Date: 20050913
Docket: A-461-04
Citation: 2005 FCA 289
NOËL J.A.
PELLETIER J.A.
BETWEEN:
DAVID RAJCHGOT
Appellant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Montréal, Quebec on September 13, 2005.
Judgment delivered at Montréal, Quebec, on September 13, 2005.
REASONS FOR JUDGMENT OF THE COURT BY: NOËL J.A.
Date: 20050913
Docket: A-461-04
Citation: 2005 FCA 289
CORAM: DESJARDINS J.A.
NOËL J.A.
PELLETIER J.A.
BETWEEN:
DAVID RAJCHGOT
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Montréal, Quebec, on September 13, 2005)
[1] This is an appeal from a decision of Rip J. who held that certain losses incurred by the appellant during his 1997 taxation year were on capital account and therefore could not be applied to reduce his income for the year.
[2] The appellant is an astute businessman who has a history of investing in the stock market. He had always treated his gains and losses on account of capital until 1997 when he suffered large losses from his investments in Tee-Comm Electronics Inc. (Tee-Comm).
[3] The appellant attempted to convince the Tax Court Judge that the Tee-Comm investments had a distinct status from his other investments invoking a variety of reasons including his detailed knowledge of the company, the time which he spent in monitoring its operations, the volume and frequency of the transactions and the limited duration of the holdings.
[4] The Tax Court Judge considered each of these factors but held that the appellant had failed to demonstrate that his original intention in purchasing the shares has changed. He said:
[37] Most of the Tee-Comm shares were purchased by the appellants in 1995 and 1996. Any gains and losses on disposition of shares in those years were claimed on account of capital. ... When a taxpayer all of a sudden changes from reporting transactions from capital to income account or from income to capital account there should be some evidence of the shares' changes in status.
[38] There is no evidence before me that the appellants, in acquiring the Tee-Comm shares, changed their original and principal intention. ... What happened in 1997 was that Tee-Comm shares started to fall in value and Mr. Rajchgot, in February, when he realized the shares were falling and would not return to their high values, started to sell the shares. However, this did not alter his overall purpose in purchasing the shares as capital assets.
[5] A taxpayer who wants to change his reporting status in circumstances where it becomes more tax efficient to do so bears a heavy onus. In this case, the Tax Court Judge held that this onus has not been met. This is a decision that was open to him on the evidence before him.
[6] The appeal will be dismissed with costs.
"Marc Noël"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-461-04
STYLE OF CAUSE: DAVID RAJCHGOT
Appellant
and
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: September 13, 2005
REASONS FOR JUDGMENT OF THE COURT:
DESJARDINS, NOËL, PELLETIER JJ.A.
DELIVERED FROM THE BENCH BY: NOËL J.A.
APPEARANCES:
|
Nicolas X. Cloutier |
FOR THE APPELLANT |
|
Alain Gareau |
FOR THE RESPONDENT |
SOLICITORS OF RECORD:
|
Davies Ward Phillips & Vineberg Montréal, Quebec |
FOR THE APPELLANT |
|
Deputy Attorney General of Canada Montréal, Quebec |
FOR THE RESPONDENT |