Words and Phrases - "cost"
31 July 2023 Internal T.I. 2021-0876331I7 - SR&ED ITC Recapture Rules
The taxpayer harvests trees, transforms then into logs, and feeds the logs into a new machine being tested for SR&ED purposes. The logs so used in the SR&ED testing are then transformed into finished lumber, which is sold at market prices to an arms-length party. The cost of materials for such SR&ED purposes consists of stumpage fees, harvesting fees, delimbing fees, transportation fees and in-house manufacturing salary and overhead expenses.
After noting that the “the term ‘cost’ includes the full cost of acquiring the property and incorporates all costs that are necessary to put the property into a position to be used,” and that “In general, for a property to be considered to be acquired, an element of beneficial ownership must exist (possession, use, risk, and control,” the Directorate noted that, having regard to s. 127(32), the particular property that was acquired from a transferor appeared to be the trees, for which a stumpage fee was paid and that, conversely, the logs did not appear to so qualify as they were obtained (out of the trees) “as a result of third-party services rendered in respect of the trees.” In addition, since no acquisition of property occurs in connection with manufacturing salary and overhead costs, these amounts cannot be considered an amount paid by the taxpayer to acquire the particular property from a transferor of the particular property.
However, for property manufactured in-house, the cost of each component part and raw material input might qualify as a separate property that was subject to the ITC recapture rules.
18 May 2022 Internal T.I. 2018-0788761I7 F - Amortissement – Travaux sur un bien loué et F&T
The taxpayer, which subleased premises on which were “Shells” consisting essentially of foundations, walls and roofs, installed wall and floor coverings and electrical, ventilation and plumbing work and performed other work to make the premises suitable for use in its manufacturing and processing (“M&P”) work, and took the position that the portion of the costs should be included in the capital cost of equipment that was used directly or indirectly primarily for the M&P of goods for sale (the "M&P Properties"), namely, the cost of installing the M&P Properties (the "M&P Installation Costs") and as the cost of goods specifically required to perform such installation and to commission the M&P Property (the "M&P Commissioning Property ) should be included in Class 29 rather than Class 13. In addressing whether such costs were costs of the M&P Property or costs of the M&P Commissioning Property, the Directorate stated:
[T]he costs of installing equipment and bringing it into service generally include the costs of connecting it, for example to the building's electrical system, to the extent that these costs are identifiable and serve only that equipment. …
If you determine that the portion of the M&P Installation Costs and the costs of the M&P Commissioning Property represents installation costs and expenses incurred to bring an M&P Property into service, the portion of those costs will therefore be included in the same Class as the M&P Property.
… [I]f you determine instead that the portion of the M&P Installation Costs and the costs of the M&P Commissioning Property does not represent installation costs and expenses incurred to bring an M&P Property into service, the portion of those costs will not be included in the same Class as the M&P Property. Instead, the M&P Commissioning Property will be included in the Class appropriate to the M&P Commissioning Property itself, for example electrical wiring and plumbing pipes … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(5) - Paragraph 1102(5)(a) - Subparagraph 1102(5)(a)(iii) | rendering of an empty shell suitable for manufacturing constituted substantially changing its nature | 288 |
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 8 - Paragraph 8(b) | property does not satisfy the “solely” test in Class 8(b) where it was necessary for the proper functioning of the building | 265 |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(4) | to be improvements or alterations to leasehold interest, property acquisitions must be assimilated to landlord’s property | 225 |
| Tax Topics - General Concepts - Ownership | leasehold improvements are assimilated to the landlord’s property unless the lease specifies otherwise | 101 |
| Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(5) | building shell was a building or structure/ addition refers to extension of structure | 294 |
Teleglobe Canada Inc. v. R., 2002 DTC 7517, 2002 FCA 408
In connection with a privatization transaction and at a time that it was still owned by the federal Crown, the taxpayer purchased assets for a stipulated purchase price that was less than the price at which an arm's length purchaser had committed (pursuant to the same agreement under which the asset sale occurred) to purchase the common shares of the taxpayer. Such purchase price excess was reported for income tax purposes by the taxpayer as the cost of cumulative eligible capital (i.e., goodwill).
