Words and Phrases - "property"
15 March 2005 Internal T.I. 2004-0108721I7 F - Don d'une licence
In connection with finding that a gift of a non-exclusive software licence was a gift of property, CRA stated:
In Manrell, the Court went on to determine that, with the exception of paragraph (d) (which is not relevant to this case), the definition in subsection 248(1) does not have the effect of giving the word "property" a meaning that differs from its ordinary meaning.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 118.1 - Subsection 118.1(1) - Total Charitable Gifts | gift of a non-exclusive software licence was a gift of property | 105 |
Aitchison Professional Corporation v. The Queen, 2018 TCC 131
At a time that James Aitchison owed $2.1 million in taxes, he transferred his law practice to a newly-incorporated professional corporation (the appellant) and thereafter worked for it as an unpaid volunteer or employee. His two daughters (also lawyers) worked for the appellant at market salaries and in the first three years received over $1 million in dividends as a result of “an improbable share structure and a complete disregard for dividend rights.”
In finding that James had not transferred property to the appellant by virtue of choosing not to negotiate a salary for his valuable professional services, Graham J stated (at paras. 16, 19):
An employee negotiates the terms of his or her employment with the firm. Nothing that the employee provides to the firm could be described as “property”. An employee provides services, not property. The same is true for a volunteer.
By definition, volunteers are not compensated for their work. While employees should, of course, be fairly compensated for their work, their right to compensation flows from the employment contracts that they negotiate. The right to negotiate is a right that everyone possesses and that is enforceable against no one. It is not “property”. If an employee negotiates a poor contract, the potential salary that he or she leaves on the table is not “property” that he or she has transferred to his or her employer. It is simply a lost opportunity. An employee does not have an enforceable right to the salary that he or she never negotiated. This is true even if an employee agrees to work for free.
He went on to state (at paras. 32, 35):
This case demonstrates that there is clearly a gap in section 160 … [but s]imply amending section 160 to cause it to cover the non-arm’s length provision of services may have undesired consequences. …
If a tax debtor spent all of his or her free time caring for his or her aging parents, would the Minister assess the parents for the fair market value of that care?
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | (foregone) right to negotiate a significant salary was not property | 169 |
Nokes v. Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014 (HL)
It was held that where a court order was made under the Companies Act 1929, for the amalgamation of two corporations, including an order for the "transfer" of all the "property" of the predecessor corporations to the amalgamated corporation, the court order did not automatically transfer employment contracts between employees and the predecessor corporations to the amalgamated corporation. "Property" was defined in the Companies Act 1929 to include "rights and powers of every description". Lord Chancellor Viscount Simon stated (p. 1024):
"S.154 when it provides for 'transfer' is providing in my opinion for the transfer of those rights which are not incapable of transfer and is not contemplating the transfer of rights which are in their nature incapable of being transferred."
The Queen v. Golden et al., 86 DTC 6138, [1986] 1 CTC 274, [1986] 1 S.C.R. 209
Estey, J. found that the interpretation of the initial version of s. 68 should be interpreted in light of the broad meaning of "property," in s. 248(1), stating in the latter regard (at para. 7) that:
The extremely broad definition of property leaves very little in the 'non-property' classification. It would appear to include a contract right and might in some circumstances include a right to assert a covenant by a vendor to deliver 'know-how'".
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 68 | 100 | |
| Tax Topics - Statutory Interpretation - Context | 27 |
Manrell v. Canada, 2003 DTC 5225, 2003 FCA 128
A portion of the consideration paid by a purchaser of shares of operating companies in which the taxpayer had been a significant shareholder (directly, or through holding companies) was allocated as consideration for his entering into non-compete agreements. Sharlow J.A. stated (at paras. 25, 53):
It is implicit in this notion of “property” that “property” must have or entail some exclusive right to make a claim against someone else. A general right to do something that anyone can do, or a right that belongs to everyone, is not the property “of anyone”. …
[T]here is not a single [Canadian] case in which the word "property" has been held to include a right that is not or does not entail an exclusive and legally enforceable claim.
She further found that the phrase "a right of any kind whatever" did not expand the ordinary meaning of "property" to include a non-exclusive, commonly held right to carry on a business, such as that held by the taxpayer.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Exempt Receipts/Business | non-taxable non-compete | 35 |
| Tax Topics - Income Tax Act - Section 9 - Expense Reimbursement | 35 | |
| Tax Topics - Statutory Interpretation - Legislative History | 57 | |
| Tax Topics - Statutory Interpretation - Other/Conflicting Statutes | foreign statutory context different | 78 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | grant of non-compete did not entail a disposition of property/ settlement of right to damages is not a disposition for capital gains purposes | 338 |
Medland v. R., 98 DTC 6358, [1999] 4 CTC 293 (FCA)
There was a transfer of property to the taxpayer for purposes of s. 160(1) when her husband, who was the joint mortgagor on a house that at the relevant times, was owned by her, paid monthly amounts due under the mortgage. By virtue of such payments, the taxpayer became less indebted and her equity in the property increased. The words "property" and "transfer" had been broadly defined in the jurisprudence.
Location Gaétan Lévesque Inc. v. MNR, 91 DTC 1380, [1991] 2 CTC 2795 (TCC)
The taxpayer entered into "leasing contracts" respecting heavy equipment which typically had a term of approximately five years, provided for monthly rental payments, provided that five months before the expiry date the taxpayer could exercise an option to purchase the equipment for a sum equal to the remaining rentals, and provided that the taxpayer was responsible for the maintenance and good condition of the equipment.
Lamarre Proulx TCJ. found (at p. 1384) that the definition of "depreciable property" meant that:
"A taxpayer's depreciable property is property for which he or she has already claimed and received deductions, and in respect of deductions for the current year, it is property which the taxpayer owns at the end of the year."
Furthermore, she found (at p. 1385) that "the words 'property acquired' must be taken to mean property in which the taxpayer has a right of ownership, or if not such a right, then all the attributes of a right of ownership, as in the case of a conditional sale". Accordingly, because the taxpayer neither owned the property nor had acquired it, it was not entitled to capital cost allowance.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Ownership | lessee with purchase option not the beneficial owner | 117 |