Section 16

Subsection 16(1) - Income and capital combined

Cases

Plains Midstream Canada ULC v. Canada, 2019 FCA 57

As part of a complex set of transactions, a predecessor of the taxpayer agreed to assume a $225M loan that was due in perhaps 43-years’ time and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) interest by its nature is symmetrical 247

The Queen v. Shaw, 93 DTC 5121, [1993] 1 CTC 221 (C.A.)

The farm lands of the taxpayer were expropriated pursuant to the Expropriation Act (Alberta) in 1977. Following the settlement in 1986 of an...

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West Hill Redevelopment Co. Ltd. v. The Queen, 91 DTC 5430, [1991] 2 CTC 83 (FCTD)

The taxpayer, which was a real estate developer, received mortgages from the purchasers of its condominiums which had a fair market value lower...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(b) mortgages included in proceeds at their principal amount rather than lower FMV 55
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Inventory 44

Alepin v. The Queen, 79 DTC 5259 (FCTD)

The taxpayer was paid $1,000,000 of the sale price of land which previously had been sold by it, at a time when the purchaser was in arrears in...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) Civil Code required repayment to be applied first to interest 89

Rodman Construction Inc. v. The Queen, 75 DTC 5038, [1975] CTC 73 (FCTD)

An owner of Canadian land mortgaged his land on a non-interest bearing basis and then sold the land to the taxpayer, a non-resident, which assumed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) 79

Vanwest Logging Co. Ltd. v. MNR, 71 DTC 5120 (Ex Ct)

The taxpayer sold some of its timber limits for $7.5 million: $1.5 million payable up front; and the balance in five equal annual instalments,...

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Groulx v. MNR, 67 DTC 5284, [1967] CTC 422, [1968] R.C.S. 6

A farmer, after initially being offered $350,000 for his farm, negotiated its sale for $395,000, of which $310,000 was payable in non-interest...

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MNR v. Mandelbaum, 62 DTC 1093 (Ex Ct)

The taxpayers, who were shareholders of a company that was being pressured by its bank to dispose of non-interest bearing conditional sales...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business individuals purchased mortgages in similar manner to dealers, so that an adventure 111
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Loans/receivables 243

See Also

Plains Midstream Canada ULC v. The Queen, 2017 TCC 207, aff'd 2019 FCA 57

The taxpayer (“Amoco”) acquired Dome Petroleum in 1988 for $5.2B pursuant to a Plan of Arrangement. Prior to this acquisition, Dome Petroleum...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base ACB addition based on future amount payable rather than much lower FMV 237

FLSmidth Ltd. v. The Queen, 2012 DTC 1052 [at 2745], 2012 TCC 3, aff'd 2013 DTC 5118 [at 6147], 2013 FCA 160

Paris J rejected the taxpayer's submission (to the effect that the phrase "can reasonably be regarded" in s. 20(12) did not permit the Minister to...

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Lehigh Cement Limited v. The Queen, 2009 DTC 776, 2009 TCC 237, rev'd 2010 DTC 6844, 2010 FCA 124

In finding that the taxpayer was entitled to deduct the full amount of the interest coupon payments made by it on a periodic basis to a Belgian...

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Gestion Guy Ménard Inc. v. MNR, 93 DTC 1058, [1993] 2 CTC 2793 (TCC)

In the taxation years in question, the taxpayer purchased significant quantities of treasury bills through its broker and sold them one day prior...

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O'Neil v. MNR, 91 DTC 692 (TCC)

The difference between the purchase price and the face amount of treasury bills was included in the taxpayer's income when they matured.

Administrative Policy

7 October 2020 APFF Roundtable Q. 16, 2020-0867071C6 F - APFF Q.16 - Withholding tax on swap payment

In Q.60 at the 1984 CTF Roundtable, the Department suggested that where swap payments are not made contemporaneously, for example, payments under...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Swaps all amounts payable or receivable under a swap are on income account 124

18 April 2013 Internal T.I. 2013-0485481I7 F - Balance of sale price without interest

A corporation sells its business, with there being a non-interest bearing balance of the sale price which it considers to be referable to the...

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9 September 2002 Internal T.I. 2002-0149007 - BLENDED PAYMENT, INTEREST

Where payment of interest charged by a U.S. parent to its Canadian subsidiary was deferred and it was agreed that payments by the subsidiary to...

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IT-233R "Lease-Option Agreement; Sale-Lease Back Agreements"

Where it is determined that a lease agreement is, in substance, a sale agreement, the vendor will be required to include an amount under s. 16(1)...

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3 December 1992 T.I. 921655 (C.T.O. "Factoring Accounts Receivable Whether Sale or Loan"; Tax Window, No. 26, p. 5, ¶2315)

Discussion of whether an arrangement between a taxable Canadian corporation and its U.S. wholly-owned subsidiary should be characterized as...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(b) - Subparagraph 212(1)(b)(i) non-arm’s length terms on sale of trade receivables to sub would indicate that it in fact was a non-arm’s length loan 328

IT-265R3 "Payments of Income and Capital Combined" - cancelled in 1991.

1. Subsection 16(1) deals with those situations where, under a contract or arrangement, a payment of income and capital combined is received or...

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IT-233R "Lease-Option Agreements; Sale-Leaseback Agreements"

Discussion of the application of s. 16(1) to a sale-leaseback arrangement which is characterized as a sale, where the fair market value of the...

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Articles

Mike Vantil, Greg C. Boehmer, "Caveat Venditor: Let the Seller Beware", Corporate Structures and Groups, Vol VII, No. 3, 2002, p. 372: Discussion of Application of s. 16(1)(a) to Sale Transactions.

Richardson, "Purchase and Sale of a Business: Income Tax Aspects of Warranties, Price Adjustments, and Earn-Outs", 1990 Corporate Management Tax Conference, pp. 10:8-10:9

Discussion of instalment sales.

Subsection 16(3) - Obligation issued at discount