Urbandale Realty Corp. v. Canada
T-533-93
Dubé J.
23/5/97
10 pp.
Appeal from decision of Tax Court of Canada dismissing plaintiff's appeal on ground redevelopment charges not deductible expenditures under Income Tax Act, s. 9, not property tax deductible under Act, s. 18(2)-Taxpayer paid Regional Municipality of Ottawa-Carleton "redevelopment" charges of $2,908,100 on December 31, 1986, sought to deduct amount from income earned in 1986 taxation year-Charges imposed for public purpose, namely financing costs of various municipal services-Taxpayer carries on business as land developer-Buys raw land, subdivides it into building lots, services lots, sells them to construction companies-Claimed redevelopment charges property tax, therefore deductible under Act, s. 18(2)-Determination of profit under s. 9(1) question of law-Even though generally accepted accounting principles to be considered, at end, Court must determine deductibility of disbursement, therefore profit under s. 9(1)-Tax returns should not always be in conformity with financial statements prepared by accountant-Key "matching principle" calling for annual profits from business to be determined by setting expenses incurred in earning revenues from business of year against revenues-Development charges in question not related to taxpayer's 1986 revenues-Not overhead, running expense-Development charges, although in nature of property tax, may not be deducted under Act, s. 18(2)-S. 18(2) not deductibility provision but limitation provision-Under Act, ss. 9, 18(1)(a), no deduction shall be made in respect of any expense unless incurred by taxpayer for purpose of producing income from business or property-No ambiguity in s. 18(2)-Appeal dismissed-Income Tax Act, S.C. 1970-71-72, c. 63, ss. 9, 18(1)(a), (2) (as am. by S.C. 1974-75-76, c. 26, s. 7).