[1] We are not persuaded that the Tax Court Judge made a reviewable error when he concluded that, for the purpose of subsection 245(4) of the Income Tax Act, R.S.C. 1985, c. 1 (5^th Supp.), the transactions in question in this case did not constitute a misuse of a provision of the Act, or an abuse of the capital cost allowance ("CCA") scheme as a whole.

[2] Counsel for the Crown submitted that she was not seeking to recharacterize the transactions and did not allege that they were a sham. Rather, she said, the policy underlying paragraph 20(1)(a), and the CCA provisions as whole, is to permit taxpayers to claim CCA in respect of the "real" or "economic" cost that they incurred in acquiring an asset, and not the "legal" cost, that is, on the facts of this case, the purchase price paid by the taxpayer.

[3] However, counsel was unable to refer to any source that satisfied us that there is a clear and unambiguous policy underlying paragraph 20(1)(a), or the CCA scheme when read as a whole, that renders it a misuse or an abuse of those provisions for the taxpayer to claim CCA in this case.

[4] For these reasons, the appeal will be dismissed with costs.

"John M. Evans"

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-262-03

STYLE OF CAUSE: HER MAJESTY THE QUEEN

Appellant

and

CANADA TRUSTCO MORTGAGE COMPANY

Respondent

PLACE OF HEARING: TORONTO, ONTARIO

DATE OF HEARING: FEBRUARY 11, 2004

REASONS FOR JUDGMENT

OF THE COURT : (ROTHSTEIN, EVANS & PELLETIER JJ.A.)

DELIVERED FROM THE

BENCH BY: EVANS J.A.

APPEARANCES:

Ms. Deen C. Olsen

FOR THE APPELLANT

Mr. Al Meghji

Ms. Monica Biringer

FOR THE RESPONDENT

SOLICITORS OF RECORD:

Morris Rosenberg

Deputy Attorney General of Canada

Toronto, Ontario

FOR THE APPELLANT

OSLER, HOSKIN & HARCOURT LLP

Toronto, Ontario

FOR THE RESPONDENT

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