Woodward Stores Ltd. v. Minister of National Revenue, (1991) 40 F.T.R. 241 (TD)

• Judge: Joyal, J.
• Court: Federal Court (Canada)
• Case Date: December 06, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1991), 40 F.T.R. 241 (TD)

Woodward Stores Ltd. v. MNR (1991), 40 F.T.R. 241 (TD)

MLB headnote and full text

Woodward Stores Limited (plaintiff) v. Her Majesty the Queen (defendant)

(T-2569-89)

Indexed As: Woodward Stores Ltd. v. Minister of National Revenue

Federal Court of Canada

Trial Division

Joyal, J.

January 21, 1991.

Summary:

Woodward Stores Ltd. received $3,750,000 as an inducement to open anchor stores in two malls. Woodward Stores claimed the sum was on account of capital. The Minister of National Revenue reassessed, claiming that the sum constituted income. The taxpayer appealed.

The Federal Court of Canada, Trial Division, allowed the appeal and set aside the reassessment.

Income Tax - Topic 1104

Income from business or property - Income - Monies received as inducement - The Income Tax Act, s. 12(1)(x) dealt with, inter alia, the taxation of "inducements" received by a taxpayer - The Federal Court of Canada, Trial Division, interpreted this provision - See paragraphs 72 to 83.

Income Tax - Topic 1104

Income from business or property - Income - Monies received as inducement - A general merchandising store chain (the taxpayer) received $3,750,000 as an inducement (fixturing allowance) to open anchor stores in two malls - The Federal Court of Canada, Trial Division, held that the $3,750,000 was not income in the hands of the taxpayer, and was properly included as part of the undepreciated capital cost of the project.

Income Tax - Topic 1178

Deductions - Capital cost allowance - Capital cost - What constitutes - A general merchandising store chain (the taxpayer) received $3,750,000 as an inducement (fixturing allowance) to open anchor stores in two malls - The Federal Court of Canada, Trial Division, held that the $3,750,000 was not income in the hands of the taxpayer, and was properly included as part of the undepreciated capital cost of the project.

Cases Noticed:

Canadian Pacific Limited v. Minister of National Revenue, [1979] C.T.C. 606; 19 N.R. 541, appld. [para. 2 et seq. ].

Consumers' Gas Co. Ltd. v. Minister of National Revenue (No. 1), [1984] C.T.C. 83; 52 N.R. 106, appld. [para. 2 et seq. ].

Consumers' Gas Co. Ltd. v. Minister of National Revenue (No. 2), [1987] 1 C.T.C. 79; 72 N.R. 206, appld. [para. 2 et seq.].

Pacific Northern Gas Ltd. v. Minister of National Revenue (1990), 33 F.T.R. 258, refd to. [paras. 5, 59].

Birmingham Corporation v. Barnes, [1935] A.C. 292, refd to. [paras. 35, 59].

French Shoes Ltd. v. Minister of National Revenue, [1986] 2 C.T.C. 132; 4 F.T.R. 140, not folld. [para. 40 et seq.].

Walker (Inspector of Taxes) v. Carnaby, Harrower et al., [1970] 1 All E.R. 502, refd to. [para. 42].

Murray (Inspector of Taxes) v. Goodhews, [1978] 2 All E.R. 40, refd to. [para. 42].

Neonex International Ltd. v. Minister of National Revenue, [1978] C.T.C. 485; 22 N.R. 284, refd to. [para. 47].

Minister of National Revenue v. Metropolitan Properties Co. Limited, [1985] 1 C.T.C. 169 (F.C.T.D.), refd to. [para. 48].

Golden Horseshoe Turkey Farms v. Minister of National Revenue, [1968] C.T.C. 294 (Exch. Ct.), refd to. [para. 49].

Maison de Choix Inc. v. Minister of National Revenue, [1983] C.T.C. 2241, refd to. [para. 50].

Valley Camp Ltd. v. Minister of National Revenue, 74 D.T.C. 6337 (F.C.T.D.), refd to. [para. 52].

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 3, sect. 9(1) [para. 80]; sect. 12(1)(x) [paras. 45, 72-83, 86].

Income Tax Act, Interpretation Bulletins, IT-359, para. 8 [para. 74]; IT-359R2, para. 9 [paras. 75, 76].

Interpretation Bulletins - see Income Tax Act.

Counsel:

Warren J.A. Mitchell, Q.C., and K. Sharlow, for the plaintiff;

J.A. Van Iperen, Q.C., and Max J. Weder, for the defendant.

Solicitors of Record:

Thorsteinssons, Vancouver, British Columbia, for the plaintiff;

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

This appeal was heard in Vancouver, British Columbia, on December 6, 1990, before Joyal, J., of the Federal Court of Canada, Trial Division, who delivered the following decision on January 21, 1991: