Date: 19991123
Docket: A-165-96
(T-3309-90)
CORAM: STRAYER J.A.
ROBERTSON J.A.
McDONALD J.A.
IN RE THE INCOME TAX ACT
1985 TAXATION YEAR
BETWEEN:
JACK WALLS
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
Heard at Vancouver, British Columbia, on Tuesday, November 23, 1999
JUDGMENT delivered from the Bench at Vancouver, British Columbia,
on Tuesday, November 23, 1999
REASONS FOR JUDGMENT BY: ROBERTSON J.A.
Date: 19991123
Docket: A-165-96
(T-3309-90)
CORAM: STRAYER J.A.
ROBERTSON J.A.
McDONALD J.A.
IN RE THE INCOME TAX ACT
1985 TAXATION YEAR
BETWEEN:
JACK WALLS
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
(Delivered from the Bench at Vancouver, British Columbia
on Tuesday, November 23, 1999)
ROBERTSON J.A.
Having regard to the facts of this case and the decisions of this Court in The Queen v. Tonn, 96 DTC 6001 (F.C.A.), and The Attorney General of Canada v. Mastri, 97 DTC 5420 (F.C.A.), we are all of the view that the learned Trial Judge erred in applying the reasonable expectation of profit doctrine laid down by the Supreme Court in Moldowan v. The Queen, 77 DTC 5213. For example, there is no "personal element" involved in the series of transactions under review. The appellant taxpayers were limited partners who purchased an ongoing commercial business. The fact that the purchase was driven, in part, by favourable tax considerations does not detract from the ongoing commercial nature of the endeavour.
Accordingly, the appeals must be allowed with one set of costs for the four appeals. The judgment of the Trial Judge dated February 2, 1996 must be set aside and the matter remitted to him for reconsideration with respect to the two outstanding issues, namely as to whether there was an "arms length transaction" and its "fair market value".
"J.T. Robertson"
J.A.