Words and Phrases - "investing"
First Torland Investments Ltd. v. MNR, 69 DTC 5109, [1969] CTC 134 (Ex Ct), briefly aff'd 70 DTC 6354, [1970] CTC 634 (SCC)
The parent corporation of the three taxpayers (The Trust and Loan Company of Canada) transferred approximately 156 Manitoba farms (which it had acquired on foreclosure during the depression) to the taxpayers. It was found that the sale of the bulk of the farms by the taxpayers over the following period of over a decade occurred pursuant to a policy of the taxpayers to do so at maximum gain from the moment they acquired the farms. Accordingly, the resulting gains were on income account notwithstanding that the farms generated a significant return by way of rental income in the interim and notwithstanding that the farms were almost invariably sold to the tenant farmers who occupied them. Cattanach J. noted that the taxpayers were "investing" in the sense of purchasing properties with a view to their resale at a profit, rather than purchasing properties for the income that could be obtained therefrom.
Wragg v. Palmer, [1919] 2 Ch. 58
A will which authorized the trustees "to invest any monies forming part of the trust estate in their names and at their discretion in or upon such stocks funds shares securities or other investments of whatsoever nature and wheresoever and whether involving liability or not or upon such personal credit without securities as his trustees should in their absolute and uncontrolled discretion think fit" was found to permit the purchase of real estate. Lawrence J. stated (pp. 64-65):
The verb 'to invest' when used in an investment clause may safely be said to include as one of its meanings 'to apply money in the purchase of some property from which interest or profit is expected and which property is purchased in order to be held for the sake of income which it will 'yield'; whilst the noun 'investment' when used in such a clause may safely be said to include as one of its meanings 'the property in the purchase of which the money has been so applied.' ... In ordinary parlance real estate is spoken of as an investment if bought in order to be held for the sake of the income or profit accruing from it. The expression 'investing in house property' is one which every lawyer must frequently have heard, and who can doubt that in such a case the house property purchased is property described as 'an investment'?