Commodities, and commodities futures and derivatives

Commentary

Commodities such as lead (see Taylor) and toilet paper (see Rutledge, and see also Fraser) are by their nature not of an investment character, so...

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Cases

Canada v. Zelinski, 2000 DTC 6001 (FCA)

The taxpayers purchased numerous paintings of Morrisseau - initially because of the advantageous price and, later, in greater volume after they...

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The Queen v. Mel-Bar Ranches, 89 DTC 5189, [1989] 1 CTC 360 (FCTD)

$291,134, which a farmer received pursuant to an agreement whose "essential purpose" was for the felling and removal of all usable timber on a...

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Armstrong v. The Queen, 85 DTC 5396, [1985] 2 CTC 179 (FCTD)

It was held that a thoroughbred racing horse had not been bought by the taxpayer with a view to its eventual sale, and its sale three years later...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 51

Westcon Engineering and Contractors Ltd. v. The Queen, 77 DTC 5398, [1977] CTC 567 (FCTD)

After a corporate jet leased by the taxpayer ceased to be useful to it, it located a purchaser, exercised a purchase option contained in the lease...

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Doyle v. MNR, 70 DTC 6251, [1970] CTC 365 (Ex.Ct.), briefly aff'd 78 DTC 6027, [1978] CTC 530, 1 S.C.R. 547

Equipment was purchased by a syndicate whose purpose was to resell the equipment at a substantial gain to a known purchaser. When the purchaser...

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Orlando v. The Minister of National Revenue, 62 DTC 1064, [1962] CTC 108, [1962] S.C.R. 261

The chief source of income of the taxpayer from farm land which she held in Scarborough was the sale in most of the years from 1945 to 1952 of...

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Frankel Corporation Ltd. v. Minister of National Revenue, 59 DTC 1161, [1959] CTC 244, [1959] S.C.R. 713

The taxpayer, which was engaged in dealing in scrap metals, smelting and refining non-ferrous metals, and in carrying on a wrecking and salvage...

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MNR v. Taylor, 56 DTC 1125, [1956] CTC 189 (Ex Ct)

Because the parent corporation of the taxpayer's employer ("Canada Metal") prohibited Canada Metal from dealing in futures or purchasing lead...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business purchase of large quantity of lead for resale was an adventure 127

Atlantic Sugar Refineries v. Minister of National Revenue, 49 DTC 602, [1949] S.C.R. 706

The taxpayer, whose business was purchasing, refining and selling sugar, purchased 15,000 tons of raw sugar at elevated prices due to the outbreak...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Futures/Forwards/Hedges short sale of sugar futures for business hedging on income account 205

See Also

Wright v. The Queen, 2003 DTC 763 (TCC)

The taxpayers and their father had used 430 acres of a 5,700 acre property in Manitoba for farming for many years before farming ceased in the...

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Pustina v. The Queen, 96 DTC 1594, [1996] 3 CTC 2542 (TCC)

In finding that the taxpayers (three lawyers) had acquired various paintings by Morrisseau on capital account, Mogan TCJ. stated (at p....

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Wain v. Cameron, [1995] BTC 299 (Ch. D.)

A sale by the taxpayer (who was an author as well as a professor) of his working papers, notebooks, drafts and memorabilia (but not of any...

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Harms v. MNR, 84 DTC 1666, [1984] CTC 2714 (TCC)

The taxpayer, who carried on an accountancy practice but also traded in corn, wheat, gold and cotton futures, purchased gold bars and coins in...

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Wisdom v. Chamberlain (1968), 45 TC 92 (C.A.)

On the advice of his accountant the taxpayer used borrowed money to purchase £200,000 worth of silver, with a right to put the silver back to the...

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Commissioners of Inland Revenue v. Fraser (1942), 24 TC 498 (Ct. of Ses. (First Div.))

The taxpayer, who had no previous dealings in whisky and none afterwards, and no special knowledge of the whisky trade, purchased whisky in bond...

