The appellant, Hickman Motors Ltd., acquired depreciable property from its subsidiary upon the subsidiary's winding-up.
The appellant held the assets for five days, during which they produced leasing revenue, before transferring them to a newly incorporated subsidiary.
The Minister of National Revenue disallowed the appellant's claim for capital cost allowance (CCA) on the basis that the assets were not acquired for the purpose of producing income.
The Supreme Court of Canada allowed the appeal, holding that the assets produced revenue and were therefore acquired for the purpose of producing income.
The Court distinguished the 'purpose of producing income' test for CCA from the 'reasonable expectation of profit' test, finding that the appellant satisfied the requirements of s. 20(1)(a) of the Income Tax Act and the relevant regulations.
