Rogers v. The Queen

Rogers v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2003-04-22
Neutral citation
2003 TCC 225
File numbers
2002-4608(IT)I
Judges and Taxing Officers
Leslie M. Little
Subjects
Income Tax Act
Decision Content
Docket: 2002-4608(IT)I
BETWEEN:
GORDON ROGERS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on April 7, 2003 at Vancouver, British Columbia
Before: The Honourable Judge L.M. Little
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
Nadine Taylor Pickering
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 2000 taxation year is dismissed, without costs, in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 22nd day of April 2003.
"L.M. Little"
J.T.C.C.
Citation: 2003TCC225
Date: 20030422
Docket: 2002-4608(IT)I
BETWEEN:
GORDON ROGERS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Little, J.
A. FACTS
[1] In 1976 the Appellant and his wife purchased a parcel of land (the "Property") consisting of 19.6 acres and located near Powell River, British Columbia.
[2] In 1980 the Appellant constructed a house on the Property where he resided with his wife and two sons.
[3] In the 2000 year the Appellant was employed as a lab technician at a pulp mill owned by Pacifica Papers Inc. (now Norske Canada Ltd.).
[4] Commencing in 1980 and up to and including the year 2000 the Appellant sold timber from his property for various reasons. The timber sales made by the Appellant and the reasons for the sales may be summarized as follows:
Year
Amount
Received
Reason for
Removal of Timber
1980
$ 2,025.00
To clear timber for road construction and to provide a location for the home.
1986
$ 4,900.00
To clear land (½ acre).
1994
$35,746.00
To obtain money from the sale of logs to pay for a divorce settlement and to purchase the interest of his wife in the Property.
1995
$24,193.00
To remove diseased trees.
1998
$19,599.00
To clear land.[1]
2000
$24,050.00
To remove diseased trees and to clear land.
[5] The Appellant made an arrangement with logging contractors to remove the standing timber from the Property except in the 1998 year.
[6] When the Appellant filed his income tax return for the 2000 taxation year the Appellant reported the gain realized on the sale of standing timber as a capital gain.
[7] The Appellant never reported for income tax purposes any of the payments received by him from the sale of logs or timber received in the 1980, 1986, 1994, 1995 and 1998 years.
[8] By Notice of Reassessment issued on the 24th day of September 2001 the Minister of National Revenue (the "Minister") reassessed the Appellant's 2000 taxation year to treat the amount of $24,050.00 received on the sale of logs as income.
B. ISSUE
[9] Is the Appellant required to include as income the amount of $24,050.00 received by him in the year 2000 on the sale of logs?
C. ANALYSIS
[10] The Minister included the amount of $24,050.00 in the Appellant's income for the 2000 taxation year because she concluded that the Appellant was engaged in an "adventure in the nature of trade" when he sold the logs in 2000.
[11] The term "adventure in the nature of trade" has frequently been considered by Canadian Courts. In Jake Friesen v. The Queen, [1995] 2 C.T.C. 369 Mr. Justice Major of the Supreme Court of Canada said at pages 374-375:
An adventure in the nature of trade is not defined in the Act but is a term which has a meaning established by the common law.
. . .
The concept of an adventure in the nature of trade is a judicial creation designed to determine which purchase and sale transactions are of a business nature and which are of a capital nature. This question was particularly important prior to 1972 when capital transactions were completely exempt from taxation. The question was succinctly stated by Clerk L.J. in Californian Copper Syndicate v. Harris (1904), 5 T.C. 159 (Ex., Scot.), at page 166:
Is the sum of gain that has been made a mere enhancement of value by realising a security, or is it a gain made in the operation of business in carrying out a scheme for profit-making?
The first requirement for an adventure in the nature of trade is that it involve a "scheme for profit-making". The taxpayer must have a legitimate intention of gaining a profit from the transaction.
[12] In a number of decisions, the Court has stated that one of the important tests used to determine if a transaction was an adventure in the nature of trade is whether the taxpayer had engaged in similar transactions. If the taxpayer had carried out frequent transactions he was usually found to be a trader. In this case the Appellant sold logs or standing timber on six different times while he owned the Property.
[13] In reviewing the evidence and the Court decisions I have concluded that when the Appellant sold logs or standing timber from the Property in the year 2000 he was engaged in an adventure in the nature of trade and therefore the amount of $24,050.00 was income.
[14] The appeal is dismissed, without costs.
Signed at Vancouver, British Columbia, this 22nd day of April 2003.
"L.M. Little"
J.T.C.C.
CITATION:
2003TCC225
COURT FILE NO.:
2002-4608(IT)I
STYLE OF CAUSE:
Gordon Rogers and
Her Majesty the Queen
PLACE OF HEARING:
Vancouver, British Columbia
DATE OF HEARING:
April 7, 2003
REASONS FOR JUDGMENT BY:
The Honourable Judge L.M. Little
DATE OF JUDGMENT:
April 22, 2003
APPEARANCES:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
Nadine Taylor Pickering
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
[1] The Appellant received $6,500.00 on the sale of logs. His two sons who assisted him each received $6,500.00.