Alberta and Southern Gas Co. v. Minister of National Revenue, (1977) 16 N.R. 220 (FCA)

• Judge: Jackett, C.J., Pratte and Urie, JJ.
• Court: Federal Court of Appeal (Canada)
• Case Date: June 24, 1977
• Jurisdiction: Canada (Federal)
• Citations: (1977), 16 N.R. 220 (FCA)

Alta. v. MNR (1977), 16 N.R. 220 (FCA)

MLB headnote and full text

Alberta and Southern Gas Co. Ltd. v. Minister of National Revenue

Indexed As: Alberta and Southern Gas Co. v. Minister of National Revenue

Federal Court of Appeal

Jackett, C.J., Pratte and Urie, JJ.

June 24, 1977.

Summary:

This headnote contains no summary.

Income Tax - Topic 9543

Tax evasion - Artificial transactions - What constitutes an artificial transaction - The taxpayer was a distributor of natural gas - In 1972 the taxpayer claimed a deduction of $4,000,000.00 which it paid for an interest in an oil and gas property - The taxpayer claimed a deduction pursuant to section 66 of the Income Tax Act as an exploration and development expense - The Crown claimed that the $4,000,000.00 payment constituted an artificial transaction within the meaning of section 245(1) of the Income Tax Act - The Federal Court of Appeal held that the $4,000,000.00 payment was not an artificial transaction - The Federal Court of Appeal stated that a transaction that clearly falls within the object and spirit of section 66 does not artificially reduce income because the taxpayer was induced to enter into the transaction because of tax considerations - See paragraph 13.

Income Tax - Topic 9541

Tax evasion - Artificial transactions - The Federal Court of Appeal stated that section 245(1) of the Income Tax Act, respecting artificial transactions, was applicable to every class of deductible expense - See paragraph 12.

Income Tax - Topic 1126

Income from a business - Deductions - General principles - The Federal Court of Appeal stated that an outlay is prima facie deductible if it "was laid out to earn a profit" and was a "current business expenditure" - See paragraph 11.

Cases Noticed:

B.C. Electric Railway Co. Ltd. v. Minister of National Revenue, [1958] S.C.R. 133, folld. [para. 11 and footnote 2].

Harris v. Minister of National Revenue, [1966] S.C.R. 489, folld. [para. 12].

Statutes Noticed:

Income Tax act, S.C. 1970-71-72, c. 63, sect. 12(1) [para. 13]; sect. 59(1) [para. 13]; sect. 66 [para. 4]; sect. 245(1) [para. 8].

Counsel:

J.A. Scollin, Q.C., Neil W. Nichols, for the appellant, Minister of National Revenue;

F.R. Matthews, Q.C., M.A. Putnam, for the respondent, taxpayer.

This appeal was heard by JACKETT, C.J., PRATTE and URIE, JJ. of the Federal Court of Appeal at Ottawa, Ontario on June 24, 1977.

The judgment of the Federal Court of Appeal was delivered from the bench on June 24, 1977. The judgment of the Federal Court of Appeal was delivered by JACKETT, C.J.