Minister of National Revenue v. Furukawa, (1997) 211 N.R. 295 (FCA)

• Judge: Isaac, C.J., Pratte and Stone, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: January 20, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 211 N.R. 295 (FCA)

MNR v. Furukawa (1997), 211 N.R. 295 (FCA)

MLB headnote and full text

Her Majesty The Queen (appellant) v. Robert B. Furukawa (respondent)

(A-412-96)

Indexed As: Minister of National Revenue v. Furukawa

Federal Court of Appeal

Isaac, C.J., Pratte and Stone, JJ.A.

January 20, 1997.

Summary:

The Tax Court of Canada determined that corporate shares issued to a taxpayer were "flow-through shares" within the meaning of s. 66(15)(d.1) of the Income Tax Act and not "prescribed shares" under s. 6202.1(2)(b)(i) of the Income Tax Act Regulations. The effect of the judgment was to allow the taxpayer to deduct $7,500 from his taxable income as Canadian exploration expenses that had been renounced by the corporation. The Minister of National Reve­nue appealed.

The Federal Court of Appeal allowed the appeal, set aside the judgment of the Tax Court and referred the matter back to the Tax Court judge for a continuation of the trial on the basis that he hears and deter­mines the issue of whether the shares in question were "prescribed shares" under s. 6202.1(1) of the Regulations.

Income Tax - Topic 8047

Returns, assessments, payment and appeals - Appeals to courts - Practice - Dis­covery - The Tax Court of Canada deter­mined that corporate shares issued to a taxpayer were "flow-through shares" under s. 66(15)(d.1) of the Income Tax Act and not "prescribed shares" under s. 6202.1(2)(b)(i) of the Income Tax Act Regulations - Although the Minister of National Revenue pleaded reliance upon several provisions of the Act and Regu­lations, the Tax Court judge confined submissions to the applicability of s. 6202.1(2)(b)(i), because he was of the view that at the examination for discovery of the Minister's witness, the taxpayer had so narrowed the issue - The Federal Court of Appeal allowed the Minister of National Revenue's appeal - The taxpayer did not draw from the witness such concession as clearly had the effect of narrowing the scope of the pleadings.

Cases Noticed:

Johnston v. Minister of National Revenue, [1948] S.C.R. 486, refd to. [para. 5].

Authors and Works Noticed:

Holmsted and Watson, G.D., Ontario Civil Procedure (1991) (Supp.), vol. 3, p. 31-17 [para. 6, footnote 5].

Counsel:

Helen C. Turner, for the appellant;

Al Meghji, for the respondent.

Solicitors of Record:

George Thomson, Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the appellant;

Bennett Jones Verchere, Calgary, Alberta, for the respondent.

This appeal was heard at Calgary, Alberta, before Isaac, C.J., Pratte and Stone, JJ.A., of the Federal Court of Appeal. Stone, J.A., delivered the following judgment from the bench on January 20, 1997.