Income Tax
Income Calculation
Appeal from Tax Court of Canada (T.C.C.) decision (2007 TCC 647) confirming, in part, assessments issued against RCI Environnement Inc. (RCI), Centre de Transbordement et de Valorisation Nord-Sud Inc. (CTVNS) for 1999 taxation year—Case pertaining to tax treatment of $12 million received by RCI and CTVNS in equal shares following settlement of dispute concerning violation of non-competition agreements—T.C.C. judge finding eligible capital amount pursuant to Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 14, with three quarters of amount included in computing income—According to counsel for RCI, amount windfall gain exempt from taxation—No logic justifying tax treatment of taxpayer determined according to circumstances relating to another taxpayer—Majority opinion of Federal Court of Appeal in The Queen v. Goodwin Johnson (1960) Ltd., [1986] 1 C.T.C. 448, holding quality of amount analyzed on basis of payer, no longer good law—Since, from perspective of RCI and CTVNS, hypothetical amount paid to acquire rights created by non-competition agreements constituting eligible capital expenditure, T.C.C. judge correctly concluded $12 million included in calculation of income of RCI and CTVNS under Act, s. 14—Appeal dismissed.
RCI Environnement Inc. v. Canada (A-35-08, 2008 FCA 419, Noël J.A., judgment dated December 29, 2008, 26 pp.)