Boger Estate v. Minister of National Revenue, (1991) 46 F.T.R. 241 (TD)

• Court: Federal Court (Canada)
• Case Date: November 30, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1991), 46 F.T.R. 241 (TD)

Boger Estate v. MNR (1991), 46 F.T.R. 241 (TD)

MLB headnote and full text

Sharon Boechler, Executrix of the estate of Alexander Boger, deceased (plaintiff) v. Her Majesty The Queen (defendant)

(T-218-89)

Indexed As: Boger Estate v. Minister of National Revenue

Federal Court of Canada

Trial Division

Jerome, A.C.J.

August 16, 1991.

Summary:

A farmer died testate, leaving a life estate in a piece of land (the home quarter) to his wife, with the residue to be divided equally between his four children. A terminal income tax return was filed claiming a "farm roll-over" of the land and equipment which was left to the children (Income Tax Act, s. 70(9)). The Minister of National Revenue reassessed the terminal return, disallowing the "farm roll-over". The executrix of the estate appealed the disallowance of the "farm roll-over" claim.

The Tax Court of Canada dismissed the appeal. The executrix appealed again.

The Federal Court of Canada, Trial Divi­sion, allowed the appeal, holding that the s. 70(9) roll-over applied to the farm land and equipment passed to the children under the farmer's will.

Income Tax - Topic 3128

Computation of income - Death of a taxpayer - Transfer of farm property from farmer to child - Section 70(9) of the Income Tax Act allowed a tax-free roll-over of farm land or depreciable property upon the death of a farmer if the property is "trans­ferred or distributed" to the child on or after the farmer's death and the property becomes "vested indefeasibly in the child" not later than 15 months after death - The Federal Court of Canada, Trial Division, discussed the meaning of the phrases "transferred or distributed" and "vested indefeasibly in the child" - See paragraphs 13 to 46.

Income Tax - Topic 3128

Computation of income - Death of a taxpayer - Transfer of farm property from farmer to child - A farmer died testate, leaving his wife a life estate in certain property and his children the residue of his farm estate - The wife successfully applied for more of the estate under the Family Relief Act (Alta.) - Estate dis­tribution was delayed 29 months - In the far­mer's terminal return a "farm roll-over" (Income Tax Act, s. 70(9)) was claimed respecting the property left to the children - The M.N.R. disallowed the roll-over, arguing that the property did not "vest indefeasibly" in the children immediately upon or within 15 months of the farmer's death, because of the Family Relief Act application - The Federal Court of Canada, Trial Division, rejected the M.N.R.'s argument - See paragraphs 13 to 35.

Income Tax - Topic 3128

Computation of income - Death of a taxpayer - Transfer of farm property from farmer to child - A farmer died testate, leaving his estate partly to his wife with the residue to his children - Before dis­tribution the executrix sold the property - Following the widow's Family Relief Act application, the sale proceeds were distrib­uted to the children - In the terminal return a "farm roll-over" (Income Tax Act, s. 70(9)), was claimed respecting the farm property left to the children - The M.N.R. disallowed the roll-over, claiming that because the property was not legally con­veyed to the children and was sold, it was not "transferred or distributed" to the children in accordance with s. 70(9) - The Federal Court of Canada, Trial Division, rejected the M.N.R.'s argument - See paragraphs 36 to 46.

Income Tax - Topic 7777

Returns, assessments, payment and appeals - Payment of tax - Payments on behalf of others - Certificate before distribution - Clearance certificate - The Federal Court of Canada, Trial Division, agreed that "the fact that a clearance certificate had been issued to an executor of an estate, the 'personal representative' does not free the estate from its liability under the [Income Tax] Act" - See paragraph 48.

Words and Phrases

Vested indefeasibly in the child - The Federal Court of Canada, Trial Division, considered the meaning of this phrase as it appeared in s. 70(9) of the Income Tax Act, S.C. 1970-71-72, c. 63 - See para­graphs 13 to 35.

