Marsted Holdings Ltd. v. Minister of National Revenue, (1986) 2 F.T.R. 68 (TD)

• Judge: Joyal, J.
• Court: Federal Court (Canada)
• Case Date: October 01, 1985
• Jurisdiction: Canada (Federal)
• Citations: (1986), 2 F.T.R. 68 (TD)

Marsted Holdings Ltd. v. MNR (1986), 2 F.T.R. 68 (TD)

MLB headnote and full text

Marsted Holdings Ltd. v. Minister of National Revenue

(No. T-172-79)

FISHER v. MINISTER OF NATIONAL REVENUE

(No. T-174-79)

Indexed As: Marsted Holdings Ltd. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Joyal, J.

March 7, 1986.

Summary:

Two partners were in the business of purchasing real estate for investment purposes. One property was sold for a substantial profit 15 months after it was purchased. The Minister of National Revenue determined that the profits were income. The partners brought actions claiming that the profit was a capital gain. The actions were tried together.

The Federal Court of Canada, Trial Division, held that the profit was income from an adventure in the nature of trade.

Income Tax - Topic 1020

Income from business or property - Sale of land - Adventure in nature of trade - The Federal Court of Canada, Trial Division, referred to seven principles to be considered in determining whether the profit from the sale of land was income or a capital gain - The court also examined the use of the taxpayer's "secondary intention".

Income Tax - Topic 1020

Income from business or property - Sale of land - Adventure in nature of trade - Two partners purchased rental properties over a 10 year period - One property was sold for a substantial profit 15 months after it was purchased - The partners had previously sold properties for a profit and although the purchases were consistent with acquiring properties for investment their conduct inferred that they also had the intention of selling if the price was right - The Federal Court of Canada, Trial Division, held that the profit was income from an adventure in the nature of trade and not a capital gain.

Cases Noticed:

Hiwako Investments Ltd. v. Minister of National Revenue, [1978] C.T.C. 378; 21 N.R. 220 (F.C.A.), refd to. [para. 17].

Reicher v. Minister of National Revenue, [1975] C.T.C. 659; 12 N.R. 31 (F.C.A.), refd to. [para. 21].

MacIsaac v. Minister of National Revenue, [1974] C.T.C. 576; 4 N.R. 503, refd to. [para. 25].

Bead Realties Ltd. v. Minister of National Revenue, [1971] C.T.C. 774, refd to. [para. 27].

Racine, Demers and Nolin v. Minister of National Revenue, [1965] C.T.C. 150, refd to. [para. 34].

Pierce Investment Corp. v. Minister of National Revenue, 74 D.T.C. 6608, refd to. [para. 35].

California Copper Syndicate v. Harris (1904), 5 T.C. 159, refd to. [para. 40].

Leonard Reeves Incorporated v. Minister of National Revenue (1985), 85 D.T.C. 419, refd to. [para. 41].

Minister of National Revenue v. Lane, 64 D.T.C. 5049, refd to. [para. 47].

Wiss v. Minister of National Revenue, 72 D.T.C. 6231, refd to. [para. 47].

G.W. Golden Construction Ltd. v. Minister of National Revenue, 67 D.T.C. 5080, refd to. [para. 47].

Counsel:

P.F. Vineberg, Q.C., for the plaintiffs;

Roger Roy, for the defendant.

Solicitors of Record:

Phillips and Vineberg, Montreal, Quebec, for the plaintiffs;

Frank Iacobucci, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the defendant.

These actions were heard on October 1, 1985, at Montreal, Quebec, before Joyal, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on March 7, 1986.