Start-Up and Liquidation Costs

Cases

Greenway v. Canada, 96 DTC 6529 (FCA)

Various conditions contained in an agreement for the acquisition of a MURB development by co-investors including the contractor's undertaking to...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date 72

MNR v. Poulin, 96 DTC 6477, 204 N.R. 376 (FCA)

Before finding that a real estate agent could not deduct legal expenses incurred in defending a suit alleging fraud and misrepresentation while...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees fees incurred in unsuccessful defence of damages claim are deductible if sued-upon conduct necessary for profession's conduct 140

Duthie Estate v. The Queen, 95 DTC 5376, [1995] 2 CTC 157 (FCTD)

The taxpayer commenced to use personal-use capital property in connection with a real estate development business at the time he made a decision...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel 87
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) contradictory assessments may be necessary 99
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) change of use when project manager retained 130

Fearn v. The Queen, 95 DTC 5052, [1995] 1 CTC 127 (FCTD)

The taxpayer acquired an island with the intention of developing an observatory resort on the site for amateur astronomers and built a cottage,...

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Merchant v. The Queen, 84 DTC 6215, [1984] CTC 253 (FCTD)

Expenditures incurred by the taxpayer in an unsuccessful attempt to gain the leadership of the Saskatchewan Liberal Party were non-deductible....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Office specified amount per sitting may be sufficient 102
Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions "means" is exhaustive 55

The Queen v. Dorchester Drummond Corp. Ltd., 79 DTC 5163, [1979] CTC 219 (FCTD)

The defendant company bought land with the intention of building a highrise office building thereon, but instead operated a parking lot on the...

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The Queen v. Huxtable, 77 DTC 5251, [1977] CTC 364 (FCTD)

An amount paid by the taxpayer ("Bedford") to the purchaser of its only asset - a ship - to give the purchaser an allowance in respect of the...

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MNR v. M.P. Drilling Ltd., 76 DTC 6028, [1976] CTC 58 (FCA)

The taxpayer was incorporated in 1963 for the primary purpose of marketing liquified petroleum gases in the Pacific Rim, and incurred substantial...

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The Queen v. MacIntyre, 75 DTC 5240, [1975] CTC 429 (FCA)

ACTRA, of which the taxpayer was a self-employed member, entered into agreements with various producers under which the producers made...

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See Also

Tournier v. The Queen, 2018 TCC 229 (Informal Procedure)

The taxpayer was a retired member of the Nova Scotia Barristers Society who ceased to practise law in 2013. Her claims in her 2015 return for file...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose expenses incurred after business cessation were deductible 86

Hébert v. The Queen, 2018 CCI 48

In the 12 months preceding its dissolution, essentially the only activity of a corporation was unsuccessful attempts to sell of its remaining...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Small Business Corporation corp qualified as SBC where only business activity was unsuccessful efforts to sell its stock of equipment 362
Tax Topics - Income Tax Act - Section 39 - Subsection 39(1) - Paragraph 39(1)(c) 147

Standard Life Assurance Company of Canada v. The Queen, 2015 DTC 1113 [at 687], 2015 TCC 97

Prior to the introduction of mark-to-market rules in 2007, the taxpayer (which to that point only carried on its life insurance business in...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Window Dressing acts purporting to evidence a Bermuda business were window dressing 205
Tax Topics - Income Tax Act - Section 138 - Subsection 138(11.3) property of a newly multinational insurer is neither "designated" nor "not designated" in the preceding year, but rather outside the scope of s. 138 604

Morris v. The Queen, 2014 DTC 1149 [at 3481], 2014 TCC 142 (Informal Procedure)

In August 2009 the taxpayer's wife purchased a home, which had been their principal residence, from the taxpayer in order to convert it to rental...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(3.1) repairs/cosmetic touch-ups 151

Beauregard v. The Queen, 2014 DTC 1015 [at 2560], 2013 TCC 287 (Informal Procedure)

The taxpayers acquired a lot in order to build a health complex. Unable to secure any lease commitments, they abandoned the project and sold the...

