Canada v. Bastion Management Ltd.
T-1344-88
Reed J.
11/4/94
8 pp.
Appeal from Tax Court's decision defendant entitled to deduction under Income Tax Act, s. 20(1)(gg)-Defendant, trader in commodity futures, purchased, on physical market, quantities of gold and silver bullion and sold contracts for future delivery at same price, to ensure defendant, in buying bullion, did not increase its net exposure to price fluctuations in market-Purchase and sale of physical quantities of bullion made on advice of defendant's accountant pointing out tax deduction available pursuant to Income Tax, s. 20(1)(gg)-Purpose of temporary provision of Income Tax to allow some relief to businesses from increased tax liability due to "false" profits created by effect of high inflation on year-end inventories-Requirement of s. 20(1)(gg) transaction must fall into place as part of undistinguished common flow of company's business, should form part of ordinary course of company's business as carried on, calling for no remark and arising out of no special or particular situation-Gold bullion owned by taxpayer at beginning of 1978-79 fiscal year not qualifying as not inventory in respect of taxpayer's business-S. 248(1) inventory usually acquired for purpose of selling it to make profit; gold and silver bullion not acquired for any trading purpose and no intention of making profit-Structure of transactions demonstrating no profit could be made and expenses bound to be incurred-Appeal allowed-Income Tax Act, S.C. 1970-71-72, c. 63, ss. 20(1)(gg) (as enacted by S.C. 1977-78, c. 1, s. 14(1)), 248(1).