Gulf Canada Resources Ltd. v. Canada
T-2076-89
Rothstein J.
26/7/93
18 pp.
Appeal from Minister's assessment in respect of Gulf Canada Square for taxation year 1980 -- Whether Gulf Canada Square Building in Calgary owned by plaintiff, Gulf Canada Resources Limited (GCL), "rental property" under Income Tax Regulations, s. 1100(14) -- GCL treating building for income tax purposes in 1980 as other than "rental property", deducting from income $3,212,069 as capital cost allowance in respect of building -- Minister reassessing GCL on basis building "rental property" -- Decision to construct Gulf Canada Square made for purpose of housing all Gulf Calgary employees in one building -- Decision made in 1977, almost two years before incorporation of Gulf Canada Resources Inc. (GCRI) when all Gulf business activity conducted by GCL -- Incorporation of GCRI as separate legal entity having no impact on building decision-Forty-five percent of building leased to G & C Realty Limited used for purpose of producing rent -- According to IT-195R4, property used principally for purpose of producing rent if more than fifty percent of total area rented -- S. 1100(14), IT-195R4 requiring consideration of quantitative and qualitative approaches -- Under qualitative approach, owner's main purpose in using property in taxation year must be considered -- Quantitative approach considering proportion of building used to produce rent -- Purpose of s. 1100(14) to restrict taxpayers from using capital cost allowance on real property, essentially buildings, to shelter unrelated business income -- Qualitative assessment addressing question of whether building used by GCL to produce rent or for another purpose -- GCL's premises in building not used to produce rent -- Purpose of housing all Gulf Calgary employees in Gulf Canada Square related to efficiency -- Only forty-five percent used for purpose of producing rent -- Gulf Canada Square not used by GCL principally for purpose of producing rent in 1980, therefore not "rental property" under Regulations, s. 1100(14) -- Appeal allowed-Income Tax Regulations, C.R.C., c. 945, s. 1100(14).