Canada v. Construction Bérou Inc.
T-1100-90
Tremblay-Lamer J.
23/2/96
23 pp.
Appeal from Tax Court of Canada decision on reassessment affecting tax consequences of certain acquisitions by defendant company-Issue whether contracts in nature of capital lease rather than mere lease-Under terms of contract, lessee could not dispose of equipment without lessor's consent; since lessee could not dispose of equipment absolutely, could not be owner thereof-Having option to purchase cannot confer ownership before option exercised-Since defendant not owner, not entitled to capital cost allowance-Definition of "qualified property" for purposes of tax credit not requiring taxpayer own property; sufficient taxpayer has acquired it-Taxpayer may have acquired property where transaction considered conditional sale of suspensive nature-For condition within meaning of Civil Code, art. 1079, event must be future and uncertain, and extrinsic to legal relationship between parties to contract-Leasing contract with option to purchase not sale on suspensive condition, since option to purchase condition intrinsic to contract and depends on will of one of parties-Absent irrevocable promise of purchase and sale, acquisition impossible before option exercised-Since lessee did not acquire property, defendant not entitled to investment tax credit-Moreover, since defendant did not acquire property, it could not deduct interest paid on balance of sale price-Civil Code of Lower Canada, art. 1079.