CIBC v. MNR, (2000) 254 N.R. 77 (FCA)

• Judge: Létourneau, Rothstein and Sharlow, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: March 01, 2000
• Jurisdiction: Canada (Federal)
• Citations: (2000), 254 N.R. 77 (FCA)

CIBC v. MNR (2000), 254 N.R. 77 (FCA)

MLB headnote and full text

Temp. Cite: [2000] N.R. TBEd. AP.018

Canadian Imperial Bank of Commerce (appellant) v. Her Majesty the Queen (respondent)

(A-516-97)

Indexed As: Canadian Imperial Bank of Commerce v. Minister of National Revenue

Federal Court of Appeal

Létourneau, Rothstein and Sharlow, JJ.A.

March 13, 2000.

Summary:

Section 20(1)(gg) of the Income Tax Act permitted a deduction for tangible property (other than real property) that was described in the taxpayer's inventory and held by the taxpayer for sale in the ordinary course of its business. The Minister of National Revenue allowed an inventory allowance for a bank's gold coins, but not for its bullion and foreign currency. The Minister took the position that the bank's bullion and foreign currency were not described in its inventory and were not held for sale, and that foreign currency was not tangible property. The bank appealed.

The Tax Court of Canada dismissed the appeal on the basis that the bullion and foreign currency were not held for sale. The bank appealed.

The Federal Court of Appeal allowed the appeal.

Income Tax - Topic 1145

Income from a business or property - Deductions - Inventory allowance - Sec­tion 20(1)(gg) of the Income Tax Act permitted a deduction for tangible property (other than real property) that was described in the taxpayer's inventory and held by the taxpayer for sale in the ordi­nary course of its business - The Minister of National Revenue allowed an inventory allowance for a bank's gold coins, but not for its bullion and foreign currency - The Minis­ter took the position that the bank's bullion and foreign currency were not described in its inventory and were not held for sale, and that foreign currency was not tangible property - The Tax Court of Canada dis­missed the bank's appeal - The bank appealed - The Federal Court of Appeal allowed the appeal.

Income Tax - Topic 1145

Income from a business or property - Deductions - Inventory allowance - Sec­tion 20(1)(gg) of the Income Tax Act permitted a deduction for tangible property (other than real property) that was described in the taxpayer's inventory and held by the taxpayer for sale in the ordi­nary course of its business - The Federal Court of Appeal held that "... tangible property may be held for sale even if it also serves another pur­pose, as long as that other purpose does not preclude a sale." - See paragraph 19.

Income Tax - Topic 1145

Income from a business or property - Deductions - Inventory allowance - Sec­tion 20(1)(gg) of the Income Tax Act permitted a deduction for tangible property (other than real property) that was described in the taxpayer's inventory and held by the taxpayer for sale in the ordi­nary course of its business - The Federal Court of Appeal held that "[p]roperty is 'described in' a taxpayer's inventory if it is inventory as a matter of fact and law. Inventory in its ordinary sense is simply stock in trade, or property held for sale in the ordinary course of a business. For income tax pur­poses inventory generally is any property the cost or value of which is relevant in determining income ..." - See paragraph 25.

Income Tax - Topic 1145

Income from a business or property - Deductions - Inventory allowance - Sec­tion 20(1)(gg) of the Income Tax Act permitted a deduction for tangible property (other than real property) that was described in the taxpayer's inventory and held by the taxpayer for sale in the ordi­nary course of its business - The Federal Court of Appeal held that foreign currency was tangible property - The court stated that "[f]oreign currency is property, and is capable of being touched, bought and sold. Its value depends solely upon its physical existence. It has no value once destroyed, which distinguishes it from something that is merely a chose in action or evidence of a chose in action, like a promissory note, share or debenture that can be destroyed without affecting the legal rights and obli­gations it represents." - See paragraph 34.

Words and Phrases

Tangible property - The Federal Court of Appeal discussed the meaning of this phrase as found in s. 20(1)(gg) of the Income Tax Act, R.S.C. 1985 (5th Supp), c. 1 - See paragraphs 33 to 34.

Cases Noticed:

Plaza Pontiac Buick Ltd. v. Minister of National Revenue (1993), 164 N.R. 219; 94 D.T.C. 6058 (F.C.A.), refd to. [para. 20].

GSW Appliances Ltd. v. Minister of National Revenue (1993), 69 F.T.R. 23; 93 D.T.C. 5502 (T.D.), dist. [para. 20].

Friesen v. Minister of National Revenue, [1995] 3 S.C.R. 103; 186 N.R. 243, refd to. [para. 25].

Blue Water Currency Exchange Ltd. v. Minister of National Revenue, 87 D.T.C. 306 (T.C.C.), dist. [para. 31].

Bank of Montreal v. Bank of Canada and Bay Bus Terminal (North Bay) Ltd. et al., [1978] 1 S.C.R. 1148; 16 N.R. 93, dist. [para. 35].

Minister of National Revenue v. Bastion Management Ltd., [1995] 2 F.C. 709; 182 N.R. 146; 95 D.T.C. 5238 (F.C.A.), refd to. [para. 36].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp), c. 1, sect. 20(1)(gg) [para. 1].

Counsel:

Al Meghji and Edward Rowe, for the appellant;

L.P. Chambers, for the respondent.

Solicitors of Record:

Donahue & Partners, Toronto, Ontario, for the appellant;

Morris Rosenberg, Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard in Ottawa, Ontario, on March 1, 2000, by Létourneau, Rothstein and Sharlow, JJ.A., of the Federal Court of Appeal. Sharlow, J.A., delivered the follow­ing decision for the Court of Appeal on March 13, 2000.