Cases
Transalta Corporation v. Canada, 2012 DTC 5040 [at 6757], 2012 FCA 20
A partnership bought the assets of an electric company at a price that was $190 million in excess of the regulated book value (the amount on which...
Schwartz v. Canada, 96 DTC 6103, [1996] 1 SCR 254
The taxpayer received $360,000 (plus costs) in settlement of his claim for damages following the repudiation by a company ("Dynacare") of its...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 180 - Subsection 180(3) | no deference to FCA factual findings | 95 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Employment | 46 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retiring Allowance | pre-employment termination damages were not a retiring allowance | 62 |
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit | 53 | |
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) | quaere whether income can be from a non-enumerated source | 39 |
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | 83 | |
| Tax Topics - Statutory Interpretation - Comparison of Provisions | presumption of consistent expression within same statute | 73 |
| Tax Topics - Statutory Interpretation - Specific v. General Provisions | specific statutory rule should not be undercut by a more general rule | 76 |
H. Baur Investments Ltd. v. The Queen, 90 DTC 6371, [1990] 2 CTC 122 (FCTD)
The Court refused to depart from a supplementary agreement as to the allocation of purchase price between land, building and equipment in a sale...
The Queen v. Golden et al., 86 DTC 6138, [1986] 1 CTC 274, [1986] 1 S.C.R. 209
The phrase "the disposition of any property" means the sale of a particular item or items of property and "the expression 'something else' must be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | "property" includes a contract right, or potentially covenant to deliver knowhow | 78 |
| Tax Topics - Statutory Interpretation - Context | 27 |
The Queen v. Demco Management Ltd., 85 DTC 5603, [1986] 1 CTC 92 (FCA)
It was held by Mahoney, J.A. that for the purpose of computing the capital gain from the disposition of a hospital there was no requirement that...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Cumulative Eligible Capital | 31 |
Salt v. The Queen, 84 DTC 6395, [1984] CTC 414 (FCTD)
Proceeds of disposition of two lots were allocated between the two lots by using the average price per square foot since "there was no feature of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Land | 45 | |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | 112 | |
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | 101 |
Millers Credit Jewellers Ltd. v. The Queen, 84 DTC 6205, [1984] CTC 218 (FCTD)
Although a building on expropriated land was worthless to the expropriating municipality, a portion of the proceeds (equal to the building's...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 169 | 108 | |
| Tax Topics - Income Tax Act - Section 172 - Subsection 172(2) | 108 |
Golden v. The Queen, 83 DTC 5138, [1983] CTC 112 (FCA), aff'd supra.
Given the reciprocal effect of a s. 68 allocation, the determination under S.68 is not to be approached from the viewpoint of the vendor only. The...
Elworthy v. The Queen, 82 DTC 6067, [1982] CTC 62 (FCTD)
The allocation between bare land and building was affected by B.C. legislation which prohibited tearing down the building, which otherwise would...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Land | 64 |
A.G. Canada v. Matador Inc., [1980] CTC 51, 80 DTC 6018 (FCA)
It was held that an allocation of the sale price of land including building, where the sale agreement was silent on the question of allocation,...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 174 - Subsection 174(3) - Paragraph 174(3)(b) | 38 |
Roywood Investments Ltd. v. The Queen, 79 DTC 5451, [1980] CTC 19 (FCTD), aff'd 81 DTC 5148, [1981] CTC 206 (FCA)
In determining what portion of a purchase price was paid for a building, the Court may consider the evidence of accountants and real estate...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(c) | 70 | |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c) | land with building was acquired only for purpose of generating capital gain | 50 |
The Queen, v. Leclerc, 79 DTC 5440, [1979] CTC 527 (FCTD)
$429,000 of the aggregate purchase price of $650,000 was allocated to building, notwithstanding that the deed of sale, following some negotiation...
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|---|---|---|
| Tax Topics - General Concepts - Evidence | 71 |
R. v. Malloney’s Studio Ltd., 79 DTC 5124, [1979] CTC 206, [1979] 2 S.C.R. 326
S.20(6)(g) of the old Act did not apply to the taxpayer's sale of premises pursuant to an agreement which provided that the lands should be "clear...
