Table of Contents


Spezzano v. Canada, 2007 DTC 5580, 2007 FCA 294

lease was part of building, not a separate capital asset

In affirming that a lump sum payment received by the taxpayer from the sole tenant of its building in consideration for the termination of the lease was received on income account rather than being compensation for the diminution in value of the lease viewed as a capital asset, Noël JA stated (at para. 28) that he saw no error in the finding below that "the sole capital asset acquired by the appellants was the building and that the long term lease was but a means of exploiting that asset."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Compensation Payments compensation received by landlord for lease cancellation was on income account 104

Canada v. Haché, 2011 DTC 5089 [at 5848], 2011 FCA 104

commercial fishing licences were property

The taxpayer voluntarily surrendered two commercial fishing licences under a government program in exchange for a payment. The Court of Appeal confirmed that the licences were capital property, and hence their disposition gave rise to capital gains, notwithstanding that there was a fishing moratorium in effect at the time of disposition. The licences still were still rights in the hands of the taxpayer, and therefore came within the s. 248(1) definition of "property." Trudel J.A. stated (at para. 35):

As the [Minister] argues, if the lack of conditions attached to the licence were to render it invalid, this licence could not have been issued in April 19, 2000, or during previous years when the moratorium was also in place. Moreover, why pay renewal fees for a licence that will in all likelihood be invalid if not because this licence gives its holder the exclusive right or authority to be part of the core and participate in commercial fishing activities? Both the legislative enactments and the evidence show that the fact that the respondent did not receive the conditions attached to the licence presented no obstacle to his holding a "bundle of rights" that he could have exercised once he received those conditions.

Rezek v. Canada, 2005 DTC 5373, 2005 FCA 227

A "spread" (under which the taxpayer would purchase a convertible debenture, a convertible preferred share or a warrant and short sell the corresponding number of common shares into which the convertible security was convertible) was not collectively a type of property, as found by the Tax Court judge, but was to be analyzed on the basis that the rights associated with the holding of the convertible securities and the rights, if any, associated with a short sale of common shares were independent rights. Rothstein J.A. stated (at p. 5380) that the fact that the convertible security was used to satisfy margin requirement respecting the short sale transaction established "a contractual overlay on each component of the convertible hedge" rather than transforming separate properties into a single property.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 150 - Subsection 150(1) - Paragraph 150(1)(d) s. 39(4) elections that were made with late-filed returns were valid as being made "in the taxpayer's return" 146
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) impermissible new theory 45
Tax Topics - Income Tax Act - Section 39 - Subsection 39(4) requirement to file election with return is satisfied even if return is late 144
Tax Topics - Income Tax Act - Section 96 spouse carrying on linked legs of integrated trading transactions 204
Tax Topics - Statutory Interpretation - Resolving Ambiguity 54

Beament et al. v. Minister of National Revenue, 70 DTC 6130, [1970] CTC 193, [1970] S.C.R. 680

In finding, in his concurring reasons for judgment, that the contractual right of beneficiaries of an estate to enforce an agreement for the purchase by them of shares of the estate for the shares' par value rather than for the much higher amount that otherwise would have been the shares' fair market value, represented property of the beneficiaries, and therefore should be excluded in the valuation of property of the estate, Pigeon J. stated (at p. 6135) that:

"Parliament cannot have intended that the same value would be included in two separate items of 'property'."

Slobodrian v. Canada (Minister of National Revenue), 2003 DTC 5632, 2003 FCA 350

Before going on to find that a "gift" of services did not qualify as a gift of property, Noël J.A. stated (at p. 5634) that in Manrell, the Court had found that "the statutory definition in subsection 248(1) does not expand the word property beyond its normal meaning" (p. 5634).

Manrell v. Canada, 2003 DTC 5225, 2003 FCA 128

"property" entails an exclusive right

A portion of the consideration paid by a purchaser of shares of operating companies in which the taxpayer had been a significant shareholder (directly, or through holding companies) was allocated as consideration for his entering into non-compete agreements. In finding that these amounts were not proceeds of disposition of property by the taxpayer, Sharlow J.A. stated (at p. 5230) that:

"It is implicit in this notion of 'property' that 'property' must have or entail some exclusive right to make a claim against someone else. A general right to do something that anyone can do, or a right that belongs to everyone, is not the property 'of anyone'."

She further indicated that the phrase "a right of any kind whatever" did not expand the ordinary meaning of "property" to include a non-exclusive, commonly held right to carry on a business.

Words and Phrases

Royal Bank of Canada v. Tuxedo Transport Ltd., 2000 DTC 6501 (BCCA)

In reversing a finding of the chambers judge below, the Court found that his interpretation effectively added words of limitation to the word "property" in s. 227(4.1) by confining that term to that which existed when the trust under s. 227(4) became operative.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 227 - Subsection 227(4.1) 75

Romkey v. Canada, 2000 DTC 6047 (FCA)

Stone J.A. noted the breadth of the term "property".

La Capitale, Compagnie d'Assurance Générale v. Canada, 98 DTC 6428 (FCA)

Létourneau J.A. found that the right to an indemnity that effectively was being provided by a general insurer to its clients represented property within the broad meaning of this term.

