Canada v. Trade Investments Shopping Centre Ltd.
T-1398-90
Noël J.
6/7/93
18 pp.
Appeal from Tax Court of Canada decision allowing defendant's appeal and referring back to M.N.R. assessment made against latter for 1986 taxation year -- In 1961 defendant purchased shopping centre for total of $3,403,471 and resold it in August 1986 to I.P.C.F. Properties Inc. -- Under Income Tax Act, s. 13(21.1), Minister disallowed final loss claimed by defendant of $981,240 and reduced taxable capital gain reported by $490,620-Whether s. 13(21.1)(a), in effect since May 9, 1985, applicable to transaction made on August 29, 1986 between I.P.C.F. Properties Inc. and defendant -- Under s. 7(2) of Act to amend the statute law relating to income tax and to make a related amendment to the Tax Court of Canada Act, s. 13(21.1)(a) applicable to any disposition occurring after May 9, 1985 other than dispositions occurring pursuant to terms of agreement in writing entered into on or before that date -- Whether lease of August 31, 1961, and option conferred by it, could be regarded as agreement in writing concerning disposition of shopping centre -- Transitional legislation remedial in nature -- Such provisions necessary in tax matters since well established in this area that state of law confers no vested right for subsequent years -- Transitional provision (s. 7(2)) quite limited in scope as only applies to dispositions occurring pursuant to contract concluded in accordance with old Act-Purchase offer cannot be "agreement" within meaning of transitional provision -- Legal consequences of purchase option distinct from ordinary offer -- Disposition in question made in accordance with terms of option agreement -- Question of interpretation as to scope of transitional provision must be answered by reference to provision of substantive law it accompanies and specific situation Parliament sought to alleviate by introducing it -- Introduction of s. 13(21.1)(a) intended to end planning which, though legitimate, regarded by Parliament as undesirable -- Transitional provision enacted exclusively to protect possible seller who had obligated himself to effect sale under old law -- Since shopping centre disposed of in accordance with terms contained in option agreement, effect of transitional provision to exclude application of s. 13(21.1)(a) of Act -- Appeal dismissed-Income Tax Act, S.C. 1970-71-72, c. 63, s. 13(21.1)(a) (as enacted by S.C. 1985, c. 45, s. 7).