotional contest was not itself a business or an adventure in the nature of trade, but instead was part of the retail business which it promoted given the "high degree of interconnection and interdependence between the retailing of products that are taxable for purposes of the GST/HST and the promotional contest."

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 188 - Subsection 188(1) promotional contest part of retail business 124

P-167R "Meaning of the First Part of the Definition of Business"

In establishing that an activity is sufficiently "business-like" to qualify as an "undertaking", a number of factors should be considered, including: 1. whether the activity is serious and earnestly pursued; 2. whether the activity is actively pursued with reasonable and recognizable continuity; 3. whether the activity is conducted in a sound manner using recognized business principles and records are maintained to that effect; 4. whether the supplies, if any, are of a kind which, subject to differences of detail, are commonly made by those who seek to profit from them; 5. whether the activity facilitates or promotes the making of supplies (whether by the person itself or by other persons); and 6. whether the activity supports other activities which are directed towards earning revenue. [I]t may be possible, in the appropriate circumstances, to conclude that a business exists even if only two of the six factors are met.

GST M 200-1-1 "Carrying on Business in Canada"

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 143 - Subsection 143(1) 0


Paul V. Casuccio, "The Requirement to Register, Charge and Remit GST/HST on the Provision of Executor Services", Sales and Use Tax, Vol XI, No. 4, 2011, p. 598

Suggests (partly based on IT-377R, para. 5) that fees received from an estate by an individual who does not normally act as an executor may not be considered to be from a business.