Vaillancourt v. The Queen, 91 DTC 5352 (FCTD)

In light of the broad definition of "property", the taxpayer was found to have "property that is a multiple-unit residential building" by virtue of having a co-ownership interest in such property.

Shaw v. The Queen, 89 DTC 5194, [1989] 1 CTC 386 (FCTD), aff'd 93 DTC 5213 (FCA)

Rent payable for the use and enjoyment of property and a lease stipulating payment of the same were both "property".

Pe Ben Industries Co. Ltd. v. The Queen, 88 DTC 6347, [1988] 2 CTC 120 (FCTD)

contractual right was a property right or chose in action

In finding that a payment made by Northern Alberta Railway ("NAR") to the taxpayer as compensation to the taxpayer for the termination by NAR of a major contract for the trucking by the taxpayer of goods and materials to a Syncrude plant represented proceeds of disposition of property, Strayer J. stated (at p. 6351), that the taxpayer's "rights under the contracts with NAR which it gave up in return for a final payment, would constitute such a right or a chose in action" described in paragraph (a) of the definition of property.

The Queen v. Golden et al., 86 DTC 6138, [1986] 1 CTC 274, [1986] 1 S.C.R. 209

"property" includes a contract right, or potentially covenant to deliver knowhow

Estey, J. found that the interpretation of the initial version of s. 68 should be interpreted in light of the broad meaning of "property," in s. 248(1), stating in the latter regard (at para. 7) that:

The extremely broad definition of property leaves very little in the 'non-property' classification. It would appear to include a contract right and might in some circumstances include a right to assert a covenant by a vendor to deliver 'know-how'".

Words and Phrases

The Queen v. Marsh & McLennan, Ltd., 83 DTC 5180, [1983] CTC 231 (FCA)

Notwithstanding the terms of a contract between the taxpayer and an insurance company, funds received by the taxpayer from clients were treated by it and the insurance company as being its property, and that therefore was the characterization to be given to those funds for purposes of the Act.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 129 - Subsection 129(4) - Canadian Investment Income funds employed and risked in the business were used in the business 167

The Queen v. Burgess, 81 DTC 5192, [1981] CTC 258 (FCTD)

Although maintenance granted pursuant to s. 11 of the Divorce Act "is not property in the proper sense of that term", it falls within the broad wording of the S.248 definition.

Murphy v. The Queen, 80 DTC 6314, [1980] CTC 386 (FCTD)

included right to be included in class of discretionary beneficiaries

It was held that when the plaintiff gave up a vested right to 1/2 the income of an estate in exchange for being included in a class of discretionary beneficiaries, there had been a transfer of "property" within the broad meaning of the S.248() definition.

The Queen v. Farmparts Distributing Ltd., 80 DTC 6157, [1980] CTC 205 (FCA)

A concept of merchandising replacement muffler systems for automobiles constituted "property".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus failure of Minister to allocate 57
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) - Subparagraph 212(1)(d)(i) right to buy and resell product not a right to use 204
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) lump sum paid irrespective of user not "royalty" 143
Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions "including" enlarges 105

Rapistan Canada Ltd. v. MNR, 74 DTC 6426, [1974] CTC 495, briefly aff'd 76 DTC 6177, [1976] CTC 296 (SCC)

The American parent or affiliate of the taxpayer purported to grant know-how to the taxpayer by deed of gift. The taxpayer was not entitled to treat the know-how as a Class 14 asset because it was not "property". "[U]nder no system of law in Canada, does knowledge, skill or experience constitute 'property' that can be the subject matter of a gift, grant or assignment except to the extent, if any, that it can be a right or a part of a right in respect of which there is property of the kind classified as industrial property ... [The gift] must be construed as a promise by the donor that the appellant will be informed and instructed by the 'donor' as to how to commence and carry on a certain manufacturing operation." [C.R.: 248(1) - "Eligible Capital Property"]

Quality Chekd Dairy Products Association v. MNR, 67 DTC 5303 (Ex Ct)

The taxpayer, which was a U.S.-resident corporative association of dairy companies, received a fee from a Canadian member that was, in part, a royalty for the use in Canada of a certification mark and, in part, consideration for know-how provided by it to the Canadian member, namely, providing assistance on production, quality control, advertising and marketing. Gibson J. found (at p. 5305) "that the 'know-how' provided by the appellant to Kellough Brothers Dairy Limited should be categorized as services rendered, or at least and in any event not 'property' within the meaning of the word as it is employed in section 106(1)(d)(iii) of the Act and also not 'other thing' as those words are also so employed there, applying as I do the ejusdem generis rule of construction ...".

Huston v. MNR, 61 DTC 1233, [1961] CTC 414 (Ex.Ct.)

An award which the taxpayers received in 1958 from the War Claims Commissioner as compensation for the confiscation of their Czechoslovakian factory during World War II included notional interest of 3% per annum for the period from January 1, 1946 to the date of the award. Thurlow, J. stated "the sums in question are not income from property because, notwithstanding the exceedingly broad scope of the statutory definition, the appellants during the period from January 1, 1946 to October 10, 1958 in respect of which the alleged 'interest' was computed, in my opinion, had no property or legal or equitable right of any kind in the amount on which the alleged 'interest' was computed"

Industrial Development Bank v. Valley Dairy Ltd., 53 DTC 1027, [1953] CTC 132 (Ont. S.C.)

