Tax Court of Canada



Favourable income tax consequences did not change nature of gift

Taxpayer purported to make gift to city of ecologically sensitive property he had purchased from father. Minister assessed taxpayer under Income Tax Act (Can.), for 2009 taxation year, treating transaction as disposition of inventory and including value of land less its original cost as income from business. Taxpayer appealed. Appeal allowed. Transaction was charitable gift. Taxpayer was credible. Taxpayer did not acquire and dispose of land as part of business. No indicia of business existed. Putting land in possession of corporation and taking steps to rezone it did not make venture business. Adventure or concern that involves acquisition of land that is ultimately subject of bona fide charitable donation for no consideration is not adventure or concern in nature of trade. Land had been purchased by taxpayer’s father for no reason beyond owning land, and purchased by taxpayer as pretext to give money to father. Application for subdivision and construction of gravel road were not indication of business, but merely steps taken to protect asset. Taxpayer did not have primary intention to purchase land, and whether development of land was secondary purpose was unclear and not carried out. Favourable income tax consequences did not change nature of gift. Transaction was gift subject to capital gain deemed to be zero.

Staltari v. R. (May. 13, 2015, T.C.C. [General Procedure], John R. Owen J., File No. 2013-1038(IT)G) 252 A.C.W.S. (3d) 863.

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