Pelletier JA applied Stanton v. Drayton, which he summarized (at para. 22) as finding that “since the transaction was at arm's length and otherwise unimpeachable, the cost of the shares was the consideration agreed between the parties and not the par value, or market value of the shares,” to find that the cost of the assets was the stipulated purchase price. He stated (at para. 32):
The cost to the Appellant of issuing shares as part consideration for the assets ... is the amount agreed between the parties, as evidenced by the stated capital of the common shares in the Appellant.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Cumulative Eligible Capital | cost of assets purchased with treasury shares was the agreed purchase price being the shares’ stated capital | 238 |
9 November 2005 Internal T.I. 2005-0154301I7 F - Choix concernant les immobilisations admissibles
On a sale of a residential care facility, the taxpayer allocated substantially all of the sale price to operating agreements with the Quebec Ministry, and took the position that the election under s. 14(1.01) was available. After finding that the operating agreements constituted goodwill, the Directorate further stated:
With respect to the requirement [in s. 14(1.01)] that the cost of the eligible capital property “can be determined”, we are of the view that a zero cost would be acceptable. Indeed, the jurisprudence confirms that the cost of a capital property to a taxpayer can be nil. In this case, the taxpayer "acquired" the … operating agreements for such a cost.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 14.1 | operating agreement of care facility with province was goodwill because it could not be transferred without a transfer of the care business | 232 |
9 March 2020 External T.I. 2013-0490301E5 F - Société exploitant une EPSP
Is a corporation carrying on a personal services business ("PSB") entitled to deduct the following under s. 18(1)(p)(ii): (i) the costs of leasing an automobile provided to an incorporated employee; (ii) interest expense on a loan for the purchase of such automobile; and (iii) capital cost allowance thereon? CRA responded:
[T]here is a benefit to an incorporated employee for purposes of subparagraph 18(1)(p)(ii) where a corporation carrying on a PSB leases an automobile that is used by the incorporated employee, in whole or in part, for personal use.
If this benefit is provided to the incorporated employee in the incorporated employee’s capacity as an employee … the cost of the benefit comprises the personal use portion of the automobile lease costs. Consequently, these expenses would be deductible in computing the income of the PSB corporation by virtue of subparagraph 18(1)(p)(ii) to the extent that such leasing costs would otherwise be deductible if the corporation's income were from a business other than a PSB. …
If this benefit is provided to the incorporated employee in the incorporated employee’s capacity as a shareholder, the cost of the benefit is not deductible in computing the income of the PSB corporation … since it would not, if the corporation's income were from a business other than a PSB, be deductible in computing its income.
CRA went on to provide that a similar analysis applied to the interest expense, i.e., if the related benefit was provided to the incorporated employee qua employee, the cost of the benefit comprised the portion of the interest expense relating to the personal use of the automobile, which amount would be deductible in computing the PSB corporation’s income under s. 18(1)(p)(ii) to the extent that such interest expense would otherwise be deductible if the corporation's income were from a business other than a PSB – whereas, in the qua shareholder case, none of the interest expense would be deductible.
Respecting CCA claims, CRA stated:
[A] capital cost allowance amount is not the cost of a benefit …[and] is not deductible in computing the income of a PSB corporation under subparagraph 18(1)(p)(ii). … However … capital cost allowance may be deducted in computing the income of the PSB corporation by virtue of subparagraph 18(1)(p)(iii) where such an amount would otherwise have been deductible by virtue of paragraphs 8(1)(f) and 8(1)(j)(ii), having regard to subsections 8(4), 8(10) and 8(13) … .
Lee v. Agence du revenu du Québec, 2020 QCCQ 780, aff'd sub nomine Seica v. Agence du revenu du Québec, 2021 QCCA 1401
A tax shelter, for the initial (2003/2004) years assessed by the ARQ, entailed the sale by a corporation (“Prospector”) to over 200 investors of software licences. Following an adverse determination by the ARQ for those years, the design of the tax shelter was changed, and for the subsequent years (2005-2010) investors were sold franchises for the non-exclusive right to distribute the software licences in specified territories. After further pressure from the ARQ, the notes issued by investors for the franchises were full recourse rather than limited recourse notes. Drouin had reversed a CRA reassessment of some investors’ 2008 taxation years made on the basis that no business was carried on. Prospector obtained a tax shelter registration number for the 2005 and 2006 years, but not the other years.
