Pardee Equipment Ltd. v. Minister of National Revenue, (1997) 130 F.T.R. 73 (TD)

• Judge: Reed, J.
• Court: Federal Court (Canada)
• Case Date: April 14, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 130 F.T.R. 73 (TD)

Pardee Equipment Ltd. v. MNR (1997), 130 F.T.R. 73 (TD)

MLB headnote and full text

Temp. Cite: [1997] F.T.R. TBEd. MY.050

Pardee Equipment Limited (plaintiff) v. Her Majesty the Queen (defendant)

(T-3480-90)

Indexed As: Pardee Equipment Ltd. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Reed, J.

May 6, 1997.

Summary:

Pardee claimed entitlement to inventory allowances with respect to heavy industrial machinery. Pardee also claimed investment tax credits.

The Federal Court of Canada, Trial Division, allowed Pardee's claim.

Income Tax - Topic 1145

Income from a business or property - Deductions - General - Inventory allowance - Pardee was a John Deere equipment dealer, selling, servicing and renting heavy industrial machinery - The dealership agreements described the machinery as being held "on consignment" - Pardee claimed inventory allowances with respect to the machinery - The Federal Court of Canada, Trial Division, held that Pardee was entitled to the inventory allowances - Although the dealer agreements characterized the machines as "consigned goods", the indicia of the transactions were more properly characterized as a sale subject to a secured interest held by John Deere until the price was fully paid - The risks and rewards of ownership rested with Pardee.

Cases Noticed:

Dresden Farm Equipment Ltd. v. Minister of National Revenue (1988), 91 N.R. 325; 89 D.T.C. 5019 (F.C.A.), reving. (1986), 2 F.T.R. 92; 86 D.T.C. 6167 (T.D.), affing. (1982), 82 D.T.C. 1388 (T.R.B.), refd to. [para. 21].

Quinn v. Leathem, [1901] A.C. 495 (H.L.), refd to. [para. 22].

Friesen v. Minister of National Revenue (1995), 186 N.R. 243; 95 D.T.C. 5551 (S.C.C.), refd to. [para. 23].

Statutes Noticed:

Income Tax Act, R.S.C. 1952, c. 148, sect. 20(1)(gg), sect. 248(1) [para. 3].

Authors and Works Noticed:

Canadian Institute of Chartered Accountants Handbook, generally [para. 20].

Counsel:

E. James Kindrake and Alan R. Gray, for the plaintiff;

Douglas B. Titosky, for the defendant.

Solicitors of Record:

Lucas Bowker & White, Edmonton, Alberta, for the plaintiff;

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

This case was heard at Ottawa, Ontario, on April 14, 1997, before Reed, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on May 6, 1997.