Hickman Motors Ltd. v. Canada
A-57-93
Hugessen J.A.
15/9/95
13 pp.
Appeal from Trial Division decision ([1993] 1 F.C. 622) dismissing appeal from reassessments for 1985, 1986 taxation years-Appellant General Motors distributor in St. John's, Newfoundland-Member of group of associated companies having common ownership-Underwent corporate restructuring-On December 28, 1984, Hickman Equipment Ltd. voluntarily liquidated, wound-up into parent Hickman Motors Ltd.-Assets in amount of $5,196,422 became property of "Motors"-On January 2, 1985, same assets, net of liabilities of "Equipment" sold by "Motors" to "Equipment (1985)" for $860,000-Appellant's claim for capital cost allowance in amount of $2,029,942 disallowed by Minister as assets of "Equipment" not acquired by appellant for purpose of gaining or producing income-Only issue between parties claim for capital cost allowance in 1984-Appellant arguing provisions of Income Tax Act, s. 88(1) create for it independent right to claim capital cost allowance on undepreciated capital cost of property acquired on winding-up of "Equipment"-S. 88(1) creating no rights to any deductions-Neither charging nor relieving provision-Whether appellant entitled under Income Tax Act, Regulations to claim capital cost allowance on undepreciated capital cost in respect of depreciable property-Right to claim capital cost allowance wholly statutory-Deductions for capital cost allowance, like any other deductions, prohibited if not related to expenditure incurred for purpose of gaining or producing income-S. 88 not creating for appellant independent right to claim capital cost allowance on property acquired on winding-up of subsidiary "Equipment"-Whether property acquired for purpose of gaining or producing income question of fact-Test to be applied in determining whether property acquired for purpose of gaining or producing income similar to that settled by Supreme Court of Canada in Moldowan v. The Queen, [1978] 1 S.C.R. 480-That taxpayer held property herein only over period of long holiday weekend indicative of absence of intention of earning income from property-Appellant itself not treating property acquired from winding-up of "Equipment" as being potential or actual source of income-Trial Judge's finding of fact appellant did not acquire property of "Equipment" for purpose of gaining or producing income concordant with applicable principles of law, solidly based in evidence-Act, s. 20(16) inapplicable-Appeal dismissed-Income Tax Act, S.C. 1970-71-72, c. 63, ss. 20(16) (as enacted by S.C. 1977-78, c. 1, s. 14(4)), 88(1) (as am. by S.C. 1973-74, c. 14, s. 27; 1980-81-82-83, c. 48, s. 48).