After finding that the software licences acquired in 2003 and 2004 clearly were tax shelters (as defined in the Quebec equivalent of s. 237.1) given the description in the marketing materials of the (Class 12) deductibility of the licence costs and their financing with limited recourse debt representing prescribed benefits (so that the failure to obtain a tax shelter number resulted in a denial of the claimed deductions), Fournier JCQ turned to the franchises purchased in 2005 and 2006 (comprising, for each purchase, software purchased for $150,000 and a membership right for $10,000) and financed with notes bearing interest at 9.38% under which recourse was limited to revenues generated from the franchises, and found that these constituted tax shelters for essentially the same reasons, and that they also were tax shelter investments, and that the licences were computer tax shelter properties, as defined under the Quebec equivalents of ITA s. 143.2(1) and Reg. 1100(20.2). Accordingly, their CCA claims were denied on that basis notwithstanding the tax shelter registrations (the revenues generated were nil). Furthermore, two of the taxpayers had not filed the prescribed forms reporting the tax shelter numbers.
For the 2007 and subsequent taxation years, the taxpayers argued that they satisfied the numerical tests for those years because the cost of their acquisition of the property (being a single franchise property for these purposes comprised of the software licence and the membership right) included all the interest they had covenanted to pay. After referring to the definitions of “cost” in Coast Capital Savings and Stirling, and in rejecting this argument, Fournier JCQ stated (at para. 547, TaxInterpretations translation):
The term "cost" must therefore be assimilated to the price that the taxpayer agreed to pay to acquire the property, excluding other expenses incurred in respect of the property, including interest payable on money borrowed by the taxpayer to acquire the property.
In also rejecting the single property argument, Fournier JCQ stated (at paras 551-552):
[T]he assets acquired under the … franchise agreement must be considered separately for tax shelter determination purposes because they have different tax characteristics. The software suite is a Class 12 property while the membership right is an eligible capital property with different rates of depreciation.
… The definition of tax shelter contained in TA section 1079.1 … militates in favour of an individual analysis of the property in question in order to determine whether or not it qualifies as a tax shelter.
Accordingly, the Class 12 CCA claims for those years respecting the cost of the software were also denied, whereas the eligible capital amounts claimed for the membership right were deductible.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | interest on limited recourse notes that could be extinguished through the surrender of the limited recourse asset was deductible | 226 |
| Tax Topics - Income Tax Act - Section 143.2 - Subsection 143.2(6) | limited recourse debt eliminated CCA claims | 151 |
7 October 2011 Roundtable, 2011-0408351C6 F - Honoraire d'évaluation d'une police d'assurance
An actuary is retained to determine the fair market value of a life insurance policy by an individual to a wholly-owned corporation, and the transferor and transferee split the actuary’s fee. Respecting the treatment of the fee to the transferee, CRA stated:
Under subsection 148(7), the cost to the corporation of its interest in the policy will be equal to the value determined under subsection 148(9). That amount will be included in Element A of the definition of "adjusted cost basis” in subsection 148(9). No adjustment is made to the calculation of the adjusted cost basis under that paragraph to reflect the costs that the corporation has made or incurred to obtain an assessment of the fair market value of the policy.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 148 - Subsection 148(1) | no deduction from gain for disposition expenses | 110 |
7 October 2011 Roundtable, 2011-0399441C6 F - T1135 - coût indiqué d'une assurance-vie
The definition of reporting entity in s. 233.3 references its “cost amount” of specified foreign property. Is the cost amount of an interest in a life insurance policy the adjusted cost basis ("ACB”) as defined in s. 148(9), or the premiums paid? After noting that para. (f) of the s. 248(1) “cost amount” definition referenced the cost to the taxpayer of the property as determined for the purpose of computing the taxpayer’s income, CRA stated:
[T]he "adjusted cost basis" of a holder's interest in a life insurance policy, as defined in subsection 148(9), can generally be considered a reasonable estimate of the cost of the property for the purposes of the application of the rules of section 233.3.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 233.3 - Subsection 233.3(1) - Reporting Entity | cost amount of foreign policy is its adjusted cost basis | 88 |
Devon Canada Corporation v. The Queen, 2018 TCC 170
Two public-company predecessors by amalgamation of the taxpayer made cash payments for the surrender by employees of their options previously granted to them under employee stock option plans. Such surrenders occurred (and were previously contemplated in agreements with purchaser corporations to occur) in connection with the acquisition of all their shares by unrelated corporate purchasers.
