Date: 20000309
Docket: A-998-96
CORAM: THE CHIEF JUSTICE
STRAYER, J.A.
ROTHSTEIN, J.A.
In Re The Income Tax Act
1989, 1990 and 1991 TAXATION YEARS
BETWEEN:
POINT GREY GOLF & COUNTRY CLUB
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
(Delivered from the bench at
Vancouver, B.C. on March 8, 2000)
ROTHSTEIN, J.A.
[1] Without endorsing all the reasons of the learned Tax Court judge, we are in agreement with his conclusion that the interest earned by the appellant in this case was income from property under paragraph 149(5)(e)(i) of the Income Tax Act and was therefore taxable.
[2] The interest was earned on a dedicated fund under a capital improvement plan. The fund was being accumulated by the appellant for the purpose of construction of a new club house. In these circumstances the interest income must be considered to be income from property.
[3] The appellant argued that the test as to whether interest income is or is not from property should be based on whether the fund which generates the interest is set aside as a dedicated fund for the legitimate purposes of the club. If so, the interest income will not be from property and will not be taxable.
[4] However, in the context of section 149 and non-profit clubs, and in the light of this Court"s reasons in Elm Ridge Country Club Inc. v. Her Majesty the Queen1 we are unable to draw a distinction between dedicated and non-dedicated funds. Indeed, if interest earned on non-dedicated short-term deposits arising from temporary surpluses in day-to-day operations is income from property and is therefore taxable as was found in Elm Ridge, then it would seem to follow that interest earned on a dedicated fund set up for a one-time extraordinary purpose, ie. construction of a new club house, would also have to be income from property and be taxable.
[5] Despite the able argument of appellant"s counsel, in the circumstances of this case, we are of the view that the interest earned is income from property and is taxable under paragraph 149(5)(e)(i).
[6] The appeal will be dismissed with costs.
(Sgd.) "Marshall E. Rothstein"
J. A.
March 9, 2000
Vancouver, British Columbia
Date: 20000309
Docket: A-998-96
CORAM: THE CHIEF JUSTICE
STRAYER, J.A.
ROTHSTEIN, J.A.
In Re The Income Tax Act
1989, 1990 and 1991 TAXATION YEARS
BETWEEN:
POINT GREY GOLF & COUNTRY CLUB
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
Heard at Vancouver, British Columbia on March 8, 2000
REASONS FOR JUDGMENT delivered at Vancouver, British Columbia on March 9, 2000
REASONS FOR JUDGMENT BY: ROTHSTEIN, J.A.
FEDERAL COURT OF CANADA
APPEAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
| COURT FILE NO.: A-998-96 |
STYLE OF CAUSE: Point Grey Golf & Country Club
v.
HMQ
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: March 1, 2000
REASONS FOR JUDGMENT OF ROTHSTEIN, J.A.
DATED: March 9, 2000
APPEARANCES:
| Craig Sturrock For the Appellant |
| Patricia Babcock For the Respondent |
SOLICITORS OF RECORD:
Thorsteinssons
Lawyers
| Vancouver, BC For the Appellant |
Morris Rosenberg
Deputy Attorney
| General of Canada For the Respondent |
1 99 D.T.C. 5127, paragraphs 15 - 19, leave to appeal to the Supreme Court of Canada denied.