Lornex Mining Corp. v. Minister of National Revenue, (1996) 120 F.T.R. 282 (TD)

• Judge: Cullen, J.
• Court: Federal Court (Canada)
• Case Date: September 30, 1996
• Jurisdiction: Canada (Federal)
• Citations: (1996), 120 F.T.R. 282 (TD)

Lornex Mining Corp. v. MNR (1996), 120 F.T.R. 282 (TD)

MLB headnote and full text

Lornex Mining Corporation Ltd. (applicant) v. Her Majesty the Queen (respondent)

(T-1330-84)

Indexed As: Lornex Mining Corp. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Cullen, J.

October 15, 1996.

Summary:

Lornex Mining Corp. appealed a reassessment by the Minister of National Revenue for the 1978 taxation year for federal and provincial tax purposes.

The Federal Court of Canada, Trial Division, dismissed the appeal. The court stated that it did not have jurisdiction with respect to provincial income tax.

Income Tax - Topic 1130

Income from a business or property - Deductions - General - Expenses incurred in borrowing money - Lornex Mining Corp. elected to capitalize interest expenses and convert interest expenses to exploration, prospecting and development expenses under s. 21 of the Income Tax Act (Act) - The Minister of National Revenue reassessed Lornex on the basis that the interest was not deductible from taxable income pursuant to s. 20(1)(c)(i) of the Act because it was incurred to earn "exempt income" - Lornex appealed - The Federal Court of Canada, Trial Division, dismissed the appeal - Section 28(1) of the Income Tax Application Rules stated that income derived from the operation of a mine "shall not be included in computing the income" of a corporation - That phrase meant the same as "exempt income" in the Act.

Income Tax - Topic 7529

Exemptions - Particular exemptions - Mines - [See Income Tax - Topic 1130 ].

Words and Phrases

Shall not be included in computing the income - The Federal Court of Canada, Trial Division, held that the meaning of this phrase contained in s. 28 of the Income Tax Application Rules, 1971, had the same meaning as "exempt income", as defined in s. 248(1) of the Income Tax Act, R.S.C. 1952, c. 148 - See paragraph 21.

Cases Noticed:

Canadian Rock Salt Co. v. Minister of National Revenue (1974), 5 N.R. 209; 74 D.T.C. 6547 (F.C.A.), refd to. [para. 27].

Westar Mining Ltd. v. Minister of National Revenue (1992), 141 N.R. 145; 92 D.T.C. 6358 (F.C.A.), refd to. [para. 33].

Bethlehem Copper Corp. v. Minister of National Revenue (1974), 3 N.R. 48; 74 D.T.C. 6520 (S.C.C.), refd to. [para. 34].

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. 36].

Statutes Noticed:

Income Tax Act, R.S.C. 1952, c. 148, sect. 20(1)(c), sect. 21(1), sect. 21(2), sect. 21(3), sect. 21(4) [para. 15]; sect. 81(1)(a) [para. 23]; sect. 248(1) [para. 22].

Income Tax Act, S.C. 1970-71-72, c. 63, Part III, sect. 9 [para. 30]; sect. 28 [para. 20].

Income Tax Application Rules - see Income Tax Act, S.C. 1970-71-72, c. 63, Part III.

Authors and Works Noticed:

Driedger, Elmer A., Construction of Statutes (3rd Ed. 1994), generally [para. 17, footnote 1].

Counsel:

William Bies and Alex Pankretz, for the applicant;

Marie-Therese Boris, for the respondent.

Solicitors of Record:

Fasken, Campbell, Godfrey, Toronto, Ontario, for the applicant;

George Thomson, Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard on September 30, 1996, at Toronto, Ontario, by Cullen, J., of the Federal Court of Canada, Trial Division, who delivered the following decision on October 15, 1996.