T-5718-79
Howden Brothers Construction Ltd. (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Maguire D.J.—Regina, November
13 and 28, 1981.
Income tax — Capital cost allowance — Plaintiff, a con
tractor, purchased metal sheets to be used as forms and
claimed capital cost allowance of 100% pursuant to class
12(d) of the Income Tax Regulations — Appeal from Tax
Review Board decision that these materials fall within class
10(h) (30%) — Whether metal sheets "movable equipment"
and, as used, a "mould" — Appeal dismissed — Income Tax
Regulations, SOR/54-682 as amended, Schedule B, class
10(h), 12(d).
INCOME tax appeal.
COUNSEL:
James A. Griffin, Q.C. for plaintiff.
Werner H. Heinrich for defendant.
SOLICITORS:
Griffin, Beke & Thorson, Regina, for
plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
MAGUIRE D.J.: The plaintiff appeals from the
decision of Roland St-Onge, Q.C., a member of
the Tax Review Board, dated January 7, 1980,
holding that certain materials used by plaintiff in
its construction business or operations came within
class 10, Schedule B, of the Regulations to the
Income Tax Act [SOR/54-682 as amended by
SOR/64-167] for the purpose of yearly capital
cost allowance, and not within class 12 of said
Regulations.
Plaintiff is in the business of constructing con
crete basements for houses and other buildings, in
which it requires forms to hold the wet concrete in
place until it sets. In the 1977 taxation year plain
tiff purchased aluminum metal panels or sheets to
be used for the said purpose, at a cost of $45,700,
and in its income tax return for that year it
included this cost as within said class 12, Schedule
B, of the Regulations thereby claiming capital cost
allowance at the rate of 100 per cent.
In assessing the plaintiff, the Minister of Na
tional Revenue assumed, inter alia, that:
(a) the metal forms consist of a contractor's movable
equipment;
(b) are not in the form of a dye, jig, pattern, mould or last;
(c) the metal forms were neither hollow nor a fixed pattern
or shape, but usually consisted of metal sheets which were
assembled on each building site to match the dimensions of a
particular house under construction.
The use of the term "forms" cannot be inter
preted as meaning "forms" in a permanent form,
but means the metal panels or sheets as purchased.
There is no dispute on this point.
Class 10 (30%) includes
(h) contractor's movable equipment (including
portable camp buildings) other than a property
included in class 22.
Class 22 has no application here.
Class 12 (100%) includes
(d) a die, jig, pattern, mould or last.
As set forth in assumption (c), the metal sheets
or panels are used to construct a form, to receive
the wet concrete. This form following use is taken
apart following the hardening of the concrete, and
the sheets are re-used with such variations as
required in the next construction to meet the vari
ables required by the next construction project.
Counsel for plaintiff submits that movable
equipment usually refers to equipment movable
under its own power. "Movable" is defined in
general dictionaries, as also in legal words and
phrases dictionaries, as something capable of being
moved. I cannot give the meaning to these words
as submitted by said counsel.
Plaintiff asserts that the sheets as so used consti
tute a mould as listed in class 12(d). In other
words, that it is the ultimate use made which
determines the class. It is further submitted that
the "ejusdem generis" rule has here no applica
tion.
Assuming for the moment that "mould" is a
general term it is apparent that all other descrip
tive words listed in said class 12(d) are particular
and specific words, each permanent in form, and in
use yielding a product identical each time in the
form determined by the die, jig, etc. The word
"mould", in my opinion, falls within the same class
and cannot be applied to such as metal sheets
assembled to meet the particular requirements of
each use. "Mould" must be interpreted as restrict
ed to the same "genus" as the other words in this
paragraph.
Plaintiff's counsel further submits that when
wood sheets with other wood parts were used
previously for the same purpose as these metal
sheets that 100 per cent allowance was approved.
There is a marked distinction, however, in that the
wooden sheets, etc., use had a lifetime of only
some three months, whereas these metal sheets
have an estimated lifetime use of some four years.
Following careful consideration of all issues
raised, I am of the opinion that the metal sheets
are "contractor's ... equipment", within class
10(h).
The decision of the Tax Review Board contains
the following paragraph:
According to the evidence adduced, and after a careful
scrutiny of the different classes of depreciation, the Board
believes that, in trying to decide into which class an asset
belongs for capital cost allowance purposes, the priority should
be given to the life expectancy of an asset. In the case at bar, it
is obvious that the life expectancy of the asset is from three to
four years, and consequently the proper rate of depreciation
would be that of Class 10(h) at 30%.
There is authority that the statutory scheme of
the Income Tax Act is to allow depreciation
depending upon the time of the effective usefulness
of the depreciable asset. In view of the decision
arrived at, I need not review this basis of
allowance.
The action is dismissed, and the decision of the
Tax Review Board is upheld. Defendant shall have
its costs of this action from the plaintiff.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.