[2012] 2 F.C.R. D-7
Income Tax
Corporations
Appeal from Tax Court of Canada (T.C.C.) decision (2010 TCC 576) dismissing appellant’s appeal of respondent’s reassessments—Appellant, product of amalgamation under Credit Union Incorporation Act, R.S.B.C. 1996, c. 82 (CUIA)—Appellant’s predecessors engaging in real estate, share transactions with third-party corporation in order to prevent merger from falling within Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 87—Shares, real estate becoming property of appellant at amalgamation even though shares not owned by predecessors immediately before amalgamation—Respondent reassessing appellant’s capital cost allowance (CCA) to reflect amount of predecessors’ undepreciated capital cost (UCC) before merger—T.C.C. finding that while s. 87 not applying to merger herein, principles established in R. v. Black & Decker Manufacturing Co. Ltd., [1975] 1 S.C.R. 411 (Black & Decker) applying so that predecessors’ combined UCC flowing through to appellant—Issues whether: (1) merger falling within Act, s. 87; (2) Black & Decker principles applying so as to require appellant to recognize depreciation of assets—(1) Conditions of Act, s. 87(1)(a), i.e. property of predecessors becoming property of new corporation, change coming about by virtue of amalgamation, satisfied herein—Transactions related to merger merely changing form of predecessors’ property that became property of appellant—Fact that interest in properties vested in appellant’s wholly owned subsidiary at moment of amalgamation not warranting conclusion that property of predecessors not becoming property of appellant for purpose of s. 87(1)(a)—Finally, transactions in present case intimately related to merger—UCC of assets immediately before merger thus flowing through to appellant under Act, s. 87(2)(b)—(2) Supreme Court of Canada in Black & Decker holding that effect of statute having amalgamating companies continue without subtraction in amalgamated company—CUIA adopting same continuation model of amalgamation—Term “without subtraction” broad enough to include predecessors’ UCC balances—Respondent correct in disallowing appellant’s claim for CCA—Appeal dismissed.
Envision Credit Union v. Canada (A-479-10, 2011 FCA 321, Evans J.A., judgment dated November 21, 2011, 28 pp.)