Mandryk v. Minister of National Revenue, (1992) 141 N.R. 371 (FCA)

• Judge: Hugessen, Stone and MacGuigan, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: April 21, 1992
• Jurisdiction: Canada (Federal)
• Citations: (1992), 141 N.R. 371 (FCA)

Mandryk v. MNR (1992), 141 N.R. 371 (FCA)

MLB headnote and full text

Her Majesty the Queen (appellant) v. Olie Mandryk (respondent)

(A-1-89)

Indexed As: Mandryk v. Minister of National Revenue

Federal Court of Appeal

Hugessen, Stone and MacGuigan, JJ.A.

April 21, 1992.

Summary:

The taxpayer claimed that certain losses for the years 1980 to 1984 were deductible business losses for income tax purposes. The Minister of National Revenue issued notices of reassessment, claiming that the losses should have been characterized as losses on account of capital. The taxpayer appealed.

The Federal Court of Canada, Trial Divi­sion, at 24 F.T.R. 137, held that the losses were deductible business losses and allowed the appeal. The Minister of National Reve­nue appealed.

The Federal Court of Appeal allowed the appeal.

Income Tax - Topic 1263

Income from business or property - De­ductions - Business losses - What consti­tute - The taxpayer became a shareholder in business ventures involving the purchase and sale of real estate and the operation of a coin laundry - The taxpayer personally guaranteed bank loans for these businesses - When these ventures faltered, the taxpayer paid off bank notes and interest - The Federal Court of Canada, Trial Divi­sion, held that the amount paid on the bank notes, plus interest, were deductible business losses - The Minister of National Revenue appealed - The Federal Court of Appeal allowed the appeal - The court examined the taxpayer's intention at the time of acquiring the shares and held that the presumption that it was a capital trans­action was not rebutted.

Cases Noticed:

Irrigation Industries Ltd. v. Minister of National Revenue (1962), 62 D.T.C. 1131 (S.C.C.), folld. [paras. 15, 16].

Fraser v. Minister of National Revenue, [1964] C.T.C. 372 (S.C.C.), refd to. [paras. 15, 16].

Minister of National Revenue v. Freud (1968), 68 D.T.C. 5279 (S.C.C.), refd to. [paras. 15, 16].

Minister of National Revenue v. Sissons, [1969] C.T.C. 184 (S.C.C.), refd to. [para. 15].

McKinley v. Minister of National Revenue (1974), 1 N.R. 403; 74 D.T.C. 6138 (F.C.A.), refd to. [para. 15].

Becker v. Minister of National Revenue (1982), 46 N.R. 251; 83 D.T.C. 5032 (F.C.A.), refd to. [paras. 15, 17].

Cull v. Minister of National Revenue (1987), 14 F.T.R. 232; 87 D.T.C. 5322 (T.D.), refd to. [paras. 15, 19].

Beamish (K.J.) Construction Co. Ltd. v. Minister of National Revenue (1990), 90 D.T.C. 1584 (T.C.C.), refd to. [para. 15].

Dumas v. Minister of National Revenue, [1989] 2 F.C. 58; 92 N.R. 394 (F.C.A.), refd to. [paras. 15, 17].

Stein Estate v. Ship Kathy K, [1976] 2 S.C.R. 802; 6 N.R. 359; 62 D.L.R.(3d) 1, refd to. [para. 22].

Canada Safeway Ltd. v. Minister of Na­tional Revenue, [1957] S.C.R. 717; 57 D.T.C. 1239, refd to. [para. 24].

Phyllis Barbara Bronfman Trust v. Minis­ter of National Revenue (1987), 71 N.R. 134; 87 D.T.C. 5059 (S.C.C.), refd to. [paras. 25, 27].

Emerson v. Minister of National Revenue (1986), 86 D.T.C. 6184 (F.C.A.), refd to. [para. 26].

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 3, sect. 18(1)(a), sect. 18(1)(b), sect. 20(1)(c), sect. 20(3) [para. 4].

Counsel:

Jag Gill and Patricia Lee, for the appellant;

Kelly Schlemmer, for the respondent.

Solicitors of Record:

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

McCarthy, Tétrault, London, Ontario, for the respondent.

This appeal was heard on April 7, 1992, at Toronto, Ontario, before MacGuigan, Stone and Hugessen, JJ.A., of the Federal Court of Appeal.

On April 21, 1992, MacGuigan, J.A., delivered the following judgment for the Federal Court of Appeal.