Oryx Realty Corp. v. Minister of National Revenue, (1974) 4 N.R. 463 (FCA)

JudgeJackett, C.J., Thurlow and Pratte, JJ.
CourtFederal Court of Appeal (Canada)
Case DateJune 04, 1974
JurisdictionCanada (Federal)
Citations(1974), 4 N.R. 463 (FCA)

Oryx Realty Corp. v. MNR (1974), 4 N.R. 463 (FCA)

MLB headnote and full text

Oryx Realty Corp. v. Minister of National Revenue

Indexed As: Oryx Realty Corp. v. Minister of National Revenue

Federal Court of Appeal

Jackett, C.J., Thurlow and Pratte, JJ.

June 5, 1974.

Summary:

This case arose out of an assessment of a taxpayer for income from the sale of land. The taxpayer was a trader and he purchased a parcel of land for $174,000 from a corporation with which he was not dealing at arm's length. Just prior to selling the land on July 21, 1960 for $373,000 the taxpayer sold his interest in the corporation so that he was at arm's length with the corporation at the time of the sale. The Minister assessed the taxpayer on the basis that the taxpayer was allowed to deduct $18,500 as the cost of the land rather than $174,000 - see paragraph 6. Both the Tax Appeal Board and the Trial Division of the Federal Court of Canada dismissed the taxpayer's appeal from the Minister's assessment.

On appeal to the Federal Court of Appeal the appeal was allowed, the judgment of the Trial Division was set aside and the assessment of the taxpayer was referred back to the Minister on the basis that the cost of the land to the taxpayer was $174,000. The Federal Court of Appeal held that s. 12(3) of the Income Tax Act did not apply to the sale of the land by the taxpayer because at the time of the sale the taxpayer had terminated the non arm's length relationship.

Income Tax - Topic 3446

Computation of income - Non arm's length transactions - Application of the rule - The taxpayer was a trader who purchased land for $174,000 from a corporation with which he was not dealing at arm's length - Just prior to selling the land for $373,000., the taxpayer sold his interest in the corporation so that he was at arm's length with the corporation - Income Tax Act, s. 12(3) - The Federal Court of Appeal held that s. 12(3) did not apply to the sale of the land by the taxpayer because at the time of the sale the taxpayer had terminated the non arm's length relationship.

Words and Phrases

Income - The Federal Court of Appeal discussed the meaning of the word "income" in s. 12(3) of the Income Tax Act, R.S.C. 1952, c. 148 - The Federal Court of Appeal stated that in the case of business income s. 12(3) referred to the computation of gross profit for the year and accordingly the cost of property purchased was not an amount "deductible" in computing business income - See paragraph 12.

Cases Noticed:

Minister of National Revenue v. Irwin, [1974] S.C.R. 662, folld. [para. 11].

Statutes Noticed:

Income Tax Act, R.S.C. 1952, c. 148, sect. 12(3) [para. 7].

Counsel:

P. Vineberg, Q.C., for the appellant;

A. Garon, Q.C., and J. Halpin, for the respondent.

This appeal, was heard by the Federal Court of Appeal at Montreal, Quebec, on June 4, 1974. Judgment was delivered by the Federal Court of Appeal on June 5, 1974 and the following judgments were filed:

JACKETT, C.J. - see paragraphs 1 to 17.

PRATTE, J. - see paragraphs 18 to 20.

THURLOW, J., concurred with JACKETT, C.J.

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