The taxpayer did not argue that the surrender payments were fully deductible under s. 9, but instead successfully argued that they were deductible as to 75% under s. 111(5.2). Before concluding that the surrender payments were eligible capital expenditures, Sommerfeldt J found that the surrender payments satisfied the requirements in the preamble of the definition in s. 14(5) that:
- they were “in respect of a business” given inter alia that they “were made to employees who had been granted their options while working in the business of their respective employers and who, for the most part, continued to work in those businesses after the respective acquisitions” (para. 86)
- they were capital expenditures having regard to Kaiser Petroleum and Imperial Tobacco
- they were made for the purpose of gaining or producing income from the business given that under this test “it will suffice if the income-gaining purpose is [only] one of the purposes of the outlay or expense” (para. 92) and that, similarly to Imperial Tobacco, they had “an employer-compensation-related purpose” (para. 96)
Furthermore, the exclusion in para. (f) of the ECP definition for “the cost of … a right to acquire [a share]” did not apply given that “the word ‘cost’ contemplates an acquisition of an asset or other property” (para. 103), whereas “when a stock option is surrendered to the issuing corporation, the rights represented by that option [instead] are extinguished” (para. 122).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) - Subparagraph 20(1)(e)(i) | quaere whether “sale” includes a sale to a 3rd party | 177 |
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(5.2) | stock option surrender payments of target deductible under s. 111(5.2) | 62 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | disposition of surrendered stock options occurred under doctrine of merger | 318 |
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | "cost" implies the acquisition of an asset | 172 |
24 May 2013 External T.I. 2013-0487581E5 F - Nature d'un bien acquis pour la revente
In the context of a general discussion of s. 10(1.01) respecting a car acquired and repaired with a view to its sale at a profit, CRA stated:
The term "cost" as used in the phrase "cost at which the taxpayer acquired the property" in section 10 means the original cost of the particular item of inventory plus all costs which may reasonably be considered as having been incurred to bring that particular item of inventory to its condition and location at the end of the taxation year.
18 May 2017 Roundtable, 2017-0692361C6 - CLHIA 2017 Q4 - Gift of a life insurance policy
Mr. A acquired a life insurance policy on his life with a $1 million death benefit and then transferred it to his wholly-owned corporation (ACo) for no proceeds at a time that it had a nil adjusted cost basis (ACB) and cash surrender value (CSV). Thereafter, while the policy has a fair market value (FMV), ACB and CSV of $100,000, $50,000 and nil, respectively, ACo will donate this policy to a registered charity.
On the original transfer from Mr. A to ACo, s. 148(7) deemed him to dispose of the policy, and ACo to have acquired it, for nil proceeds, i.e., the greatest of the FMV of the consideration given, the ACB of the policy and the CSV of the policy at the time of transfer. On the subsequent gift, the greatest of these three amounts was the policy’s $50,000 ACB (i.e., no taxable gain). Under s. 248(35)(b)(i), the FMV of the policy for gift receipting purposes was the lesser of its FMV ($100,000) and its ACB ($50,000) – except that under s. 248(36), for s. 248(35) purposes, the cost or adjusted cost base, of the property to ACo immediately before the gift could be deemed to equal the lower of its cost and adjusted cost base to Mr. A. How would s. 248(36) apply to the gift?
CRA responded:
[A]s originally proposed, neither subsections 248(35) nor (36) included a specific reference to the ACB of a life insurance policy. However, proposed subsection 248(35) was later amended to include such a reference before it was enacted.
