Garage Montplaisir Ltée v. Canada
T-2812-92
Tremblay-Lamer J.
17/10/96
9 pp.
Appeal from Tax Court of Canada judgment dismissing plaintiff's appeal from notices of reassessment issued by M.N.R. for 1985, 1986 taxation years-Plaintiff operating General Motors dealership in Drummondville since 1964 (G.M. Ltée)-Pinard Ltée operating Ford dealership, providing services similar to those offered by plaintiff-In 1982, owing to serious financial difficulties, Pinard Ltée having no alternative but to get rid of Ford dealership-Prior to June 1984, Pinard Ltée having disposed of all tangible assets, including its building-In 1985, G.M. Ltée and Pinard Ltée and Pinard Ltée amalgamated and plaintiff born therefrom-Plaintiff seeking to deduct from its taxable income, as non-capital losses, losses accumulated by business carried on by Pinard Ltée: $429,175 for 1985, $380,174 for 1986-Income Tax Act, s. 111(5) must be interpreted to determine whether business carried on by Pinard Ltée carried on by plaintiff for profit or reasonable expectation of profit throughout 1985, 1986 taxation years-Department of National Revenue not allowing plaintiff to deduct losses in question-T.C.C. Judge dismissing plaintiff's appeal on ground employment by business of key person from another business not in itself constituting continuation of latter business-No commercial activity of Pinard Ltée carried on after October 1984-Only commercial activities during year sales on paper taking place between July and October-Purpose of s. 111(5) not carryover of losses as such but strengthening or survival of declining business-Parliament did not intend to allow one business to purchase another business for nominal sum and deduct enormous losses of business purchased within framework of similar business when purchaser clearly no longer carrying on business it acquired-Employing Mr. Pinard and his son as salesmen at Montplaisir Ltée not sufficient in itself to say that business carried on by Pinard Ltée continued or reactivated-Appeal dismissed-Income Tax Act, S.C. 1970-71-72, c. 63, s. 111(5)(a) (as am. by S.C. 1984, c. 1, s. 54; 1985, c. 45, s. 57).