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Rutledge v. Commissioners of Inland Revenue (1929), 14 TC 490 (Ct. of Ses. (First Div.))

The taxpayer, a businessman with many interests (lending money, the film business, and dealing in real property) happened to be in Berlin in...

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Doughty v. Commissioner of Taxes, [1927] AC 327 (PC)

On the formation of a partnership, the excess of the nominal value of the shares issued over the net book value of the assets transferred was...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence step up in recorded carrying value not profit 131
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Goodwill 134

Administrative Policy

23 December 2013 Internal T.I. 2013-0514701I7 - Bitcoins

Question. "Given the enormous appreciation of the [Bitcoin] currency - how does Capital Gains tax apply?" CRA response:

The determination of the...

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Example

Mr. X bought a Bitcoin on June 1, 2013 for $100. Mr. X then sold the Bitcoin on December 1, 2013 for $500. Based on his particular facts and...

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5 November 2013 CRA Press Release "What you should know about digital currency"

Digital currency is virtual money that can be used to buy and sell goods or services on the Internet. Bitcoins are an example of digital...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Computation of Profit 67

10 July 2012 Internal T.I. 2011-0418541I7 - XXXXXXXXXX hedges

Canco acquired FCo, a non-resident corporation. Canco did not directly hold reserves or production assets, but had a head office in Canada with...

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25 February 2011 External T.I. 2011-0392061E5 - Commodities and mutual Funds

A mutual fund's gains and losses from transactions in commodities futures are generally considered to be derived from adventures in the nature of...

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7 April 2005 External T.I. 2004-0099191E5 F - Inventaire d'un artiste

CRA indicated that inventory of an artist acquired on the artist’s death would generally be disposed of by the legatee on capital account.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 10 - Subsection 10(6) reporting nil inventory on T2124 form is treated as making the election 82
Tax Topics - Income Tax Act - Section 70 - Subsection 70(2) application of s. 70(2) or (3) to artist’s inventory 219

16 December 2004 External T.I. 2004-008197

Respecting a mutual fund that purchased precious metals to be physically held by it in its vaults in the expectation of long-term appreciation,...

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16 May 1996 Internal T.I. 9616950 - SALE OF TIMBER FROM PRIVATE LAND

Whether a contract relating to disposal of timber constitutes a sale of chattels, or constitutes a grant of an interest in land or a licence...

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21 April 1995 External T.I. 9509865 - CAPITAL GAINS ELECTION -- STANDING TIMBER

Because standing timber normally is not an asset distinct from the land on which it stands, an individual owning the underlying real property can...

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6 September 1994 External T.I. 9412945 - TRANSACTIONS IN COMMODITIES BY MUTUAL FUND TRUSTS

RC is "of the opinion that gains and losses resulting from transactions in commodities by mutual fund trusts are, generally, considered to be...

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23 February 1994 Internal T.I. 9402106 - CLASSIFICATION OF LEASED ASSETS

Generally, it is RC's position that a property subject to a long term lease is capital property.

11 January 1994 External T.I. 5-9325855

A taxpayer purchases gold on the spot market and simultaneously sells it forward for an amount which exceeds his cost, thus locking in a gain. Is...

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2 September 1992 Memorandum (Tax Window, No. 24, p. 17, ¶2222)

Proceeds received by land owners from the sale of logs and wood products are included in their income. However, where the removal of trees is...

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13 May 1992 Internal T.I. 7-921151

Fluctuations in the amount of the liability of gold producers for gold loans are on income account.

IT-373R "Farm Woodlots and Tree Farms"

"Amounts received (whether in a lump sum or on a stumpage basis) for permitting other persons to remove standing trees from the woodlot are...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) 39

IT-346R "Commodity Futures and Certain Commodities"

3. For taxpayers who take futures positions in, or who have transactions in, commodities connected with their business as part of their business...

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CPP-3 "Speculators in Commodity Futures and Certain Commodities"