Damka Lumber & Development Ltd. v. Minister of National Revenue, (1990) 31 F.T.R. 218 (TD)

• Judge: Martin, J.
• Court: Federal Court (Canada)
• Case Date: January 11, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1990), 31 F.T.R. 218 (TD)

Damka Lumber & Dev. Ltd. v. MNR (1990), 31 F.T.R. 218 (TD)

MLB headnote and full text

Damka Lumber & Development Ltd. (plaintiff) v. Her Majesty The Queen (defendant)

(No. T-1283-86)

Indexed As: Damka Lumber & Development Ltd. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Martin, J.

January 11, 1990.

Summary:

A taxpayer sold 14 acres of land to the Urban Transit Authority of British Columbia for $8,500,000.00. The only issue in an action commenced by the taxpayer was whether the $8,500,000.00 was "the sale price of property sold to a person by whom notice of an intention to take it under statutory authority was given" under s. 54(h)(iv) of the Income Tax Act. Section 44(1)(a), if s. 54(h)(iv) applied, offered special tax advantages to forced dispositions of capital property.

The Federal Court of Canada, Trial Division, held that s. 44(1)(a) did not apply, because the taxpayer was given no notice of any intention to take the property under statutory authority.

Income Tax - Topic 1755

Capital gains and losses - Capital gains - Deferral of gain on involuntary disposition of property - Section 44(1)(a) of the Income Tax Act provided for favourable treatment on capital gains where a taxpayer sold property for which a "notice of intention to take it under statutory authority was given" under s. 54(h)(iv) of the Act - A taxpayer sold 14 acres of land to the Urban Transit Authority of British Columbia - The negotiations were handled by an agent for the government - The taxpayer surmised that the government was the purchaser, but the agent would neither confirm nor deny it - The Urban Transit Authority had no expropriation power and the taxpayer was never informed, verbally or in writing, that if he did not agree to sell the land would be expropriated - The Federal Court of Canada, Trial Division, held that s. 44(1)(a) did not apply, because the taxpayer did not receive any "notice of intention to take" the land.

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 13(21)(d), sect. 44(1)(a), sect. 54(h)(iv) [para. 2].

Income Tax Act, Interpretation Bulletin IT-175 [para. 3].

Income Tax Act, Interpretation Bulletin IT-271R, sect. 4, sect. 5 [para. 4].

Interpretation Bulletin - see Income Tax Act.

Counsel:

Jeanne Watchuk and Dan Bennett, for the plaintiff;

William Mah, for the defendant.

Solicitors of Record:

Bull, Housser & Tupper, Vancouver, British Columbia, for the plaintiff;

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

This action was heard on November 8-10, 1989, at Vancouver, British Columbia, before Martin, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on January 11, 1990.