The Queen v. Jessiman Brothers Cartage Ltd., 78 DTC 6205, [1978] CTC 274 (FCTD)
The taxpayer, which previously had transported mail for Canada Post in the Winnipeg area, sold its fleet of 60 trucks to Canada Post for $91,675....
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|---|---|---|
| Tax Topics - Income Tax Act - Section 178 - Subsection 178(2) | 18 |
The Queen v. Moulds, 78 DTC 6068, [1978] CTC 146 (FCA)
The taxpayer acquired land with two small apartment buildings on it in 1961 because he conidered the site to be suitable for the construction of a...
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|---|---|---|
| Tax Topics - General Concepts - Estoppel | 105 |
Dominion Stores Ltd. v. MNR, 66 DTC 5111, [1966] CTC 97 (Ex Ct)
In finding that the taxpayer in fact received an amount in respect of the issuance by it of "free" trading stamps on the purchase of groceries by...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | portion of sales allocated to trading stamps | 136 |
Seaboard Advertising Co. Ltd. v. MNR, 65 DTC 5188, [1965] CTC 310 (Ex. Ct.)
The taxpayer paid $230,000 for the acquisition of substantially all the business of its competitor, including $100,000 which was allocated to...
See Also
Wagner v. The Queen, 2012 DTC 1234 [at 3645], 2012 TCC 8
An agreement of a corporation ("Château Dollard") owned equally by the three individual taxpayers to sell its assets for $13,750,000 was replaced...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | common interest in sharing tax saving | 114 |
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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|---|---|---|
| Tax Topics - Income Tax Act - Section 16 - Subsection 16(1) | regard to economic substance | 138 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(12) | 303 | |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 42 | |
| Tax Topics - Treaties - Income Tax Conventions - Article 24 | no double taxation engaging Art.2(a) of U.S. Treaty | 258 |
Robert Glegg Investment Inc. v. The Queen, 2008 DTC 2466, 2008 TCC 20, aff'd , 2009 DTC, 2008 FCA 332
The taxpayer, which sold its shares of a company ("Glegg Industries") at the same price as that received by the minority shareholders of Glegg...
Tsiaprailis v. Canada, 2005 DTC 5119, 2005 SCC 8, [2005] 1 S.C.R. 113
After referring (at para. 51) to the “need to compartmentalize global payments into their constituent portions to determine which are...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(f) | payment in settlement of disability arrears was taxable under surrogatum principle as being "pursuant to" the plan | 169 |
Staltari v. The Queen, 95 DTC 506, [1995] 2 CTC 2239 (TCC)
Beaubier TCJ. affirmed the Minister's reassessment treating all but $15,000 of a $115,000 sum purportedly paid to an arm's length dismissed...
Spies v. The Queen, 94 DTC 1964, [1994] 2 CTC 2439 (TCC)
All the proceeds received by the taxpayer in connection with the sale of his land to TransCanada Pipelines Limited ("TCP") were to be...
Inshore Investments Ltd. v. The Queen, 92 DTC 6162, [1992] 1 CTC 189 (FCTD)
A written agreement between the taxpayer (a venture capital corporation) and another corporation ("Taiga") provided for the sale by the taxpayer...
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| Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business | 105 | |
| Tax Topics - Income Tax Act - Section 9 - Expense Reimbursement | 105 |
Gérald Léonard and Suzette Léonard v. Minister of National Revenue, 91 DTC 545, [1991] 1 CTC 2353 (TCC)
The taxpayers were successful in allocating a higher portion of the purchase price to livestock and the cost of milk quotas, and a lower portion...
Administrative Policy
17 February 2021 External T.I. 2018-0768051E5 F - Contrat de crédit-bail
Regarding a lease to “Aco” of a truck tractor (the “Vehicle”) with a term of 48 months and a bargain purchase option at maturity, CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | leasing contract cannot be recharacterized as a secured loan funding an acquisition of depreciable property | 246 |
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | a portion of the lease payments under a lease with a bargain purchase option recharacterized as consideration for the option | 146 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) | acquisition of leased vehicle pursuant to bargain purchase option followed by sale of vehicle could engage s. 13(5.2) | 131 |
| Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) | truck tractor is prescribed property | 26 |
| Tax Topics - General Concepts - Substance | lease payments, but not the lease itself, could be recharacterized | 93 |
S3-F4-C1 - General Discussion of Capital Cost Allowance
Categories covered
1.80 … As it pertains to depreciable property, the provisions of section 68 can apply to consideration for:
- both depreciable...