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Tri-O-cycles Concept Inc. v. The Queen, 2013 DTC 1084 [at 467], 2009 TCC 632

The taxpayer was wholly owned and directed by an individual ("Brisson"), and employed Brisson at $50/hour to develop prototypes of pedal and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 67 66

Kuhlmann v. The Queen, 2011 DTC 1297 [at 1675], 2011 TCC 410 (Informal Procedure)

The taxpayer and his wife carried on a consulting business through a partnership. They taxpayer subsequently became employed by the partnership's...

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Walsh v. The Queen, 2011 DTC 1249 [at 1419], 2011 TCC 341 (Informal Procedure)

The taxpayer, who had degrees in economics, business and accounting, retired from chartered accountancy for health reasons and proceeded to set up...

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Génier v. The Queen, 2011 DTC 1058 [at 317], 2011 TCC 641

The taxpayer ceased regular operation of her retirement home business, and took five years to sell the property. She deducted related expenses...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Business Judgment 196

Hayter v. The Queen, 2010 DTC 1176 [at 3395], 2010 TCC 255

The taxpayer sustained a total loss with respect to a joint venture to buy laptops and resell them at a gain, given that a purported vendor of the...

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Langille v. The Queen, 2009 DTC 1431, 2009 TCC 398

In 1988 the taxpayer decided to discontinue the operation of the largest dairy farm in Nova Scotia and over the following period of over 10 years...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Timing 45

Caballero v. The Queen, 2009 DTC 1360, 2009 TCC 390

Various professional expenses that the taxpayer incurred with respect to a proposed venture of providing on-site mobile message therapy services...

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Dubois c. La Reine, 2007 DTC 1534, 2007 TCC 461 (Informal Procedure)

Before going on to find that legal fees incurred as a result of a cancellation by the taxpayer of an agreement to purchase a building were capital...

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Humphrey v. The Queen, 2006 DTC 2730, 2006 TCC 168 (Informal Procedure)

The taxpayer was assessed for amounts that she embezzled from her employer in 2000, declared bankruptcy because of this claim against her and,...

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Boulanger v. The Queen, 2003 DTC 1277 (TCC)

A corporation had been incorporated for the purpose of developing a business that offered various services in the automotive field and it had...

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Raegele v. The Queen, docket 2001-3048(IT)I (Informal Procedure)

In finding that the costs of restoring a house, which had been left by the tenants in filthy condition and after rental operations had ceased,...

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Harquail v. The Queen, 99 DTC 1318 (TCC)

Whether shares sold by the taxpayer qualified as qualified small business corporation shares turned on whether a subsidiary was engaged in an...

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MacDonald v. The Queen, 98 DTC 1177 (TCC)

The taxpayer, who worked as a full-time locomotive engineer, was not able to deduct losses from a proposed sawmill operation given the length of...

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Neeb v. The Queen, 97 DTC 895 (TCC)

The taxpayer incurred legal expenses in defending against narcotics charges. Before going on to find that these expenses were non-deductible on...

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Samson et Fréres Ltée v. The Queen, 97 DTC 642 (TCC)

Dussault T.C.J. found that the taxpayer, which had carried on a meat processing business, had ceased to carry on that business by the second...

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Heinze v. The Queen, 97 DTC 5219 (FCTD)

The taxpayer acquired farmland and buildings for $130,000 and rented the farm out at $2,500 per year with the intention that they would not farm...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(2) 70

Vogel v. The Queen, 96 DTC 1321 (TCC)

A corporation which previously had earned income from commissions by negotiating contracts for various commodities and that prior to the taxation...

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Grocott v. The Queen, 96 DTC 1025, [1996] 1 CTC 2311 (TCC) (Informal Procedure)

The taxpayer, after moving to Toronto, made vigorous but unsuccessful attempts attempts to rent out his former principal residence in Sarnia. In...

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Solnicka v. The Queen, 95 DTC 652 (TCC)

Although the taxpayers were unsuccessful in renting out a house in their 1989 year, they were able to deduct related expenses incurred in the year...

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Watt Estate v. The Queen, 95 DTC 423 (TCC)

Boarding fees, training fees, entry fees and transportation expenses incurred by the taxpayer for the purpose of developing her teenage daughter's...

