United News ( Wholesalers ) Ltd. v. Canada
T-77-84
Strayer J.
16/6/94
7 pp.
Appeal from Tax Court decision advance of $210,000 by plaintiff company to B/C Concerts Ltd. in 1977 to present "Toller Cranston and the Ice Show" capital loss-Money advanced pursuant to agreement providing for repayment at rate of $10,000 after each of performances 21 to 41, 5% of gross receipts from performances with guarantee of minimum of $42,000-Repayment of advance and payment of $42,000 as minimum consideration for advance guaranteed by Dennis Bass, principal of B/C Concerts Ltd.-Plaintiff distributor of books, magazines, greeting cards, not in business of lending money-Not active in organizing or presenting performances-Performances not financially successful-Plaintiff giving up right to 5% of gross receipts-Never receiving repayment of advance or minimum consideration-Guarantee proving worthless-Plaintiff showing $210,000 loss of advance as loss from business venture-Minister reassessing loss of advance as capital loss-Plaintiff submitting adventure in nature of trade as speculative transaction involving high risk and potentially high return, thus loss of advance should be treated as business loss-Appeal dismissed-Terms of agreement supporting characterization of investment as loan-When money advanced, former president of plaintiff not regarding venture as very risky as obtained effective guarantee both of repayment of advance plus minimum return on money of 40% with possibility of return of 100%-Normally loan made by person not in business of lending money considered investment unless unusual circumstances: Minister of National Revenue v. Freud, [1969] S.C.R. 75-No unusual circumstances herein.