Words and Phrases - "used in business"
The Queen v. Marsh & McLennan, Ltd., 83 DTC 5180, [1983] CTC 231 (FCA)
Interest earned, on the investment of funds received by an insurance broker, during the period before those funds had to be paid to the insurers, was held not to be Canadian investment income under the pre-1979 version of the definition. Per Clement, D.J.: The funds so invested may be contrasted with an investment in a long-term bond with no need to use the principal in the on-going business. Here, the funds would be required for payment to the insurers within 90 days of their investment, and the investments and the insurance broker's were interdependent. The investments thus were used in its business. Per Le Dain, J.: The funds were employed and risked in the business, as an amount equivalent to the amount so invested was committed to the carrying-on of the business in order to meet the insurance broker's obligations to the insurers, and the invested funds were thus property used or held in the course of carrying on its business. [C.R.: 129(4.1); 248(1) - "Business"]
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 51 |
Ensite Ltd. v. R., 86 DTC 6521, [1986] 2 CTC 459, [1986] 2 S.C.R. 509
The taxpayer made U.S. dollar deposits with commercial banks in order to reduce its net borrowing cost under a swap arrangement respecting an investment by the taxpayer in a stamping plant in the Philippines. The swap arrangement in turn resulted from a requirement under Philippines law that it bring foreign currency into the Philippines to finance the stamping plant.
The U.S. dollar deposits were held to be "property used or held by the corporation in the year in the course of carrying on a business" for purposes of the Canadian investment income definition s. 129(4). Wilson J stated:
[T]he test is whether the property was used to fulfill a requirement which had to be met in order to do business. Such property is then truly employed and risked in the business. Here the property was used to fulfill a mandatory condition precedent to trade.