S.112(6) of the Act as it read effective prior to July 1, 1950 provided that the liability of a taxpayer for amounts withheld by him "constituted a first charge on his assets", and s. 112(6) after that date provided that such amounts were a first charge "on his property". After finding that the Department had priority over a bank because the bank's floating charge had not become crystallized at the time the above statutory lien attached, Judson J. stated (p. 1028):

"If the floating charge had first become crystallized, I would have held that it had priority on the ground that 'property' or 'assets' means what is left to the taxpayer after satisfaction of prior charges."

Words and Phrases

See Also

Commissioner of State Revenue v Placer Dome Inc., [2018] HCA 59

protean nature of property concept

In the context of discussion the extent to which a gold mining company should have significant separate value assigned to goodwill, Gageler J stated (at paras. 163-166, footnotes omitted):

"Property" is not "a monolithic notion of standard content and invariable intensity". "Accordingly, to characterise something as a proprietary right ... is not to say that it has all the indicia of other things called proprietary rights. Nor is it to say 'how far or against what sort of invasions the [right] shall be protected, because the protection given to property rights varies with the nature of the right'. Statutory use of the term "property" correspondingly invokes a protean concept, the content of which is informed by the statutory context.

That "property" has a broad meaning in this statutory context is indicated by the scope of the "property" statutorily excluded. For most legal purposes, information alone is not treated as proprietary in character unless it is confidential. Yet amongst the categories of "property" directed to be excluded in this statutory context is "intellectual property (including knowledge or information that has a commercial value) relating to any process, technique, method, design or apparatus to ... locate, extract, process, transport or market minerals". Knowledge or information that has a commercial value is thereby treated for this statutory purpose as "property" whether or not it is confidential.

More important for present purposes is that the content of the term "property" is informed in this statutory context by the amplified reference to "all property" to which the corporation is entitled, a reference which encompasses all property of a corporation which has an entitlement to conduct a business as a going concern.

An entitlement to conduct a business as a going concern has never been doubted to be capable of being conveyed by a seller to a purchaser. When conveyed to the purchaser, an entitlement of that nature has long been protected by injunction from derogation by the seller by reference to the principle that "[a] vendor of any form of property incurs an implied obligation not to destroy, defeat or impede the enjoyment by the purchaser of the subject of the sale".

Thus, Federal Commissioner of Taxation v Murry explained that "the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means which in the past have attracted custom to the business" is recognised as "property" – traditionally described as "goodwill" – which can be conveyed by a seller to a purchaser, so as to remain the property of the purchaser within the protection of the law for so long as the purchaser in fact conducts substantially the same business in substantially the same manner.

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14.1 - Paragraph (a) goodwill must have a connection to attracting custom 499
Tax Topics - General Concepts - Fair Market Value - Other discounted cash flow valuation undervalued resource lands and residual valuation overstated goodwill 342

Aitchison Professional Corporation v. The Queen, 2018 TCC 131

(foregone) right to negotiate a significant salary was not property

At a time that a lawyer (“James”) owed $2.1 million in taxes, he transferred his law practice to a professional corporation and thereafter worked for it as an unpaid volunteer or employee. His two daughters (also lawyers) worked for the corporation at market salaries and in the first three years received over $1 million in dividends as a result of “an improbable share structure and a complete disregard for dividend rights.”

In finding that James had not transferred “property” to the corporation for s. 160 purposes by virtue of choosing not to negotiate a salary for his valuable professional services, Graham J stated (at para. 19):

The right to negotiate is a right that everyone possesses and that is enforceable against no one. It is not “property”. If an employee negotiates a poor contract, the potential salary that he or she leaves on the table is not “property” that he or she has transferred to his or her employer. It is simply a lost opportunity.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) s. 160(1) did not apply to a tax debtor providing services free of charge to the NAL transferee of his professional practice 350

Iberville Developments Limited v. The Queen, 2018 TCC 102, aff'd 2020 FCA 115

only one interest in a partnership

Before going on to indicate (at para. 54) that issuing additional units on the drop-down of property under s. 97(2) into a partnership would not create addtional cost for the interest of the transferor in the partnership (as contrasted to the the increment to its adjusted cost base of that interest under s. 97(2)(b)), Boyle J stated (at para.. 43):

Whereas the Act generally treats each share of a corporation as distinct property, the Act generally only tracks a partner’s interest in a partnership. The exceptions, where the Act looks to units of a partnership instead of the overall interest in a partnership, are in Part IX.1 of the Act dealing with specified investment flow‑through (“SIFT”) partnerships, in the definition of qualified investments for deferred profit sharing plans in Part X, and in the definition of excluded property and specified property for foreign affiliates and their foreign accrual property income (“FAPI”) in subdivision I applicable to non‑resident corporations and their shareholders.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) the starting ACB of a partnership interest was determined exclusively under s. 97(2)(b) 659
Tax Topics - Income Tax Act - Section 97 - Subsection 97(1) s. 97(1) establishes FMV cost for partner's interest 136

Carson v. The Queen, 2014 DTC 1006 [at 2520], 2013 TCC 353 (Informal Procedure)

donated space must constitute an enforceable right in order to be property

The taxpayer and his wife allowed a charity to use two rooms of their house for free (an office and a storage room), and claimed charitable credits for the fair market value of the use of the rooms (i.e. rent). C Miller J disallowed these credits, as the charity had no legally enforceable right to the space - and without an enforceable right, there was no property to donate.

