Cull v. Minister of National Revenue, (1987) 14 F.T.R. 232 (TD)

• Judge: Reed, J.
• Court: Federal Court (Canada)
• Case Date: June 16, 1987
• Jurisdiction: Canada (Federal)
• Citations: (1987), 14 F.T.R. 232 (TD)

Cull v. MNR (1987), 14 F.T.R. 232 (TD)

MLB headnote and full text

Patrick J. Cull (plaintiff) v. Her Majesty The Queen (defendant)

(No. T-1582-85)

Indexed As: Cull v. Minister of National Revenue

Federal Court of Canada

Trial Division

Reed, J.

June 19, 1987.

Summary:

Cull, along with other partners in his law firm, purchased shares in a subdivision development. Cull also advanced several thousand dollars to finance the development. The shares became worthless when the housing market declined. The law firm partnership claimed the purchase price of the shares and the amounts advanced for the development as business losses for income tax purposes. The Minister of National Revenue assessed the partnership on the basis that the losses were capital in nature. Cull appealed.

The Federal Court of Canada, Trial Division, allowed the appeal and remitted the matter for reassessment on the basis that the losses were not on account of capital.

Income Tax - Topic 1012

Income from business or property - Income from property - Adventure in nature of trade - Cull and other partners in his law firm purchased shares in a subdivision development and made advances to finance the development - The shares became worth less because of changes in the housing market - The partnership claimed the cost of the shares and the amount of the advances as business losses for income tax purposes - The Federal Court of Canada, Trial Division, agreed that since the losses resulted from an adventure in the nature of trade, they were properly claimed as business losses, rather than on account of captial.

Income Tax - Topic 1784

Capital gains and losses - Capital losses - What constitute - Shares - [See Income Tax - Topic 1012 above].

Cases Noticed:

Irrigation Industries Limited v. Minister of National Revenue, 62 D.T.C. 1131, refd to. [para. 12].

Fraser v. Minister of National Revenue, 64 D.T.C. 5224, consd. [paras. 15, 17].

Minister of National Revenue v. Freud, 68 D.T.C. 5279, consd. [paras. 15, 16, 17, 18].

Blok-Andersen v. Minister of National Revenue, 72 D.T.C. 6309 (F.C.T.D.), refd to. [para. 17].

Welden and Robb v. Minister of National Revenue, 80 D.T.C. 6224 (F.C.T.D.), refd to. [para. 17].

Hornsteiin v. Minister of National Revenue, 64 D.T.C. 684 (T.A.B.), refd to. [para. 17].

DeToro v. Minister of National Revenue, 65 D.T.C. 5194 (Ex. Ct.), refd to. [para. 17].

Dubrovsky v. Minister of National Revenue, 67 D.T.C. 445 (T.A.B.), refd to. [para. 17].

Slater et al. v. Minister of National Revenue, 66 D.T.C. 5047 (Ex. Ct.), refd to. [para. 17].

Burgess et al. v. Minister of National Revenue, 73 D.T.C. 5040 (F.C.T.D.), refd to. [para. 17].

McKinley v. Minister of National Revenue, 74 D.T.C. 6138 (F.C.A.), refd to. [para. 17].

Minister of National Revenue v. Dumas, 80 D.T.C. 6398 (F.C.T.D.), refd to. [para. 17].

Mould v. Minister of National Revenue (1986), 2 F.T.R. 120; 86 D.T.C. 6087 (F.C.T.D.), refd to. [para. 17].

Factory Carpet v. Minister of National Revenue, 85 D.T.C. 5464 (F.C.T.D.), refd to. [para. 17].

Steward and Morrison Limited v. Minister of National Revenue, 72 D.T.C. 6049, not appld. [para. 21].

Meisels Investments Ltd. v. Minister of National Revenue, 85 D.T.C. 5029 (F.C.T.D.), not appld. [para. 21].

Esar et al. v. Minister of National Revenue, 74 D.T.C. 6062 (F.C.T.D.), refd to. [para. 21].

Armstrong v. Minister of National Revenue, 85 D.T.C. 5396, refd to. [para. 22].

Counsel:

D.C. Nathanson, for the plaintiff;

P. Lee, for the defendant.

Solicitors of Record:

McDonald & Hayden, Toronto, Ontario, for the plaintiff;

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

This appeal was heard in Toronto, Ontario, on June 16, 1987, before Reed, J., of the Federal Court of Canada, Trial Division, who delivered the following decision on June 19, 1987: