Ikea Ltd. v. Minister of National Revenue, (1998) 222 N.R. 161 (SCC)
| Judge | Gonthier, Cory, Iacobucci, Major and Bastarache, JJ. |
| Court | Supreme Court of Canada |
| Case Date | February 12, 1998 |
| Jurisdiction | Canada (Federal) |
| Citations | (1998), 222 N.R. 161 (SCC);155 DLR (4th) 295;[1998] 1 SCR 196;[1998] SCJ No 15 (QL);52 DTC 6092;1998 CanLII 848 (SCC);222 NR 161;[1998] 2 CTC 61 |
Ikea Ltd. v. MNR (1998), 222 N.R. 161 (SCC)
MLB headnote and full text
[French language version follows English language version]
[La version française vient à la suite de la version anglaise]
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Temp. Cite: [1998] N.R. TBEd. FE.014
Ikea Limited (appellant) v. Her Majesty The Queen (respondent)
(25674)
Indexed As: Ikea Ltd. v. Minister of National Revenue
Supreme Court of Canada
Gonthier, Cory, Iacobucci, Major and Bastarache, JJ.
February 12, 1998.
Summary:
Ikea agreed to lease premises for 10 years, with an option to renew for a further 10 years. In 1986, Ikea received a cash payment of $2,650,000 from the owner to induce Ikea to lease. Ikea was not obligated to use the money for any particular purpose. Ikea treated the payment for income tax purposes as a capital receipt rather than taxable income. The Minister reassessed Ikea, determining that the entire payment was taxable income in 1986. Ikea appealed.
The Tax Court of Canada, in a judgment reported 94 D.T.C. 1112, held that the tenant inducement payment constituted income (not a capital receipt) and the entire amount was to be included in income in the year that it was received. Ikea appealed.
The Federal Court of Appeal, in a judgment not reported in this series of reports, dismissed the appeal. Ikea appealed.
The Supreme Court of Canada dismissed the appeal.
Income Tax - Topic 1122
Income from a business or property - Income - Tenant inducement payments - A lessee was paid $2,650,000 by the lessor solely to induce the lessee to enter a 10 year lease with an option to renew for 10 years - The lessee was not obligated to use the money for any particular purpose - The Supreme Court of Canada affirmed that the payment was income (not a capital receipt) - The court stated that "the payment was clearly received as part of ordinary business operations and was, in fact, inextricably linked to such operations. ... no question of linkage to a capital purpose can seriously be entertained. ... whether the [payment] represented a reduction in rent or a payment in consideration of [the lessee's] assumption of its various obligations under the lease, it clearly cannot be treated as a capital receipt" - Further, the entire amount was income in the year received (not amortized over the life of the lease), because "amounts received or realized by a taxpayer, free of conditions or restrictions upon their use, are taxable in the year received, subject to any contrary provision of the Act or other rule of law" - See paragraphs 21 to 37.
Income Tax - Topic 1742
Capital gains and losses - Capital gains - Capital receipt v. income - [See Income Tax - Topic 1122 ].
Cases Noticed:
Canderel Ltd. v. Minister of National Revenue (1998), 222 N.R. 81 (S.C.C.), appld. [para. 1].
Toronto College Park Ltd. v. Minister of National Revenue (1998), 222 N.R. 189 (S.C.C.), refd to. [para. 1].
Neonex International Ltd. v. Minister of National Revenue (1978), 78 D.T.C. 6339 (F.C.T.D.), refd to. [para. 9].
Oxford Shopping Centres Ltd. v. Minister of National Revenue (1979), 79 D.T.C. 5458 (F.C.T.D.), refd to. [para. 9].
Associated Investors of Canada Ltd. v. Minister of National Revenue (1967), 67 D.T.C. 5096 (Ex. Ct.), refd to. [para. 9].
Symes v. Minister of National Revenue, [1993] 4 S.C.R. 695; 161 N.R. 243, refd to. [para. 9].
Corporation of Birmingham v. Barnes, [1935] A.C. 292 (H.L.), refd to. [para. 11].
Canadian Pacific Ltd. v. Minister of National Revenue (1977), 19 N.R. 541; 77 D.T.C. 5383 (F.C.A.), refd to. [para. 11].
Consumers' Gas Co. v. Minister of National Revenue (1982), 82 D.T.C. 6300 (F.C.T.D.), refd to. [para. 11].
London and Thames Haven Oil Wharves Ltd. v. Attwooll, [1967] 2 All E.R. 124 (H.L.), refd to. [para. 12].
Woodward Stores Ltd. v. Minister of National Revenue (1991), 40 F.T.R. 241; 91 D.T.C. 5090 (T.D.), refd to. [para. 12].
Suzy Creamcheese (Canada) Ltd. v. Minister of National Revenue (1992), 56 F.T.R. 15; 92 D.T.C. 6291 (T.D.), refd to. [para. 12].
Foothills Pipe Lines (Yukon) Ltd. v. Minister of National Revenue (1990), 115 N.R. 380; 90 D.T.C. 6607 (F.C.A.), refd to. [para. 15].
Kenneth B.S. Robertson Ltd. v. Minister of National Revenue (1944), 2 D.T.C. 655 (Ex. Ct.), refd to. [para. 15].
Westfair Foods Ltd. v. Minister of National Revenue, [1991] 1 C.T.C. 146; 40 F.T.R. 207 (T.D.), refd to. [para. 21].
Saint John Dry Dock & Shipbuilding Co. v. Minister of National Revenue, [1944] Ex. C.R. 186 (Ex. Ct.), refd to. [para. 22].
Charles Brown & Co. v. Commission of Inland Revenue (1930), 12 T.C. 1256 (C.A.), refd to. [para. 22].
Lincolnshire Sugar Co. v. Smart, [1937] A.C. 697 (H.L.), refd to. [para. 22].
I.B.M. Canada Ltd. v. Minister of National Revenue (1993), 93 D.T.C. 1266 (T.C.C.), refd to. [para. 23].
French Shoes Ltd. v. Minister of National Revenue (1986), 4 F.T.R. 140; 86 D.T.C. 6359 (T.D.), refd to. [para. 26].
Minister of National Revenue v. Schwartz, [1996] 1 S.C.R. 254; 193 N.R. 241, refd to. [para. 27].
Nesbitt Thomson Inc. v. Minister of National Revenue (1991), 91 D.T.C. 1113 (T.C.C.), refd to. [para. 28].
Minister of National Revenue v. Benaby Realties Ltd., [1968] S.C.R. 12, refd to. [para. 34].
Statutes Noticed:
Income Tax Act, S.C. 1970-71-72, c. 63, sect. 9(1) [para. 6].
Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 12(1)(x) [para. 19].
Counsel:
Warren J.A. Mitchell, Q.C., and Karen Sharlow, for the appellant;
Roger Taylor and Sandra Phillips, for the respondent.
Solicitors of Record:
Thorsteinssons, Vancouver, B.C., for the appellant;
Attorney General of Canada, Ottawa, Ontario, for the respondent.
This appeal was heard on December 2, 1997, before Gonthier, Cory, Iacobucci, Major and Bastarache, JJ., of the Supreme Court of Canada.
On February 12, 1998, Iacobucci, J., delivered the following judgment in both official languages for the Supreme Court of Canada.
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Table of Cases
...72 DTC 6148 (TD) .......... 391 IG (Rockies) Corp v Canada, 2005 TCC 51 (Informal Procedure) ................... 542 Ikea Ltd v Canada, [1998] 1 SCR 196, [1998] 2 CTC 61, 98 DTC 6092........................................................................................ 638, 661 Imperial Ge......
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Canderel Ltd. v. Minister of National Revenue, (1998) 222 N.R. 81 (SCC)
...Ltd. v. Minister of National Revenue (1998), 222 N.R. 189 (S.C.C.), refd to. [para. 3]. Ikea Ltd. v. Minister of National Revenue (1998), 222 N.R. 161 (S.C.C.), refd to. [para. 3]. Vallambrosa Rubber Co. v. Farmer (1910), 5 T.C. 529 (Ct. of Sess.), refd to. [para. 14]. Naval Colliery Co......
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...expressly referenced in Part LXX of the ITR. [399] M.N.R. v. Benaby Realties Ltd., [1968] S.C.R. 12 at page 16, Ikea Ltd. v. Canada, [1998] 1 S.C.R. 196 at paragraph 34, West Kootenay Power and Light Co.v. Canada, [1992] 1 F.C. 732 (FCA), Maritime Telegraph and Telephone Co. v. Canada, [199......
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Canada (Sécurité publique et Protection civile) c. Mohammed,
...c. B479, 2010 CF 1227, [2012] 2 R.C.F. 491. APPLIED: DÉCISIONS APPLIQUÉES : R. v. Canadian Broadcasting Corp., 2018 SCC 5, [2018] 1 S.C.R. 196; R. v. Hall, 2002 SCC 64, [2002] 3 S.C.R. 309; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Newfoundland and Labrador Nurses’ Union v......
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Canderel Ltd. v. Minister of National Revenue, (1998) 222 N.R. 81 (SCC)
...Ltd. v. Minister of National Revenue (1998), 222 N.R. 189 (S.C.C.), refd to. [para. 3]. Ikea Ltd. v. Minister of National Revenue (1998), 222 N.R. 161 (S.C.C.), refd to. [para. 3]. Vallambrosa Rubber Co. v. Farmer (1910), 5 T.C. 529 (Ct. of Sess.), refd to. [para. 14]. Naval Colliery Co......
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Cassan v. The Queen, 2017 TCC 174
...expressly referenced in Part LXX of the ITR. [399] M.N.R. v. Benaby Realties Ltd., [1968] S.C.R. 12 at page 16, Ikea Ltd. v. Canada, [1998] 1 S.C.R. 196 at paragraph 34, West Kootenay Power and Light Co.v. Canada, [1992] 1 F.C. 732 (FCA), Maritime Telegraph and Telephone Co. v. Canada, [199......
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Goff Construction Ltd. v. Canada, (2009) 387 N.R. 325 (FCA)
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Federal Court of Appeal hears argument on whether “break fees” are income (Morguard)
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Mark-To-Market Recognition Of Foreign Exchange Gains/Losses For Tax Purposes
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Table of Cases
...72 DTC 6148 (TD) .......... 391 IG (Rockies) Corp v Canada, 2005 TCC 51 (Informal Procedure) ................... 542 Ikea Ltd v Canada, [1998] 1 SCR 196, [1998] 2 CTC 61, 98 DTC 6092........................................................................................ 638, 661 Imperial Ge......
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RECONSIDERING THE INCOME TAX TREATMENT OF INVESTIGATION FEES.
...by stating it stands for the proposition that "the more frequent the expenditure the less enduring the benefit"). (113) Ikea Ltd v R, [1998] 1 SCR 196, 1998 CanLII 848 [Ikea cited to (114) Ibid at para 28. See also Morguard Corp v Canada, 2012 FCA 306 at para 16. (115) Ikea, supra note 113 ......
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Appendix C: Measurement of Income
...ensured future income stream, satisfied interim financing requirements) realized in first year to match expense); Ikea Ltd v Canada , [1998] 1 SCR 196 (tenant inducement payment received for signing a ten-year lease taxable as income entirely in year received); Toronto College Park Ltd v......
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Income Taxation Of Derivatives
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