Brent Paris

The respondents were limited partners in a partnership that purchased a mini-warehouse.

The partnership generated losses, which the respondents deducted for income tax purposes.

The Minister reassessed the respondents, disallowing the losses on the basis that the partnership did not carry on business with a reasonable expectation of profit.

The Supreme Court of Canada, applying the test from the companion case of Stewart v. Canada, held that the storage park operation was commercial in nature and lacked any personal element.

Therefore, the reasonable expectation of profit test did not apply, and the operation constituted a source of income under s. 9 of the Income Tax Act.

The Crown's appeal was dismissed.

The appellant, an egg producer, intentionally exceeded its production quota and was assessed an over-quota levy by the provincial marketing board.

The appellant deducted the levy as a business expense under the Income Tax Act.

The Minister disallowed the deduction.

The Supreme Court of Canada held that the levy was deductible as a current business expense under s. 18(1)(a) of the Act, as it was incurred for the purpose of gaining or producing income.

The Court ruled that the income tax system does not distinguish among levies, fines, and penalties, and that public policy considerations should not be used by courts to disallow deductions that are otherwise permitted by the clear language of the Act, leaving such policy choices to Parliament.

The Supreme Court of Canada allowed the appeal from the Federal Court of Appeal, agreeing with the dissenting judge and the Tax Court.

The Court held that the property in question retained its character as inventory in the hands of the appellant company after being acquired from a subsidiary.

The Minister of National Revenue reassessed the respondent, attributing dividends paid to his wife on her Class B shares to his income under s. 56(2) of the Income Tax Act.

The dividends were declared pursuant to a discretionary dividend clause in the company's Articles of Incorporation.

The Supreme Court of Canada held that the discretionary dividend clause was valid under corporate law and did not violate the common law presumption of equality among shares.

The Court further held that s. 56(2) generally does not apply to dividend payments, and the dividends paid to the wife were a legitimate return on her investment and contribution to the company, not a tax avoidance scheme.

The Crown's appeal was dismissed.