Browning Harvey Ltd. v. Minister of National Revenue, (1990) 31 F.T.R. 229 (TD)
Judge | Martin, J. |
Court | Federal Court (Canada) |
Case Date | September 06, 1989 |
Jurisdiction | Canada (Federal) |
Citations | (1990), 31 F.T.R. 229 (TD) |
Browning Harvey Ltd. v. MNR (1990), 31 F.T.R. 229 (TD)
MLB headnote and full text
Her Majesty The Queen (plaintiff) v. Browning Harvey Limited (defendant)
(No. T-969-88)
Indexed As: Browning Harvey Ltd. v. Minister of National Revenue
Federal Court of Canada
Trial Division
Martin, J.
January 12, 1990.
Summary:
Browning manufactured and distributed soft drinks. Browning sold $1,500.00 coolers to retail outlets for $2.00 for a seven year term, to be used exclusively to display Browning's products. Title remained in Browning until the second $1.00 payment was made at the end of the seven years. The issue was whether Browning was entitled to deduct the full cost of the coolers as an income expense (Income Tax Act, s. 18(1)(a)) or as a terminal loss (s. 20(16)).
The Federal Court of Canada, Trial Division, held that purchases of the coolers were capital outlays of a Class 8 asset, therefore Browning was limited to claiming capital cost allowance (20% of undepreciated capital cost). The court held that Browning was not entitled to deduct the full cost of the coolers as a terminal loss.
Income Tax - Topic 1127
Income from business or property - Deductions - Expenses - [See Income Tax - Topic 1190].
Income Tax - Topic 1181
Income from business or property - Deductions - Capital cost allowance - Disposition of property - What constitutes - [See Income Tax - Topic 1190].
Income Tax - Topic 1190
Income from business or property - Deductions - Capital cost allowance - Termination allowance - A soft drink manufacturer sold $1,500.00 coolers to retail outlets to be used exclusively to display the manufacturer's products - The coolers were sold for a $1.00 payment at the beginning and another $1.00 after seven years - Title remained in the manufacturer until the end of seven years - The Federal Court of Canada, Trial Division, held that the cost of the coolers was a capital outlay, not an income expense - The coolers were a Class 8 asset subject to a deduction for capital cost allowance of 20% - The full cost of the coolers was not deductible in the first year as a terminal loss under s. 20(16) of the Income Tax Act, because not all Class 8 assets were disposed of - Alternatively, there was no terminal loss because there was no "disposition of property" or "proceeds of disposition" under s. 13(21)(c) or (d).
Cases Noticed:
Firestone v. Minister of National Revenue (1987), 77 N.R. 59; 87 D.T.C. 5237 (F.C.A.), refd to. [para. 9].
Minister of National Revenue v. Haddon Hall Realty Inc., 62 D.T.C. 1001 (S.C.C.), refd to. [para. 9].
B.P. Australia Ltd. v. Commissioner of Taxation of the Commonwealth of Australia, [1966] A.C. 224, refd to. [para. 10].
Johns-Manville Canada Inc. v. Minister of National Revenue (1985), 60 N.R. 244; 85 D.T.C. 5373 (S.C.C.), refd to. [para. 10].
Minister of National Revenue v. Wardean Drilling Limited, 69 D.T.C. 5194, refd to. [para. 21].
Saskatchewan Wheat Pool v. Canada (1985), 56 N.R. 149; 85 D.T.C. 5034 (F.C.A.), refd to. [para. 27].
Waserman Furs Ltd. v. Minister of National Revenue, [1985] 1 C.T.C. 2375, dist. [para. 32].
Statutes Noticed:
Federal Court Rules, rule 337(2)(b) [para. 34].
Income Tax Act, S.C. 1970-71-72, c. 63, sect. 13(21)(c), sect. 13(21)(d) [para. 15]; sect. 18(1) [para. 6]; sect. 20(1)(a) [para. 13]; sect. 20(16) [para. 14]; sect. 39(1)(b)(i) [para. 14].
Income Tax Act Regulations, sect. 1100(1)(a) [para. 13].
Counsel:
Robert McMechan, for the plaintiff;
Fabian O'Dea, Q.C., for the defendant.
Solicitors of Record:
John C. Tait, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the plaintiff;
O'Dea, Greene, St. John's, Newfoundland, for the defendant.
This appeal was heard on September 6, 1989, at St. John's, Newfoundland, before Martin, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on January 12, 1990.
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Canadian bijuralism and the concept of an acquisition of property in the federal Income Tax Act.
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