However, C Miller J disagreed with CRA's position in 2003-0018595 that a grant of use cannot constitute a transfer of property. Manrell provides that "property" entails some exclusive right to make a claim against someone else (para. 6).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts donated space must constitute an enforceable right in order to be property 123

Winsor v. The Queen, 2008 DTC 2116, 2007 TCC 692

fishing licence was property based on administrative law rights

Before going on to find that fishing licences of the taxpayer were capital property, so that an amount received by the taxpayer from the federal government for their cancellation by the federal government gave rise to a capital gain, Webb J. stated (at para. 26):

"Since any person who has a licence under the Fishery (General) Regulations has a right 'to apply for and resist an arbitrary denial of, renewal or re-issuance of his licence', this right would ... be property for purposes of the Act."

Roth v. The Queen, 2005 DTC 1570, 2005 TCC 484, aff'd 2007 DTC 5222, 2007 FCA 38

knowhow not propery

Before going on to find that a purported transfer of an undeveloped project by the taxpayer to a corporation as reflected in a journal entry showing $370,000 owing by the corporation to him was ineffective, Bell J. stated (at p. 1579):

"My conclusion is that information, ideas, knowledge and/or know-how, do not fall within the meaning of the words 'property'. They are not exclusive to one person and are not, in that simple form, capable of being described as property."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) know-how not property 79
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Incurring of Expense purported transfer of knowhow to corportion did not entail acquisition of property 98

QEW 427 Dodge Chrysler (1991) Inc. v. Minister of Revenue (2000), 49 OR (3d) 776 (S CT J), aff'd (2002), 50 OR (3d) 460 (S Ct J, Div Ct), 2002 DTC 7228

Chrysler Canada would sell cars to the taxpayer (an automobile dealer) under conditional sales contracts, and sell the conditional sales contracts to the Canadian finance arm of Chrysler (Chrysler Credit). In finding that the vehicles shipped by Chrysler Canada to the taxpayer represented property to it, Trafford J. stated (at p. 796) that "despite the contractual limitations on its beneficial ownership, QEW has a property interest in the new vehicles that includes the possession of the vehicles, the rights to sell a vehicle free of any lien except for the purchase money security interest created by the inventory and lease financing security agreement in favour of Chrysler Credit, the right to negotiate the price of the sale to the retail consumer and the entitlement to profit from the proceeds of a sale".

Marzetti v. Marzetti (1994), 26 C.B.R. (3d) 161, [1994] 2 S.C.R. 765

A bankrupt's interest in a post-bankruptcy income tax refund was "property" for purposes of the Bankruptcy Act notwithstanding that the refund did not become due and payable until a return was filed.

Canadian Imperial Bank of Commerce v. Hallahan (1990), 48 BLR 113 (Ont CA)

A milk quota under the Milk Act (Ontario) was not property, and its transfer accordingly could not be challenged under the Fraudulent Conveyances Act (Ontario).

Drummond v. Smith (1988), 18 R.F.L. (3d) 120 (Alta. Q.B.)

The word "property" in the Matrimonial Property Act (Alberta) (a term which is not specifically defined) does not include university degrees and professional licences.

Re National Trust Co. and Bouckhurst (1987), 61 OR (2d) 640 (C.A.)

A licence to produce tobacco was not property. "The notion of 'property' imports the right to exclude others from the enjoyment of, interference with or appropriation of a specific legal right. This is distinct from a revocable licence, which simply enables a person to do lawfully what he could not otherwise do"

Kirby v. Thorn EMI plc, [1987] DTC 462 (CA)

A lump sum which the taxpayer (a British holding company) received as consideration for a non-competition agreement given by it to the U.S. purchaser of three operating companies indirectly owned by it was found to be a capital gain pursuant to s. 22(3) of the Finance Act 1965 which provided that:

"There is ... a disposal of assets by their owner where any capital sum is derived from assets notwithstanding that no asset is acquired by the person paying the capital sum ... ."

Nichols L.J. stated (at p. 468):

"I agree that the liberty or freedom to trade enjoyed by everyone, is not a form of 'property' within the meaning of Sec. 22. This liberty, or freedom, is a 'right' if that word is given a very wide meaning, as when we speak of a person's rights in a free society ... . The context in the instant case is a taxing Act which is concerned with assets, and with disposals and acquisitions, gains and losses. I can see no reason to doubt that in Sec. 22 'property' bears the meaning of that which is capable of being owned, in the normal, legal sense, and that it does not bear the extended meaning that would be needed if it were to include a person's freedom to trade."

He went on to find that the substance of the payment was a capital sum received by the taxpayer in exchange for agreeing not to exploit its reputation (a form of goodwill) and that, under the scheme of the Act, goodwill was an asset of the taxpayer.

O'Brien v. Benson's Hosiery (Holdings) Ltd. (1979), 53 TC 241 (HL)

A payment of £50,000 by an employee to his employer in consideration of his employer releasing him of all obligations under the employment contract was held to be a capital sum chargeable to capital gains tax under the Finance Act, 1965 (U.K.). At issue was whether the employer corporation should be considered to have realized a chargeable gain in respect of the disposal by it of an "asset", which was defined in subsection 22(1) of the Finance Act 1965 to include "all forms of property". Lord Russell stated the following (at p. 270):

"If, as here, the employer is able to exact from the employee a substantial sum as a term of releasing him from his obligations to serve, the rights of the employer appear to me to bear quite sufficiently the mark of an asset of the employer, something which he can turn to account, notwithstanding that his ability to turn it to account by a type of disposal is limited by the nature of the asset."

Manitoba Fisheries Ltd. v. The Queen, [1979] 1 S.C.R. 101.

The granting by the Crown to a crown corporation of a commercial monopoly in the export of fish from Manitoba, which had the effect of putting the appellant out of business, constituted the taking of property, namely, goodwill, away from the appellant.

The Queen v. Littler, 78 DTC 6179, [1978] CTC 235 (FCA)

The sale of property at a price that is less than its value does not result in a transfer of "property" to the purchaser.

Minister of Revenue (Ontario) v. McCreath, [1976] CTC 178, [1977] 1 S.C.R. 2

The settlor of a trust delivered voting trust certificates to the trustee on terms that the income of the trust fund was to be paid during the settlor's lifetime to her or her issue and that on the death of the settlor, the trust fund was to be distributed among her issue as she might by will direct. With respect to an argument made on behalf of the estate of the settlor that was based on the proposition that the gift of the voting trust certificates was severable into income and capital interests, Dickson J. stated (at p. 191):

"Essentially the subject - matter of the gift was a block of shares... . Although the trust indenture provides that the income from the trust fund is to be handled in one manner and the corpus in another, that does not have the effect of constituting two properties... . The substance of the matter in my view is that there was one gift, the subject - matter being 99,986 common shares... ."

Beament et al. v. Minister of National Revenue, 70 DTC 6130, [1970] CTC 193, [1970] S.C.R. 680

Pigeon J.,in his concurring judgment, indicated that the right of children in an agreement between them and the deceased to require a corporation controlled by the deceased be wound-up was "property" for purposes of the Estate Tax Act (Canada), which defined that term as including "a right of any kind whatever".

Technical Tape Corp. v. MNR, 64 DTC 428 (TAB)

Variable payments made by the taxpayer for the use by it of know-how provided by a U.S. corporation were subject to withholding tax as being "for the use in Canada of property". Mr. Davis noted that in the Rolls-Royce case (40 TC 443), The House of Lords "established that what has come to be known in industry as 'know-how' is undoubtedly an asset, even though it may be an intangible one which never becomes depleted".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 212 - Subsection 212(1) - Paragraph 212(1)(d) - Subparagraph 212(1)(d)(i) variable payments wer for use of knowhow 125

Minister of National Revenue v. Fitzgerald, [1949] CTC 101, [1949] S.C.R. 453 (SCC)

A testator (A) domiciled and resident in British Columbia, who died in 1921, bequeathed his property to his surviving wife (B), with the assets of the estate not being administered until beyond the year 1944. B died, while domiciled in British Columbia in 1924, leaving her estate to an individual (C), who was domiciled and resident in California. In 1941 C died leaving her estate to her husband (D) who, in turn died in August 1944 leaving his estate to a nephew (E), of California, who lost his life in December 1944. Administration with the will annexed was granted in California to the respondent in the estates of D and E.

In finding that the right which devolved upon the death of D (namely, the right to have the estate of his deceased wife administered) was not "property" for purposes of the Dominion Succession Duty Act (Canada),Kellock J. stated (at p. 113):

"In my opinion, while 'property' is defined by section 2(k) of the statute as including every estate and 'interest' in real and personal property capable of being devised or bequeathed by will or of passing on death, I see no reason for construing the statute, without more express language, as including an interest in an interest or more remote interests."

Federal Commissioner of Taxation v. United Aircraft Corp. (1943), 7 A.T.D. 318 (HC)

Licence fees to be earned by an American company for the communication of know-how to an Australian licensee did not represent income from a property situate in Australia given that the knowledge to be communicated did not represent property.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(ii) provision of knowhow in the US to Australian company not carrying on business in Australia 199

Musker v. English Electric Co. Ltd., 41 TC 556 (HL)

Lord Radcliffe stated (p. 585):

"There is no property right in 'know-how' that can be transferred, even in the limited sense that there is a legally protected property interest in a secret process. Special knowledge or skill can indeed ripen into a form of property in the fields of commerce and industry, as in copyright, trade-marks and designs and patents, and where such property is parted with for money what is received can be, but will not necessarily be, a receipt on capital account. But imparting of 'know-how' for reward is not like this, any more than a teacher sells his knowledge or skill to his pupil."

Nokes v. Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014 (HL)

It was held that where a court order was made under the Companies Act 1929, for the amalgamation of two corporations, including an order for the "transfer" of all the "property" of the predecessor corporations to the amalgamated corporation, the court order did not automatically transfer employment contracts between employees and the predecessor corporations to the amalgamated corporation. "Property" was defined in the Companies Act 1929 to include "rights and powers of every description". Lord Chancellor Viscount Simon stated (p. 1024):

"S.154 when it provides for 'transfer' is providing in my opinion for the transfer of those rights which are not incapable of transfer and is not contemplating the transfer of rights which are in their nature incapable of being transferred."