18 July 2011 External T.I. 2010-0370561E5 F - Location avec option d'achat
Where there is a real estate lease with a purchase option, is a portion of the rent paid under a lease with a bargain purchase option allocated to...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | where lease is coupled with bargain purchase option, a portion of the rents must be allocated to option proceeds | 164 |
| Tax Topics - General Concepts - Substance | lease is a lease in the absence of sham | 92 |
4 April 2005 External T.I. 2004-0099411E5 F - Transfert de contrat de crédit-bail
Corporation A signed a four-year lease, at the end of which it could exercise a bargain purchase option on the property for $5. It then...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | CRA position on allocating lease payments to bargain purchase option extended to assignment of the lease agreement | 83 |
9 March 2004 External T.I. 2003-0046961E5 F - Frais payés à une famille d'accueil
Mr. A and Ms. A, who have a child with a mental or physical impairment qualifying for the tax credit under s. 118.3(1), decided to place the child...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 63 - Subsection 63(3) - Child Care Expense - Paragraph (a) | occasional short stays with the parents do not qualify as residing with them | 152 |
| Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(2) - Paragraph 118.2(2)(b.1) | fee paid for care by foster family for disabled child could qualify under s.118.2(2)(b.1 | 288 |
92 C.R. - Q.9
Paragraph 6 of IT-96R5 (respecting circumstances in which it is not necessary to allocate consideration to a conversion feature) applies where a...
September 1991 Memorandum (Tax Window, No. 10, p. 16, ¶1479)
Where various assets are sold for a single price without a contractual allocation of the price among the assets sold, and the parties make...
89 C.M.TC - Q.3
s. 68 continues to have application to the issue of allocation between two properties.
88 C.R. - F.Q.12
Where there is no agreed allocation, each taxpayer should prorate the purchase price based on relative fair market values.
80 C.R. - Q.16
RC will look beyond the written allocation of arm's length parties where the parties do no follow the agreed allocation, where the total selling...
80 C.R. - Q.41
In MURB offerings, it is reasonable to regard down payments of cash and promissory notes and mortgage draws as being applied first to goods and...
IT-220R2 "Capital Cost Allowance - Proceeds of Disposition of Depreciable Property"
Detailed discussion under heading "Combined Consideration".
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(4) | 0 |
IT-96R "Options Granted by Corporations to Acquire Shares, Bonds or Debentures"
[para. 9] In the case of a security with a conversion feature which is not severable from the security and cannot be separately traded, no part of...
IT-304R "Capital Cost Allowance - Condominiums"
Where a unit or strata lot is purchased, an allocation is required to be made between the cost of the undivided interest in the land and the...
Paragraph 68(a)
See Also
Godcharles v. Agence du revenu du Québec, 2021 QCCA 1843
A group of unrelated individuals were the co-owners of a seniors’ residence (“SR”), which was leased by them to the corporate operator of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) - Subparagraph 69(1)(b)(i) | s. 69 cannot reduce inflated proceeds to vendor | 435 |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | transaction was not at arm’s length given the dominant role of their architect | 413 |
| Tax Topics - General Concepts - Fair Market Value - Land | goodwill portion of retirement residences business determined as the residual from valuing the residence using the cost method | 272 |
Paragraph 68(c)
Articles
Michael Coburn, "Practical Strategies for Dealing with the Restrictive Covenant Provisions", 2014 Conference Report (Canadian Tax Foundation), 8:1-29
Burden on CRA of establishing unreasonableness/reasonableness of nil allocation (pp.17-19)
Effectively, the courts have created a test where the...
Jack Bernstein, "Canadian Intangibles, Noncompete Payments, and Allocations of Purchase Price", Practitioner's Corner, Tax Notes International, 26 March 2012, p. 1011
High-level overview.