Cargill Ltd. v. Canada
A-140-96
Stone J.A.
28/1/98
17 pp.
Appeal from judgment of Tax Court of Canada as to correct amount of inventory allowance appellant entitled to claim under Income Tax Act, s. 20(1)(gg) for 1980, 1981 taxation years-Appellant conducting grain business at numerous elevator locations in western Canada, as grain dealer, elevator operator-Co-mingling purchased, storage grain for sale as soon as it is received from producer at individual elevator-Tax Court concluded from examination of Canada Grain Act producers, not appellant, owned storage grain-Also concluded appellant did not have property interest in storage grain sold by it in 1980, 1981-Whether Tax Court Judge erred in construing applicable provisions of Act, s. 20(1)(gg)-Ownership of grain important issue herein-Appellant's practice to sell storage grain even though it had no property interest in goods-Despite co-mingling of storage grain, purchased grain from time of delivery, storage grain held primarily for storage, owned by producers-Storage grain not inventory "held for sale" by appellant within meaning of s. 20(1)(gg)-Although appellant's method of accounting for inventory assumed storage grain was "sold", appellant never in position under Canada Grain Act to do so-Appellant could only lawfully sell purchased grain it owned-Only grain "held for sale" by appellant purchased grain-By failing to offset negative inventories against positive inventories of purchased grain in other elevators in system, appellant misstated true inventory position with respect to purchased grain for purpose of s. 20(1)(gg) calculation-Appeal dismissed-Canada Grain Act, R.S.C., 1985, c. G-10-Income Tax Act, S.C. 1970-71-72, c. 63, s. 20(1)(gg) (as am. by S.C. 1986, c. 55, s. 5).