Words and Phrases
property property acquired

Curtis Brown, Ltd. v. Jarvis (1929), 14 TC 744 (K.B.D.)

Rowlatt J., before going on to find that U.K. income tax should have been deducted from the payment of royalties to non-resident authors on the basis that they represented annual profits from property situated in the United Kingdom, namely, copyright, rejected (at p. 750) a submission "that the element of property only emerges when a transaction takes place to exploit the copyright by giving a licence" and stated that "it seems to me the copyright itself is property".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) 121

Administrative Policy

7 October 2022 APFF Federal Roundtable, Q.12

building treated as a single property for purposes of principal use test

A CCPC (ABC Inc.) owns a building, 65% of which is used in its manufacturing business, and the remaining 35% is leased to a third party. CRA referenced (subpara. (b)(ii)) of the definition of “income” in s. 129(4), which assimilates to income from an active business, property income from property used or held principally for the purpose of gaining or producing income from that business., and stated:

[T]here are arguments to support the contention that the building used 65% by ABC Inc. in its manufacturing activities could be a property used or held primarily to earn income from its manufacturing business for the purposes of subparagraph (b)(ii) … . In such case, the rental income of ABC Inc. would qualify as "income of the corporation for the year from an active business" within the meaning of subsection 125(7).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 129 - Subsection 129(4) - Income or Loss rental income from the smaller portion of a building not used in manufacturing could be assimilated to active business income 306

6 October 2017 APFF Financial Strategies and Instruments Roundtable Q. 10, 2017-0705201C6 F - Capital loss - repayment of loan

foreign currency is not property for purposes of the suspended-loss rules
See also 2008-0280111I7.

A U.S.-dollar loan owing to an affiliated trust is repaid on its maturity, thereby resulting in an s. 39(2) FX loss to the borrower. The trust promptly relends those U.S.-dollar to the borrower. Is the s. 39(2) loss (which is deemed to be a loss from the disposition of foreign currency) suspended under s. 40(3.4) (or is it a superficial loss under s. 40(2)(g)(i), if the borrower is an individual)?

CRA indicated that the issue here is whether the U.S. dollars received by the borrower under the new loan are identical property to the foreign currency that it was deemed to have disposed of under s. 39(2), and noted that under the "property" definition in s. 248(1), “money could constitute property unless a contrary intention is evident” – but then stated:

However, the CRA's position is not to consider money to be identical property for the purposes of subparagraph 40(2)(g)(i) or subsections 40(3.3) and (3.4) in a circumstance such as this where a taxpayer sustains a loss under subsection 39(2).

Therefore, no suspended (or superficial) loss.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3.3) the foreign currency deemed to be disposed of under s. 39(2) by an FX borrower on repaying a USD loan is not identical property to the USDs received by it under a replacement loan 370

6 October 2017 APFF Roundtable Q. 16, 2017-0709161C6 F - Résidence principale sur une terre agricole

non-severable farm is a single indivisible property

A husband and wife equally own a partnership which for some time has been holding land which as to 80% was used in the farming business and as to 20% was used for their residence (with the residence not being legally severable). CRA indicated that because under the Quebec Civil Code “an owner of an immovable (for example, a piece of land) is the owner by accession to all structures and works located on the immovable,” the land was to be treated as one indivisible property for purposes of determining under the “interest in a family farm or fishing partnership” definition whether the land was used principally (over 50%) in a Canadian farming business.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1) - Interest in a Family Farm or Fishing Partnership - Paragraph (a) - Subparagraph (a)(i) a legally non-severable farm that is used both in farming and as a residence is one property for purposes of the s. 110.6 principal-use tests 314

2 February 2017 Quebec CPA Individual Taxation Roundtable Q. 1.4, 2016-0674831C6 F - Changement d'usage - duplex

duplex is single property
essentially the same as 2015-0589821E5 F

Before going on to find that the change-of-use rules should be applied to a duplex on a global basis, CRA stated:

[A]n immovable is normally considered to be a single and sole property unless it is legally subdivided into two or more separate properties.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) substantially renovating the personal-use portion of a rental property (without changing floor areas) generally would not engage the change-of-use rules 243
Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) apportionment of operating expenses of duplex used both personally and for rental income 165

29 November 2016 CTF Roundtable Q. 8, 2016-0671501C6 - 55(2) clause 55(2.1)(b)(ii)(B)

cash is property in s. 55(2)

CRA indicated that cash is property for s. 55 purposes.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) cash is property for 55(2.1)(b)(ii)(B) purposes 133

3 March 2015 External T.I. 2014-0519981E5 F - Donation avec charge / Gift with a charge

real estate property is one property

Before considering the treatment under ss. 69(1)(b)(ii) and s. 69(1)(c) of a gift of a real estate property that is charged with a hypothec, CRA stated:

[A]n immovable is normally considered as a single and unique property at least where such property is not the object of a legal partition into two or more distinct properties.

