Publi-Hebdos Inc. v. Canada
T-2625-86
Noël J.
4/4/95
10 pp.
Action to quash reassessments for plaintiff's 1981, 1982, 1983 and 1984 taxation years -- Carried on business in Canada producing and publishing two newspapers distributed free to readers on weekly basis -- Nearly all income associated with publication came from advertising contracts and customers, who used advertising space in newspapers -- During taxation years in question plaintiff published two newspapers and to do so purchased various equipment -- Considered income from publication of newspapers profit from manufacturing or processing, claiming investment tax credit for 1982, 1983 and 1984 taxation years -- M.N.R. found income from newspaper distribution did not come from sale or lease of goods within meaning of Income Tax Act, s. 125.1(3)(b) and as such not manufacturing and processing profits for purpose of Act, s. 125.1(1) -- Issue whether plaintiff's activities resulted in manufacturing and processing profits for purposes of s. 125.1 -- To be successful plaintiff had to show newspapers it produced were intended for "sale or lease" within meaning of s. 125.1(3)(a) -- Since Federal Court of Appeal judgment in Canada v. Hawboldt Hydraulics (Canada) Inc., [1995] 1 F.C. 830, clear only contract of sale understood as such in legal terms in light of applicable law confers benefit mentioned in s. 125.1-A fortiori only contract of lease meeting same requirements capable of coming within ambit of provision-Newspapers published by plaintiff not intended for lease within meaning of s. 125.1(3)(a) -- Intended to convey customers' advertising as part of service offered by plaintiff -- Action dismissed -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 125.1(1) (as enacted by S.C. 1973-74, c. 29, s. 1), (3) (as enacted idem).