M.N.R. v. Augart
T-1396-89
Strayer J.
23/11/92
8 pp.
Appeal from Tax Court decision entire 8.99-acre property on which defendant had residence constituting principal residence and none of proceeds of disposition subject to capital gains tax -- Defendant purchased property in 1966 and lived there until 1980 when property sold -- At time of purchase, zoning required minimum lot size of 3 acres -- Other buildings on property including barn, greenhouse, sheds, paddock where kept riding horses for personal use -- Western half of property pasture, used partly for own horses and to temporarily accommodate horses boarded for Calgary owners -- Defendant carried on business of egg jobber from garage attached to house -- Also purporting to carry on farming business, but over 90% of gross income derived from egg jobbing -- 1980 zoning bylaw amendment requiring detached dwellings to be on 80 acres of land, but permitted non-conforming uses to continue -- Calgary purchased entire parcel for $899,000 in 1980 -- That same year defendant purchased 4-acre parcel near Calgary on which still resides, and 196 acres west of city -- In 1980 income tax return, defendant claimed principal residence consisted of house and 1 acre of immediately contiguous land and remainder of 8.99 acres used for farming business -- Elected to treat 4-acre and 196-acre parcels acquired in 1980 as replacement properties for remaining 7.99 acres -- On reassessment, Minister holding principal residence consisting of house and immediately contiguous 3 acres -- Tax Court holding necessary to look to minimum amount of property legally required for residence at time of disposition to define "principal residence" according to The Queen v. Yates (W. and M.), [1983] C.T.C. 105 (F.C.T.D.); affd [1986] 2 C.T.C. 46 (F.C.A.) -- Appeal allowed -- Yates holding minimum amount of land taxpayer legally obliged to have in connection with residence at time of disposition of property establishes objectively amount of land associated with "principal residence" -- Minimum permitted by previous bylaw minimum amount of property upon which plaintiff entitled to have residence after bylaw amendment i.e. 3 acres -- Defendant not meeting burden of showing larger area necessary to use and enjoyment of house -- Not substantiating claim excess over 3 acres used primarily in farming business -- As failed to demonstrate carried on any significant farming business on excess, defendant not entitled to treat 196-acre parcel as replacement property for "former business property" since former property not used "primarily for purpose of gaining or producing income from business" -- Income Tax Act, S.C. 1970-71-72, c. 63, ss. 44(1) (as am. by S.C. 1977-78, c. 1, s. 18), (5) (as am. by S.C. 1977-78, c. 32, s. 8), 54(g) (as am. by S.C. 1973-74, c. 14, s. 14; 1974-75-76, c. 26, s. 25; 1976-77, c. 4, s. 14), 248(1) (as am. by S.C. 1977-78, c. 1, s. 98).