Notwithstanding that proposed subsection 248(36) was not similarly amended, it remains our view that the ACB of an interest in a life insurance policy, as defined in subsection 148(9), is generally a reasonable proxy for the "cost" of an interest in a life insurance policy for purposes of subsection 248(36). …
[S]ince ACo acquired the life insurance policy less than three years before it intends to donate the policy, the proposed gift would meet the condition in subparagraph 248(35)(b)(i) and be subject to the deemed FMV rule in subsection 248(35). In applying subsection 248(35), subsection 248(36) would need to be taken into account as ACo acquired the life insurance policy from a non-arm’s length person within a three-year period of the gift. In our view, the cost of the gifted property to ACo under subsection 248(36) would be nil (the lowest amount that is the ACB of the policy to ACo or Mr. A). Then, in applying subsection 248(35), the deemed FMV of the policy would also be nil (the lesser of the FMV of the policy at the time of the gift and the deemed ACB as determined under subsection 248(36)).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(35) - Paragraph 248(35)(b) - Subparagraph 248(35)(b)(i) | gifted policy deemed to have its nil adjusted cost basis to the NAL transferor to the donor | 301 |
14 March 2016 Internal T.I. 2015-0609671I7 - Earnout, Amalgamation, Cost of Shares and ECE
A Canadian Acquisitionco acquired Canadian Targetco for a cash base price plus earnout obligations, and then immediately merged with Targetco under a short-form amalgamation. The Rulings Directorate rejected Amalco’s treatment of its earnout payments as eligible capital expenditures, stating:
[R]egardless of whether the [Targetco] Shares existed at the time that the Earnout Payments became payable or paid, the Earnout Payments nevertheless are part of the cost of the Shares. Mandel…appears to dictate such a result….
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) | post-amalgamation earnout payment could be applied to increase an s. 88(1)(d) bump of capital property (but not ECP) of the amalgamated target | 317 |
| Tax Topics - Income Tax Act - Section 14 - Subsection 14(5) - Eligible Capital Expenditure | payments made by Amalco in satisfaction of earnout obligation for acquisition of one precedessor by the other were not ECE | 224 |
| Tax Topics - General Concepts - Purpose/Intention | attribution of predecessor's intention to Amalco | 140 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | position on interest deductibility following target amalgamation is based on policy and ITA scheme rather than technical | 350 |
Coast Capital Savings Credit Union v. Canada, 2016 FCA 181
The applicant (“Coast Capital”), which was the trustee of RRSPs and RRIFs, was assessed under s. 116(5) for failure to withhold on its purchase of shares (that were taxable Canadian property) of Canadian companies from non-resident vendors at prices which were substantially in excess of those shares' fair market value (with the result that the RRSPs and RRIFs were stripped of funds which ended up in offshore accounts or were applied to pay the fees of the "promoter.") Gleason JA found that any deception of the trustee was irrelevant to the assessment, which turned only on the trustee having purchased taxable Canadian property shares from a non-resident, so that a proposed addition to the Coast Capital pleadings, alleging the purchase transactions were shams, was rejected.
Coast Capital also sought an amended pleading that the cost to it of the shares was their fair market value (arguing, para. 28, that “not all of the amount transferred was given to purchase the shares but that some portion was given for the purpose of conveying benefits to the annuitants and the promoters.”) In rejecting this proposed pleading, Gleason JA stated (at para. 31):
While Stirling…was decided in the context of interpreting the term “cost” in the context of the ITA provisions on capital gains, it applies equally to the definition of “cost” in subsection 116(5)… . The cost of the shares to Coast Capital is what it paid for them and, for purposes of discerning their cost to Coast Capital, it matters not what their actual value might have been nor how the promoters might have diverted the funds paid by Coast Capital for the shares after the funds were paid out of the RRSPs or RRIFs.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Sham | deceit of taxpayer was irrelevant to assessment – so that “sham” also was irrelevant | 282 |
| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | no bifurcation of inflated purchase price between FMV cost and benefit conferral | 142 |
4 June 2014 External T.I. 2013-0513761E5 - Meaning of "cost" in determining "equity amount"
Generally, … the "cost" of property …include[s] the amount laid down to acquire such property. … The Queen v. Canada Trustco Mortgage Company (2005 DTC 5523),…stated…that ‘[t]extually, the CCA provisions use ‘cost' in the well-established sense of the amount paid to acquire the assets….'…[T]he term "cost" for the purposes of the definition of "equity amount" in subsection 18(5)… means the original acquisition cost of a property. As a result, in the case of depreciable property, any amortization claimed in respect of the property should not, in our view, be taken into account in determining the "cost" of such property… .
