Consumers' Gas Co. v. Minister of National Revenue, (1986) 2 F.T.R. 30 (TD)

• Judge: Muldoon, J.
• Court: Federal Court (Canada)
• Case Date: June 10, 1985
• Jurisdiction: Canada (Federal)
• Citations: (1986), 2 F.T.R. 30 (TD)

Consumers Gas Co. v. MNR (1986), 2 F.T.R. 30 (TD)

MLB headnote and full text

Consumers' Gas Company Ltd. v. Minister of National Revenue

(No. T-1277-84)

Indexed As: Consumers' Gas Co. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Muldoon, J.

February 18, 1986.

Summary:

Consumers frequently relocated portions of its gas pipelines to accommodate customers and non-customers such as builders, municipalities, etc. Consumers was reimbursed for a portion of the relocation costs. The relocation costs were properly added to undepreciated capital cost. The Minister of National Revenue assessed the amount of the reimbursements as income. Consumers appealed.

The Federal Court of Canada, Trial Division, allowed the appeal and held that the reimbursements were non-taxable capital receipts, not income.

Income Tax - Topic 1034

Income from business or property - Amounts received based on production or use - Consumers frequently relocated portions of its gas pipelines to accommodate customers and non-customers - Consumers was partially reimbursed - Consumers was not in the business of relocating pipelines - There was no profit in the reimbursements because they never exceeded the relocation costs - The Federal Court of Canada, Trial Division, held that the amounts received as reimbursement were not income, but were non-taxable capital receipts.

Income Tax - Topic 1742

Capital gains and losses - Capital receipt v. income - Consumers frequently relocated portions of its gas pipelines to accommodate customers and non-customers - Consumers was partially reimbursed - Consumers was not in the business of relocating pipelines - There was no profit in the reimbursements because they never exceeded the relocation costs - The Federal Court of Canada, Trial Division, held that the amounts received as reimbursement were non-taxable capital receipts.

Cases Noticed:

Consumers' Gas Company Ltd. v. Minister of National Revenue, [1983] 1 F.C. 314 (F.C.C.), affd., [1984] 1 F.C. 799; 52 N.R. 106 (F.C.A.), folld. [para. 3].

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 9(1).

Counsel:

M.S. Bistrisky, for the plaintiff;

G. Jorre and E. Thomas, for the defendant.

Solicitors of Record:

Aird and Berlis, Toronto, Ontario, for the plaintiff;

Frank Iacobucci, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the defendant.

This appeal was heard on June 10, 1985, at Toronto, Ontario, before Muldoon, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on February 18, 1986.