The appellants sold shares of their small business corporation and claimed a lifetime capital gains exemption.
The CRA denied the claim, assessing that more than 50% of the corporate assets were investments rather than assets used in an active business.
The appellants argued that large cash reserves were necessary for future oil well decommissioning costs.
The Tax Court of Canada dismissed the appeals, finding no rational connection between the remote risk of high decommissioning costs and the large reserves held, concluding the assets were not used in an active business.
