INCOME TAX
Income Calculation
Deductions
Appeal from Tax Court of Canada decision ([2007] 1 C.T.C. 2123) shares disposed of in 1998 not flow‑through shares as defined in Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 66(15)—Shares acquired pursuant to agreement whereby Deena Energy Inc. agreeing to incur Canadian exploration and development expenses and to renounce in favour of taxpayer amount of expenses equal to subscription price paid for shares—When Deena failed to incur any such expenses, renunciation invalid—Taxpayer claiming capital loss on shares as result of receivership of Deena—Appeal dismissed—Tax Court erred in determining shares not flow‑through shares based on breach of agreement occurring after issuance—Shares not flow‑through shares because prescribed shares by virtue of Income Tax Regulations, C.R.C., c. 945, s. 6202.1(1)c)(i)—When shares issued, Deena undertaking to ensure any loss taxpayer sustaining from holding shares, to extent such loss related to expenditure by Deena of subscription price of shares, limited.
Canada v. JES Investments Ltd. (A‑474‑06, 2007 FCA 337, Ryer J.A., judgment dated 26/10/07, 11 pp.)