Rivermede Developments Ltd. v. Minister of National Revenue, (1993) 66 F.T.R. 161 (TD)

• Judge: Teitelbaum, J.
• Court: Federal Court (Canada)
• Case Date: May 17, 1993
• Jurisdiction: Canada (Federal)
• Citations: (1993), 66 F.T.R. 161 (TD)

Rivermede Dev. Ltd. v. MNR (1993), 66 F.T.R. 161 (TD)

MLB headnote and full text

Rivermede Developments Limited (plaintiff) v. Her Majesty the Queen (defendant)

(T-1649-85)

Indexed As: Rivermede Developments Ltd. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Teitelbaum, J.

August 5, 1993.

Summary:

The Minister of National Revenue reassessed the plaintiff taxpayer for the year 1977. The Minister determined that $1,120,535, which represented the proceeds of disposition of a parcel of vacant land owned by the taxpayer was business income, as opposed to a capital gain from the dis­position of capital property. The taxpayer appealed.

The Tax Court of Canada dismissed the appeal. The taxpayer appealed again.

The Federal Court of Canada, Trial Divi­sion, dismissed the appeal.

Income Tax - Topic 1823

Capital gains - Land - Capital gains v. ordinary income - The taxpayer, River­mede Developments Ltd., was in the busi­ness of buying, developing and selling land and buildings - The taxpayer sold a par­ticular property and claimed a capital gain for income tax purposes - The Minister of National Revenue reassessed, claiming the profits were business income - The Feder­al Court of Canada, Trial Division, reaf­firmed the reassessment where, inter alia, the taxpayer engaged in similar transac­tions and its ordinary business was selling land, there was evidence of improvement and development work respecting the land and the taxpayer's intentions were clear, that it intended to develop and sell the land for a profit as soon as possible.

Income Tax - Topic 1823

Capital gains - Land - Capital gains v. ordinary income - The Federal Court of Canada, Trial Division, referred to the test and factors to be considered in determining whether proceeds of disposition of prop­erty constitutes business income or a capi­tal gain - See paragraphs 72, 73.

Cases Noticed:

Hillsdale Shopping Centre Ltd. v. Minister of National Revenue, [1981] C.T.C. 322; 38 N.R. 103 (F.C.A.), refd to. [para. 78].

Regal Heights Ltd. v. Minister of National Revenue, [1960] S.C.R. 902, refd to. [para. 81].

Racine et al. v. Minister of National Rev­enue, [1965] C.T.C. 150 (Ex. Ct.), refd to. [para. 81].

R. v. Witten, [1991] 1 C.T.C. 139 (F.C.T.D.), refd to. [para. 81].

Regina Shoppers Mall Ltd. v. Minister of National Revenue, [1986] 1 C.T.C. 261; 1 F.T.R. 129 (T.D.), refd to. [para. 83].

Vaintrub v. Minister of National Revenue, 35 Tax A.B.C. 74, refd to. [para. 85].

Ace Holdings Corp. v. Minister of Nation­al Revenue, 37 Tax A.B.C. 320, refd to. [para. 85].

Pierce Investment Corp. v. Minister of National Revenue, [1974] C.T.C. 825; 74 D.T.C. 6608 (F.C.T.D.), refd to. [para. 92].

Statutes Noticed:

Income Tax Act, Interpretation Bulletin IT-218, generally [para. 74].

Interpretation Bulletins - see Income Tax Act.

Parkway Belt Planning and Development Act, R.S.O. 1980, c. 360, generally [para. 41].

Counsel:

Jacques Bernier, for the plaintiff;

Caroline Coderre, for the defendant.

Solicitors of Record:

Bennett, Jones and Verchere, Montreal, Quebec, for the plaintiff;

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

This appeal was heard in Toronto, Ontario, on May 17, 1993, before Teitelbaum, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on August 5, 1993.