Boger Estate v. Canada
A-1199-91
Heald J.A.
8/6/93
12 pp.
Appeal from trial judgment ([1992] 1 F.C. 152) allowing appeal from reassessment of terminal tax return disallowing roll-over pursuant to Income Tax Act, s. 70(9) of farm land and depreciable property given to taxpayer's children under will -- S. 70(9) providing rules where any land or depreciable property used by taxpayer immediately before death in farming business and transferred or distributed to child as result of death and property vested indefeasibly in child not later than 15 months after death -- Taxpayer died in March, 1979 -- Estate consisting of farm land, farming equipment, livestock, grain used in farming business immediately prior to death -- Widow receiving life estate in home quarter under will -- Terminal tax return to date of death claiming "spousal roll-over" of home quarter pursuant to s. 70(6), "farm roll-over" of remaining land and farming equipment pursuant to s. 70(9) -- Farming equipment sold by auction in 1979 -- Executrix (daughter) becoming registered owner of lands qua executrix in 1981 -- Part of land sold in 1982 -- Children receiving capital distributions of $310,000 between September 1981 and September 1982 -- Reassessment because property not "transferred or distributed" to children and not "vested indefeasibly" within time limit in s. 70(9) -- Trial Judge holding farm lands and equipment passing under will effectively rolled over -- Appellant submitting property not transferred to widow, children under will -- Submitting beneficiaries not acquiring property rights until administration of estate complete and title conveyed to beneficiaries -- Implicit personal representative must take positive action to "transfer or distribute" legal title or physical possession before beneficiaries obtaining property rights -- Appeal dismissed -- Although Alberta's Devolution of Real Property Act, s. 2 providing real property devolving on personal representative of deceased, s. 3 providing personal representative of deceased holding real property as trustee for persons beneficially entitled thereto -- When s. 3 read in conjunction with ss. 9, 10(1), "beneficial entitlement" arising on death in Alberta, not at some later date -- S. 70(6), (9) not referring to transfer or distribution by personal representative, but contemplating transfer or distribution by personal representative on or after death of taxpayer -- Formal conveyance not necessary to transfer or distribute farm lands -- Fact farm lands sold directly by executrix to third party not vitiating transfer under will -- Sale of farm lands within 15-month period not precluding application of s. 70(9) -- Farm lands "vested indefeasibly" in taxpayer's children not later than 15 months after taxpayer's death -- Property interests "vested" because no condition precedent to be fulfilled and persons entitled ascertained and ready to take possession -- "Indefeasible" vesting because not subject to condition subsequent in will -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 70(6),(9) (as enacted by S.C. 1973-74, c. 14, s. 19; 1976-77, c. 4, s. 27) -- Devolution of Real Property Act, R.S.A. 1980, c. D[ib]-4, ss. 2, 3.