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James v. The Queen, 95 DTC 394, [1995] 1 CTC 2024 (TCC)

After the taxpayer entered into an agreement entitling him to sell advertising and distribute a specified magazine in his particular area, nothing...

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Gulf Canada Resources Ltd. v. The Queen, 95 DTC 5189, [1995] 1 CTC 334 (FCTD), partially rev'd 96 DTC 6065 (FCA).

Before going on to find that the taxpayer's interest in the Syncrude project did not constitute a "source" of income for its 1978 taxation year,...

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Words and Phrases
source

Gartry v. The Queen, 94 DTC 1947, [1994] 2 CTC 2021 (TCC)

In finding that the expenses of various categories of work done on a vessel before the vessel sank and before the taxpayer acquired title to it,...

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Fortin v. MNR, 94 DTC 1603, [1993] 2 CTC 3009 (TCC)

Expenses claimed by the taxpayer as soft costs in respect of condominium investments were found to have been incurred prior to the date of...

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ELB Productions Ltd. v. MNR, 91 DTC 1466, [1991] 2 CTC 2661 (TCC)

In finding that a franchise fee paid by the shareholder of the taxpayer prior to its incorporation was not deductible by the taxpayer, Bowman J....

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M.R.T. Investments Ltd. v. The Queen, 75 DTC 5224, [1975] CTC 354 (FCTD), aff'd 76 DTC 5156 (FCA)

Walsh, J. stated obiter that where a company has been incorporated but does not actually commence operations on any extensive scale until some...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business managed mortgage portfolio gave rise to income from active business 208

Godden v. A. Wilson's Stores Ltd. (Holdings) (1962), 40 T.C. 161 (CA)

The taxpayer paid the sum of £1,900 to the manager of its rubber plantation a few days before it completed the sale of the rubber plantation to...

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Clevite Development Ltd. v. MNR, 61 DTC 1093 (Ex. Ct.)

Royalty income of the taxpayer from foreign patents was found to be income from a business as opposed to a mere property holding notwithstanding...

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C.I.R. v. Anglo Brewing Co., Ltd. (1925), 12 T.C. 803 (K.B.D.)

Prior to ceasing trading operations on November 30, 1921, the taxpayer made (or made provision for the payment of) various ex gratia payments to...

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Administrative Policy

3 November 2004 Internal T.I. 2004-0083791I7 F - Paragraphe 44.1(2)

A newly-formed corporation used its cash share subscription proceeds almost entirely to purchase a piece of land for which, to date, a required...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 44.1 - Subsection 44.1(1) - Eligible Small Business Corporation shares were not of an eligible small business corporation given that only business activity was desultory zoning application 193
Tax Topics - Income Tax Act - Section 44.1 - Subsection 44.1(8) pre-condition of carrying on business not satisfied / general overview provided 328

3 December 2015 External T.I. 2015-0618981E5 - Deductibility of run-off insurance premiums

Professionals who carried on a business will, upon retirement, pay premiums for “Run-off Insurance” to address any negligence claims made...

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24 April 2012 Internal T.I. 2011-0400671I7 F - Honoraires professionnels

Corporation A was owned equally by a holding company for Mr. B (Corporation B), Mr. A and Mrs. A. In the context of a dispute with Mr. and Mrs....

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) meaning of “benefit” 164
Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) tax planning fees paid to joint counsel qualified as a disposition expense 143

21 December 2004 External T.I. 2004-0091011E5 F - Déductibilité-primes d'assurance-responsabilité

Are professionals, who are required to maintain liability insurance for actions taken in the course of their practice for a number of years after...

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IT-364 "Commencement of business operations"

IT-454 "Business transactions prior to incorporation"

IT-417R "Prepaid Expenses and Deferred Charges" under "Pre-Production or Start-Up Cost of a New Business"

Articles

Walker, "Adoption of Pre-Incorporation Expenses", Canadian Current Tax, December, 1989:

"it is clear that IT-454 represents a departure from the existing caselaw."

Accounting Pronouncements

CICA Emerging Issues Committee, EIC-27 "Revenues and Expenditures During the Pre-Operating Period"