Duthie Estate v. Canada
T-359-92
Rothstein J.
18/5/95
24 pp.
Appeal of Tax Court dismissal of appeal from Minister's reassessment holding land development business not having effect of converting land from capital asset to inventory -- Issues (1) whether land development business commenced; and (2) whether Income Tax Act, 45(1)(a) change in use of land provision converting land from capital asset to inventory -- Decline in value of land -- Inventory status allowing plaintiff to treat decline as business loss and deduct same from income for tax purposes -- Earlier tax return claiming certain business expenses associated with proposals for developing land but not reporting any change in use of land or any capital gain in respect of land; subsequent tax return deducting business expenses including claim for decline in value of land over period of four years, with request resulting loss be carried back to earlier return -- Positive finding of commencement of land development business due to: (1) frequent meetings; (2) formal minutes; (3) hiring of consultants; (4) assignment of business tasks; and (5) devotion of full-time attention to project -- Fact legal counsel not retained not determinative of business commencement -- Positive finding of change in use of land pursuant to Act, s. 45(1)(a) -- Moving off land or physical change not constituting conditions precedent to change of use -- Commencement of business activity relative to land sufficient to evidence change in use of land from capital to inventory -- Minister contending plaintiff estopped from asserting change in use of land due to failure to disclose change of use in earlier return -- Minister cannot allege estoppel following election to own detriment to not reassess within statutory time -- General rule to effect Minister should not issue contradictory assessments not applicable herein where necessity attributed directly to actions of taxpayer -- Appeal allowed -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 45(1)(a) (as am. by S.C. 1988, c. 55, s. 25).