A-337-76
Sudden Valley, Inc. (Appellant) (Plaintiff)
v.
The Queen (Respondent) (Defendant)
Court of Appeal, Ryan J., Kerr and Sheppard
D.JJ. Vancouver, October 29, 1976.
Income tax—Non-resident—Appeal against tax assessed on
interest paid by Canadian residents to non-resident—Whether
appellant carrying on business in Canada within extended
meaning provided by Income Tax Act Appeal dismissed—
Income Tax Act, R.S.C. 1952, c. 148, s. 139(7)(6), S.C. 1970-
71-72, c. 63, s. 253(b)—Income Tax Regulations, s. 805.
APPEAL.
COUNSEL:
Warren J. A. Mitchell for appellant
(plaintiff).
W. Hohmann for respondent (defendant).
SOLICITORS:
Thorsteinsson, Mitchell, Little, O'Keefe &
Davidson, Vancouver, for appellant (plain-
tiff).
Deputy Attorney General of Canada for
respondent (defendant).
The following are the reasons for judgment
delivered orally in English by
RYAN J.: This is an appeal from the judgment
of the Trial Division', dated April 22, 1976, which
dismissed the appellant's appeal from a judgment
of the Tax Review Board. The appeal is in relation
to a series of assessments for income tax for the
taxation years from 1969 to 1972 inclusive. The
assessments were in respect of interest payments
made by persons resident in Canada to the appel
lant, a non-resident. The interest was paid on
unpaid balances of the purchase price of lots of
land sold by the appellant. The lots are located at
a place called Sudden Valley in the State of
Washington. The tax in respect of each of the
years from 1969 to 1971 inclusive was assessed by
virtue of Part III of the Income Tax Act then in
force; that in respect of 1972 under Part XIII of
' [1976] 2 F.C. 462.
the Act then and now in force.
Because of section 805 of the Income Tax
Regulations the appellant would not be taxable
under Part III or Part XIII if it was carrying on
business in Canada during the relevant years and
the payments were reasonably attributable to the
business. The critical question then is: Was the
appellant carrying on business in Canada during
these years?
The facts of the case are stated in the reasons
for judgment of the learned Trial Judge. It is clear
on the facts that the appellant was not carrying on
business in Canada unless its activities fall within
the extended definition of "carrying on business in
Canada" as set forth in paragraph 253(b) of the
Income Tax Act:
253. Where, in a taxation year, a non-resident person
(a) . ..
(b) solicited orders or offered anything for sale in Canada
through an agent or servant whether the contract or transac
tion was to be completed inside or outside Canada or partly
in and partly outside Canada,
he shall be deemed, for the purposes of this Act, to have been
carrying on business in Canada in the year.
This paragraph is in the same terms as paragraph
139(7)(b) of the former Act, the paragraph appli
cable to the taxation years from 1969 to 1971
inclusive.
The learned Trial Judge made these findings [at
page 467]:
From a glance at the evidence in this case, which I have
summarized above, it is abundantly clear that no offer was
obtained and no attempt was made to obtain any in Canada
and it is equally clear that nothing was offered for sale in
Canada either through an agent or otherwise. One must there
fore conclude that the real estate business of the plaintiff was
not being carried on in Canada even within the extended
meaning given to that term by section 253(b).
The only activity carried on in Canada by the plaintiff was
that of attempting to induce Canadians to visit Sudden Valley
in the hope that some might eventually become interested in
buying property there.
These findings are supported by the evidence and
are decisive of the issue. Indeed, the final finding
would itself be enough.
I would dismiss the appeal with costs.
* * *
KERR D.J. concurred.
* * *
SHEPPARD D.J. concurred.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.