Friesen v. Minister of National Revenue, (1993) 156 N.R. 199 (FCA)

• Judge: Létourneau, Linden and Marceau, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: June 08, 1993
• Jurisdiction: Canada (Federal)
• Citations: (1993), 156 N.R. 199 (FCA)

Friesen v. MNR (1993), 156 N.R. 199 (FCA)

MLB headnote and full text

Jake Friesen (appellant) v. Her Majesty the Queen (respondent)

(A-449-92)

Indexed As: Friesen v. Minister of National Revenue

Federal Court of Appeal

Létourneau, Linden and Marceau, JJ.A.

June 30, 1993.

Summary:

A businessman acquired a parcel of land for resale at a profit. He submitted that the land was inventory in a business, entitling him to inventory write-downs for the taxa­tion year under s. 10(1) of the Income Tax Act. The Minister disallowed the deductions. The businessman appealed.

The Federal Court of Canada, Trial Divi­sion, in a decision reported 53 F.T.R. 49, dismissed the appeal. The businessman appealed.

The Federal Court of Appeal dismissed the appeal.

Income Tax - Topic 1348

Income from a business or property - Business inventory - Inclusion - Require­ment of matching costs with related reve­nues - A businessman acquired land for resale at a profit - The land decreased in value - He submitted that the acquisition was an adventure in the nature of trade and the land was inventory in a business, entitling him to write down the value from cost to fair market value pursuant to s. 10(1) of the Income Tax Act - The Feder­al Court of Appeal stated that the land could be inventory and eventually eligible for inventory write-down - However, s. 10(1) was not applicable in a taxation year unless there was computation of income from the business.

Cases Noticed:

Tobias v. R. (1978), 78 D.T.C. 6028 (F.C.T.D.), refd to. [para. 9].

Bailey v. Minister of National Revenue (1990), 90 D.T.C. 1321 (T.C.C.), refd to. [para. 9].

Van Dongen v. R. (1990), 90 D.T.C. 6633 (T.C.C.), refd to. [para. 9].

Minister of National Revenue v. Irwin (1964), 64 D.T.C. 5227 (S.C.C.), refd to. [para. 10].

Cyprus Anvil Mining Corp. v. Minister of National Revenue (1989), 104 N.R. 299; 90 D.T.C. 6063 (F.C.A.), refd to. [para. 12].

Dresden Farm Equipment Ltd. v. Minister of National Revenue (1988), 91 N.R. 325; 89 D.T.C. 5019 (F.C.A.), refd to. [para. 13].

Shofar Investment Corp. v. Minister of National Revenue (1979), 30 N.R. 60; 79 D.T.C. 5347 (S.C.C.), refd to. [para. 15].

Oryx Realty Corp. v. Minister of National Revenue (1974), 4 N.R. 463; 74 D.T.C. 6352 (F.C.A.), refd to. [para. 16].

West Kootenay Power and Light Co. v. Minister of National Revenue (1992), 136 N.R. 146; 92 D.T.C. 6023 (F.C.A.), refd to. [para. 17].

Neonex International Ltd. v. Minister of National Revenue (1978), 78 D.T.C. 6339 (F.C.A.), refd to. [para. 17].

Qualico Developments Ltd. v. Minister of National Revenue (1984), 51 N.R. 387; 84 D.T.C. 6119 (F.C.A.), refd to. [para. 17].

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 9 [para. 12]; sect. 10(1) [para. 4]; sect. 248(1) [para. 9].

Counsel:

Ian Pitfield, for the appellant;

Robert McMechan and Al Meghji, for the respondent.

Solicitors of Record:

Thorsteinssons, Vancouver, British Co­lumbia, for the appellant;

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

This appeal was heard at Vancouver, British Columbia, on June 8, 1993, before Létourneau, Linden and Marceau, JJ.A., of the Federal Court of Appeal. On June 30, 1993, the decision of the court was delivered and the following opinions were filed:

Létourneau, J.A. (Linden, J.A., concur­ring) - see paragraphs 1 to 18;

Marceau, J.A. - see paragraphs 19 to 24.