See summary under s. 69(1)(b).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) gift of encumbered property 154

6 October 2014 External T.I. 2014-0543751E5 F - Rollover of a part of an interest in a partnership

partnership interest is one property - but fraction thereof also is property if transferred

CRA stated "an interest in a partnership held by a taxpayer [is] a single property, regardless of the composition of that interest," but then added in light of the Act's part-disposition rules:

[A] part or fraction of an interest in a partnership held by a taxpayer as capital property could, in turn, be regarded as capital property, because it is property the disposition of which results in a capital gain or loss for the taxpayer. Thus, a part or fraction of the partnership interest would be an eligible property [under s.] 85(1.1)(a).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) fractional partnership interest qualifies as eligible property 75

20 January 2014 External T.I. 2013-0503871E5 F - Vente d'une érablière

maple syrup production quota is property if it is property under civil law

Would a maple syrup production quota allocated to a maple sugar bush by an authority be considered property for tax purposes. After referencing s. 8.1 of the Interpretation Act, CRA stated:

If it is determined that the maple syrup production quota is property under civil law, the maple syrup production quota will also be considered property for the purposes of the Act.

12 June 2012 STEP CRA Roundtable, 2012-0442921C6 - STEP CRA Roundtable - June 2012 Q.9

A s. 70(6) election cannot be made in respect of a fractional interest in a property For these purposes each share of a corporation, and all of the taxpayer's interest in a partnership, constitutes a single property of the taxpayer. As each share is a separate property, a s. 70(6.2) election can be made for any number of the deceased taxpayer's shares; whereas it cannot be made with respect to a portion of the deceased taxpayer's partnership interest.

21 February 2012 External T.I. 2011-0417471E5 F - Changement d'usage - paragraphe 45(3)

immovable (including a duplex used 2 different ways) is considered a single property unless subdivided

A taxpayer inhabited as a principal residence a unit of a taxpayer-owned duplex and integrates that unit, through major renovations, with the other unit in the duplex that was, before those renovations, rented to third parties.

CRA indicated that “An immovable is normally considered to be a single property unless it is legally subdivided into two or more separate properties,” so that, in this situation, the partial change-in-use rule in s. 45(1)(c) would be considered to apply.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 45 - Subsection 45(3) s. 45(3) election not available where 2nd unit in taxpayer-owned duplex changed from rental to personal use 146
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(c) s. 45(1)(c) applies where 2nd unit in taxpayer-owned duplex changed from rental to personal use 150

19 January 2011 External T.I. 2010-0390831E5 - Compute LRIP - corporation becomes non-CCPC

A future income tax asset is not "property" within the meaning of variable A of s. 89(8) as it does not represent a "right" - unless the corporation has a right to receive a refund of the tax.

12 January 2011 Internal T.I. 2010-0375801I7 F - Bien agricole admissible détenu avant 1987

property status of Quebec lands divided into cadastral lots was analyzed on a lot-by-lot basis

Before finding that Quebec lands that had been devised to a widow by her farmer husband, who used only part of the lands in his farming business, should be analyzed on a cadastral lot-by-lot basis, respecting meeting the tests in s. 110.6(1.3)(c)(ii), so that only those lots that had been used by deceased husband in farming so qualified, the Directorate stated:

[C]adastral lots are considered, for the purposes of the Act, to be separate real property … . Consequently, the determination of the status of the land, i.e., whether or not it can be considered to be property used principally in the business of farming, must be made on a lot-by-lot basis.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - 101-110 - Section 110.6 - Subsection 110.6(1.3) - Paragraph 110.6(1.3)(c) - Subparagraph 110.6(1.3)(c)(ii) lands of widow analyzed on a cadastral lot-by-lot basis, so that only those that had been used by deceased husband in farming qualified 297

8 October 2010 Roundtable, 2010-0373461C6 F - Retrait d'une société de personnes

partnership unit is not separate property from other units

Before going on to find that there was a pro rata recognition of capital gain when 20% of a partner’s units were redeemed, CRA stated that "all the units that a partner holds in a partnership are one and the same property, that is, the partner's interest in the partnership."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3) negative ACB realized pro rata as units are redeemed 51
Tax Topics - Income Tax Act - Section 100 - Subsection 100(2) negative ACB realized pro rata under s. 100(2) as portion of the units are redeemed each year 201
Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) all the partner’s units are a single property 81

11 July 2007 External T.I. 2006-0206391E5 F - Choix du paragraphe 70(6.2) - société de personnes

each share, unlike a partnership unit, is a distinct property

A deceased person held an interest in a family farm partnership. In the course of finding that the executor could not elect to have s. 70(6) apply to only a portion of the partnership interest, CRA noted that “a partnership interest, even if it is represented by the holding of units with or without identical rights, constitutes a single property of the partner,” and a s. 70(6.2) election could not be made respecting only a portion of a property.

This contrasted with qualified small business corporation shares, for which the election could and was required to be made in respect of a particular number of shares: “each share represents a property in itself.”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 70 - Subsection 70(6.2) s. 70(6.2) election not available for part of a partnership interest, whereas it is made for particular shares 131

11 May 2007 External T.I. 2006-0214351E5 F - Transfert d'un droit de propriété

an occupied unit in a co-owned duplex can be designated as a principal residence

CRA applied the statement in IT-120R6, para. 3, that a unit in a duplex is a property that can be designated as a taxpayer's principal residence, to find that where a duplex is co-owned by a husband and wife, the one unit occupied by them can be designated as their principal residence – but when their daughter moves into the 2nd unit (until then, a rental unit) and acquires a co-ownership interest in the whole property, they will be able to designate either of the two units as their principal residence, but not both.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 40 - Subsection 40(2) - Paragraph 40(2)(b) where duplex co-owned by husband and wife, the one unit occupied by them can be designated as a principal residence – but this changes when daughter moves into the 2nd unit 243

15 March 2005 Internal T.I. 2004-0108721I7 F - Don d'une licence

excepting WIP, definition of property is no broader than term’s ordinary meaning

In connection with finding that a gift of a non-exclusive software licence was a gift of property, CRA stated:

In Manrell, the Court went on to determine that, with the exception of paragraph (d) (which is not relevant to this case), the definition in subsection 248(1) does not have the effect of giving the word "property" a meaning that differs from its ordinary meaning.

Words and Phrases
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts gift of a non-exclusive software licence was a gift of property 105

28 April 2004 Internal T.I. 2004-0066991I7 F - Paiement incitatif

property “includes practically any type of economic interest”

As an incentive for the sale of exempt life insurance policies (having a savings and investment component) a life insurance brokers would pay to clients purchasing the policies an amount equal to the first-year’s commission earned by the broker from the life insurance company.

Before finding that such incentive payments were includable in the income of such clients under s. 12(1)(x) (absent any election made under s, 12(2.2) respecting the premiums paid) given inter alia that they were received by such clients “in the course of earning income from … property,” namely, acquiring and holding the policies, CRA cited La Capitale (98 DTC 6215) (also regarding an insurance policy) for the proposition that "’property’ in the Act includes practically any type of economic interest” and indicated that “the Policyholder holds property for the purposes of the Act.”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) incentive payments received from broker to purchase an exempt life insurance policy were received “in the course of earning income from … property” (the policy) 166
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose per MacIntyre, life insurance premiums are not deductible from business income 192

27 January 2004 External T.I. 2003-00060250 F - Roulement d'une partie d'un bien

s. 70(6) can apply to a part interest in a single real property
Identical to 2003-0006025 F

Where part of an immovable was distributed to the spouse of the deceased, and the other interests in the immovable were distributed to the children, CCRA indicated that the s. 70(6) rollover applied to the interest distributed to the spouse.

1998 A.P.F.F. Round Table, Q. 14, No. 9824750

Know-how is not property. Accordingly, although the know-how relating to a business may be part of the goodwill that is transferred on an incorporation of that business, this position (reflected in IT-386R, para. 2(d)) cannot be relied upon in determining whether know-how is an eligible property for purposes of s. 85(1.1).

27 April 1998 External T.I. 9800145 - non-competion agreements, client lists

A lump-sum payment received by the individual shareholder of a corporation upon a sale by that corporation of one of its business divisions and in consideration for a non-compete covenant given by the individual to the purchaser would be regarded as a capital gain arising on a disposition of "property" (the right of the individual to compete).

23 September 1996 External T.I. 5-962304

The rights of a person to obtain a patent in respect of know-how represent property and, accordingly, can qualify as an eligible property under s. 85(1.1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) pre-patent right included 27

8 November 1995 Internal T.I. 9525077 - NON-COMPETITION PAYMENTS

In considering the treatment of payments received by a shareholder pursuant to a non-competition agreement, the Department stated:

"Property is broadly defined in subsection 248(1) of the Act to include, '... a right of any kind whatever ...'. It is our view that where a taxpayer gives up his right to compete in a business under a contract that right would be a property for the purposes of the Act and any consideration received by the taxpayer for giving up such right would generally be on account of capital."

24 April 1995 External T.I. 9429505 - MILK QUOTA

A milk quota represents a "right" of the individual farmer to produce and market milk and, therefore, represents "property" and an "eligible capital property" notwithstanding that the applicable regulations provide that the quota belongs to the provincial marketing board and that no person may transfer, assign or sell the quota to another person or receive payment for a quota from a producer.

28 March 1995 Internal T.I. 9502507 - RIGHT TO ROYALTY ELIGIBLE PROPERTY

RC cited Evans v. MNR,60 DTC 1047, [1960] S.C.R. 391 and Asamera Oil (Indonesia) Ltd.,73 DTC 5274 (FCTD) after stating that "a right to receive income, in or by itself, would generally not be considered capital property", but went on to note that a different conclusion obtains where the taxpayer also owns the underlying property that gives rise to the rights to the income.

3 October 1994 External T.I. 9424115 - EPSP FORFEITURES

A contingent right to receive shares under an employee profit sharing plan would be a capital property the disposition of which to give rise to a capital loss or capital gain.

24 March 1992 T.I. (920203 (March 1993 Access Letter, p. 76, ¶C109-126; Tax Window, No. 18, p. 24, ¶1827)

A particular covenant that is a restriction against land and which runs with the land and is binding on the landlord and his successors in title, will qualify as property for purposes of s. 248(1).

81 C.R. - Q.86

notwithstanding Rapistan, RC will consider know-how that is of a capital nature as being "eligible capital property" for purposes of the Act.


Douglas S. Ewens, Michael J. Flatters, "Toward a more Coherent Theory of Dispositions", 1995 Canadian Tax Journal, Vol. 43, No. 5, p. 1377

Discussion of the realization principle.

Wilson, "Tax Treatment of Development, Acquisition, and Transfer of Technology", 1983 Conference Report, pp. 857-867

Discussion of whether know-how is property.