[2012] 1 F.C.R. D-6
Income Tax
Income Calculation
Capital Gains and Losses
Appeal from Tax Court of Canada decision (2010 TCC 471) dismissing appeal of appellant’s reassessment for 2003 taxation year—Appellant claiming entitled to benefit of principal residence exemption in relation to capital gain realized on sale of house, 2.43 hectares of land—Appellant residing there from date acquired in 1994 to November 2003 when sold—When appellant acquiring property in 1994, local zoning by-laws precluding appellant from acquiring less than entire 2.43 hectares of land—Zoning by-laws remaining unchanged until May 2003, when amendment coming into force making it possible for appellant to apply to have property rezoned, subdivided—For purposes of capital gains, losses, “principal residence” defined in Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 54, including ½ hectare of land on which house sitting—Land in excess of ½ hectare deemed not part of principal residence unless proven necessary to use, enjoyment of housing unit as residence—Issue whether principal residence exemption applying to appellant’s remaining 1.93 hectares of land—Act, s. 40(2)(b) setting out principal residence exemption, formula for determining capital gain on disposition of property considered “principal residence”—Variable B of that formula, in which one plus number of years in which “principal residence” definition met, relevant in present case—Determination of variable B requiring determination, for each taxation year in which taxpayer owning property in issue, as to whether property meeting definition of “principal residence” of taxpayer for that taxation year—Appellant’s proposed interpretation of s. 40(2)(b) consistent with language, purpose thereof—Purpose of s. 40(2)(b) to relieve individuals from obligation to pay tax on capital gain realized on sale of principal residence—Annual determination for variable B in formula intended to ensure benefit of principal residence exemption allowed in part in case of property not meeting definition of “principal residence” for entire period of ownership—Appeal allowed.
Cassidy v. Canada (A-403-10, 2011 FCA 271, Sharlow J.A., judgment dated September 30, 2011, 15 pp.)