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FEDERAL INCOME TAX - Capital gains and losses - Calculation of gains and losses - Appeals - Tax Court of Canada - Judgments disposing of an appeal

Friday, April 21, 2017 @ 10:43 AM  


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Appeal by Struck from a Tax Court judgment quashing his appeal. In 2005, the appellant transferred shares in a numbered company and a half interest in a rental property to his son. They reached an agreement on the fair market value of the assets and the manner of payment. The appellant did not report any taxable capital gain arising from the transaction. In 2009, a reassessment included taxable capital gains of $163,000. The appellant served a notice of objection and the reassessment was reduced to $110,500, with $75,000 attributable to the real property disposition, and $35,500 attributable to the share sale. The appellant appealed to the Tax Court of Canada. In 2013, a consent order allowed the appeal and reduced the total taxable capital gains to $72,100, of which $49,850 was attributable to the sale of the property. Following a reassessment issued to reflect the consent judgment, the appellant filed a notice of appeal alleging the total taxable capital gains should be calculated with regard to reserves. The Crown moved to quash the appeal. In 2016, the Tax Court allowed the Crown's motion. Struck appealed.

HELD: Appeal dismissed. The Tax Court did not err in quashing the appellant's appeal. The terms of the consent to judgment were incorporated by reference into the judgment, which conclusively determined the total amount of the taxable capital gain arising from the dispositions of the properties in question. By agreeing to the amount of the taxable capital gain, which was not in dispute, the appellant agreed to all of the consequences flowing from the consent to judgment, which in the case, was determination of the amount of the gain without any claim for a reserve. Since the amount of the taxable capital gain was conclusively determined by the Tax Court, the appellant was precluded from advancing an appeal that would change the amount.

Struck v. Canada, [2017] F.C.J. No. 338, Federal Court of Appeal, M. Noël C.J., W.W. Webb and J.M. Woods JJ.A., April 3, 2017. Digest No. TLD-Apr172017011