Geophysical Engineering Ltd. v. Minister of National Revenue, (1976) 11 N.R. 146 (SCC)

• Judge: Laskin, C.J.C., Judson, Spence, Beetz and de Grandpré, JJ.
• Court: Supreme Court (Canada)
• Case Date: April 03, 1976
• Jurisdiction: Canada (Federal)
• Citations: (1976), 11 N.R. 146 (SCC);1976 CanLII 209 (SCC);[1977] 2 SCR 1008

Geophysical Eng. Ltd. v. MNR (1976), 11 N.R. 146 (SCC)

MLB headnote and full text

Geophysical Engineering Ltd. v. Minister of National Revenue

Indexed As: Geophysical Engineering Ltd. v. Minister of National Revenue

Supreme Court of Canada

Laskin, C.J.C., Judson, Spence, Beetz and de Grandpré, JJ.

October 5, 1976.

Summary:

This case arose out of a claim by a taxpayer for an exemption pursuant to s. 83 of the Income Tax Act. The taxpayer claimed exemption with respect to the profit realized on the sale of shares of a company. The taxpayer alleged that the shares were acquired from a prospector pursuant to an arrangement to pay for prospecting expenses and accordingly was exempt pursuant to s. 83 of the Income Tax Act. The alleged prospector was found to be a full time employee of the taxpayer. The Tax Appeal Board dismissed an appeal by the taxpayer and held that the taxpayer was not entitled to the exemption claimed.

On appeal to the Trial Division of the Federal Court of Canada the appeal was dismissed and the judgment of the Tax Appeal Board was affirmed.

On appeal to the Federal Court of Appeal the appeal was dismissed and the judgment of the Trial Division was affirmed - see 6 N.R. 563.

On appeal to the Supreme Court of Canada the appeal was dismissed and the judgment of the Federal Court of Appeal was affirmed. The Supreme Court of Canada stated that the alleged prospector did not prospect on his own behalf or on his own behalf and for others as required by s. 83(1)(c) of the Income Tax Act which defined the term "prospector" as meaning:

An individual who prospects or explores for minerals or develops a property for minerals on behalf of himself, on behalf of himself and others or as an employee.

The Supreme Court of Canada stated that the prospector was a full time employee of the taxpayer and, accordingly, the taxpayer did not have a contract with a prospector as required by s. 83 of the Income Tax Act.

Spence, J., dissenting, in the Supreme Court of Canada, would have allowed the appeal because the evidence showed that the prospector was not a full time employee of the taxpayer - see paragraphs 8 to 31.

Income Tax - Topic 7531

Exemptions - Income from contracts with prospectors - What constitutes a prospector - Income Tax Act, s. 83 - The taxpayer claimed an exemption with respect to a profit on the sale of shares of a company - The taxpayer alleged that the shares were acquired by it from a prospector pursuant to an arrangement to provide prospecting expenses - The Supreme Court of Canada held that the alleged prospector did not prospect on his own behalf or on his own behalf and for others as required by s. 83 of the Income Tax Act - The Supreme Court of Canada stated that the prospector was a full time employee of the taxpayer - The Supreme Court of Canada dismissed the taxpayer's claim for an exemption with respect to the profit on the sale of the shares.

Words and Phrases

Prospector - The Supreme Court of Canada discussed the meaning of the word "prospector" as found in s. 83 of the Income Tax Act.

Cases Noticed:

Mersey Docks and Harbour Board v. Coggins, [1946] 2 All E.R. 345, folld. [para. 27].

Newton v. Commissioner of Taxation of the Commonwealth of Australia, [1958] 2 All E.R. 759, folld. [para. 29].

Statutes Noticed:

Income Tax Act, R.S.C. 1952, c. 148, sect. 83.

Counsel:

D.J. Wright, Q.C. and R.N. Waterman, for the appellant;

N.A. Chalmers, Q.C. and John Power, for the respondent.

This appeal was heard by the Supreme Court of Canada at Ottawa, Ontario on March 30, 31 and April 3, 1976. Judgment was delivered by the Supreme Court of Canada on October 5, 1976 and the following opinions were filed:

de GRANDPRE, J. - see paragraphs 1 to 7.

SPENCE, J. - dissenting, see paragraphs 8 to 31.

LASKIN, C.J.C., JUDSON and BEETZ, JJ. concurred with de GRANDPRE, J.