The Queen v. Stirling, 85 DTC 5199, [1985] 1 CTC 275 (FCA)
The word "cost" in s. 54(a) "means the price that the taxpayer gave up in order to get the asset; it does not include any expense that he may have incurred in order to put himself in a position to pay that price or to keep the property afterwards." Interest on the unpaid portion of the price of gold bullion, and safe keeping charges incurred during the period following the taxpayer's acquisition of the bullion, accordingly could not be added to the adjusted cost base of the gold bullion.
Bodrug Estate v. The Queen, 90 DTC 6521, [1990] 2 CTC 324 (FCTD), aff'd 91 DTC 5621 (FCA)
An estate paid $1,320,000 to settle an action brought against it by two other persons ("Cohen" and "NIR") for specific performance of an option which the deceased had given to sell shares of a company ("Hidrogas"). This settlement enabled the estate to tender its shares of Hidrogas to a takeover bid at a substantially higher price than the market price at the time of the settlement agreement.
McNair J. held that because "the cost of an asset for the purposes of capital gains computation is limited to the cost of acquisition of that asset" (pp. 6526-6527), the damages payment subsequently made by the taxpayer to NIR and Cohen, which was unrelated to the acquisition of the Hidrogas shares by the taxpayer, was not part of the cost of those shares. McNair J. noted, however, (at p. 6527) that the Minister saw fit to increase the adjusted cost base of the Hidrogas shares for the payment of the $1,320,000 in damages presumably on the basis that "the [taxpayer] paid this sum to regain his rights to the Hidrogas shares". In the Court of Appeal, Stone J.A., in what may have been obiter dicta, characterized the payment of the $1,320,000 as being made in exchange for the surrender of all rights and interests of NIR and Cohen in the Hidrogas shares and as, therefore, forming part of the cost of those shares.
Water's Edge Village Estates (Phase II) Ltd. v. Canada, 2002 DTC 7172, 2002 FCA 291
In December 1991 the taxpayers (who were Canadian residents) acquired most of the partnership interests in a U.S. partnership ("Klink") that had been formed approximately 12 years earlier and whose principal asset, in December 1991, was an IBM mainframe computer which originally had cost U.S.$3.7 million but which had a current fair market value of $5,000. Klink then transferred the computer to a recently-formed British Columbia limited partnership in consideration for a partnership interest therein.
After stating (at para. 44) that the object and spirt of the recapture and terminal loss provisions "is to provide for the recognition of money spent to acquire qualifying assets to the extent that they are consumed in the income earning process," Noël J.A. found (at para. 50 that:
"The only cost which the Act provides for in the present fact situation is the original or full cost, and I do not believe that I could read into the Act the type of modification incorporated by the 1994 addition of paragraph 96(8) to alter this result without infringing on the role of Parliament."
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 254 - Subsection 254(4) | 177 | |
| Tax Topics - Income Tax Act - Section 96 | exploiting modest business asset was sufficient partnership activity | 229 |
| Tax Topics - Statutory Interpretation - Resolving Ambiguity | 179 | |
| Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(3) | prompt amendment evidenced intent to end anomaly | 88 |
Consumers' Gas Company Ltd. v. The Queen, 82 DTC 6300, [1982] CTC 339 (FCTD), aff'd, 84 DTC 6058, [1984] CTC 83 (FCA)
Amounts expended by the taxpayer to install new pipelines were additions to the capital cost of its depreciable assets notwithstanding that it was reimbursed in whole or in part by government or private sources. Walsh J quoted (at 6304, with approval) the statement of Lord Atkin in Corp. of Birmingham v. Barnes (1935), 19 T.C. 195, at 217 (HL):
What a man pays for construction or for the purchase of a work seems to me to be the cost to him; and that whether someone has given him the money to construct or purchase for himself, or before the event has promised to give him the money after he has paid for the work, or after the event promised or given the money which recoups him what he has spent.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) | 33 | |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Disposition of Property | no disposition of abandoned gas mains | 38 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.1) | 37 | |
| Tax Topics - Income Tax Act - Section 9 - Compensation Payments | compensation for relocating pipelines was capital | 32 |