A-851-81
The Queen (Appellant)
v.
James F. Burns Sr. (Respondent)
Court of Appeal, Pratte, Marceau and Hugessen
JJ.—Montreal, May 10, 1984.
Income tax — Income calculation — Deductions — Appeal
from Trial Division decision — Obligation to do something
which may in future entail necessity of paying money not
expense within meaning of s. 18(1)(a) of Act — Expense
meaning obligation to pay sum of money — Appeal allowed —
Income Tax Act, S.C. 1970-71-72, c. 63, s. 18(1)(a).
COUNSEL:
W. Lefebvre, Q.C. and G. Jorré for appellant.
N. C. Wittman and J. B. Katchen for
respondent.
SOLICITORS:
Deputy Attorney General of Canada for
appellant.
Code, Hunter, Calgary, for respondent.
The following are the reasons for judgment of
the Court delivered orally in English by
PRATTE J.: We are all of opinion that the appeal
must succeed.
In our opinion, an expense, within the meaning
of paragraph 18(1)(a) of the Income Tax Act,
[R.S.C. 1952, c. 148 (as am. by S.C. 1970-71-72,
c. 63, s. 1)], is an obligation to pay a sum of
money. An expense cannot be said to be incurred
by a taxpayer who is under no obligation to pay
money to anyone. Contrary to what was decided
by the Trial Division, an obligation to do some
thing which may in the future entail the necessity
of paying money is not an expense.
The appeal will therefore be allowed, the judg
ment of the Trial Division will be set aside and the
Minister's assessment of the respondent's income
tax for his 1974 taxation year will be restored. As
agreed between the parties, the appellant will be
entitled to Her costs in the Trial Division but there
will be no order as to the costs of the appeal.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.