Words and Phrases

Transferred or distributed - The Federal Court of Canada, Trial Division, con­sidered the meaning of this phrase as it appeared in s. 70(9) of the Income Tax Act, S.C. 1970-71-72, c. 63 - See para­graphs 36 to 46.

Cases Noticed:

Hillis et al. v. Minister of National Rev­enue (1982), 82 D.T.C. 6249 (F.C.T.D.), refd to. [para. 5].

Hillis and Hillis v. Minister of National Revenue (1983), 49 N.R. 1; 83 D.T.C. 5365 (F.C.A.), consd. [para. 13 et seq.].

Dontigny Estate v. Minister of National Revenue, [1974] C.T.C. 532; 5 N.R. 309 (F.C.A.), refd to. [para. 26].

Mr. Lucky v. Minister of National Rev­enue, [1972] C.T.C. 2412 (T.R.B.), refd to. [para. 27].

Greenwood Estate v. Minister of National Revenue (1990), 39 F.T.R. 234 (F.C.T.D.), refd to. [para. 27].

Willis Estate v. Minister of National Rev­enue (1968), 68 D.T.C. 204 (T.A.B.), refd to. [para. 38].

Hrycej v. Minister of National Revenue, [1984] C.T.C. 2115; 84 D.T.C. 1090 (T.C.C.), refd to. [paras. 38, 43].

Montreal Trust Co. v. Minister of National Revenue, [1973] C.T.C. 434; 73 D.T.C. 5354 (F.C.A.), affd. [1976] C.T.C. 415; 9 N.R. 394; 76 D.T.C. 6312 (S.C.C.), refd to. [para. 40].

Fasken v. Minister of National Revenue (1949), 49 D.T.C. 491 (Ex. Ct.), refd to. [para. 41].

Gathercole v. Smith (1880-81), 17 Ch. D. 1, refd to. [para. 41].

Boger v. Minister of National Revenue (1989), 89 D.T.C. 15 (T.C.C.), refd to. [para. 43].

Statutes Noticed:

Dependants' Relief Act, R.S.S. 1978, c. D-25, generally [para. 13 et seq.]; s. 9(2) [para. 31].

Devolution of Real Property Act, R.S.A. 1980, c. D-34, sect. 3 [paras. 11, 37]; sect. 9, sect. 10 [para. 11].

Family Relief Act, R.S.A. 1980, c. F-2, sect. 5(1), sect. 5(4), sect. 11(1), sect. 17(1), sect. 18(1) [para. 11].

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 70(5) [paras. 3, 12]; sect. 70(6) [para. 3 et seq.]; sect. 70(9) [para. 1 et seq.]; sect. 159(2) [para. 9 et seq.]; sect. 159(3) [para. 10 et seq.].

Authors and Works Noticed:

Anger and Honsberger on Canadian Real Property (2nd Ed. 1985), p. 125 [para. 29].

Black's Law Dictionary (5th Ed.), gen­erally [paras. 25, 39].

Feeney, Thomas G., The Canadian Law of Wills (1987), vol. 2, p. 258 [para. 25].

Jowitt, Dictionary of English Law, gen­erally [para. 25].

Megarry and Wade, The Law of Real Property (1984), pp. 231, 232 [para. 28].

Osborn's Concise Law Dictionary, gen­erally [para. 27].

Shorter Oxford Dictionary (3rd Ed.), gen­erally [paras. 25, 39].

Counsel:

David Phillip Jones, Q.C., and Anne S. de Villars, for the plaintiff;

Edward Fulcher and Naomi R. Goldstein, for the defendant.

Solicitors of Record:

de Villars Jones, Edmonton, Alberta, for the plaintiff;

John C. Tait, Q.C., Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the defendant.

This appeal was heard in Edmonton, Alberta, on September 13 and November 30, 1990, before Jerome, A.C.J., of the Federal Court of Canada, Trial Division, who delivered the following decision on August 16, 1991.