The appellant, a mining contractor, subscribed for shares of two junior mining companies in connection with being awarded mine development work by each company. It later realized losses on sales of those shares to a related corporation after the companies failed to proceed with the mines.
Monaghan JA found no reversible errors in the following findings made by the Tax Court in concluding that the losses were on capital account:
[T]he shares
“were acquired and held …in connection with [the appellant’s] business”,“were not acquired for trading purposes”, and“constituted an investment …in the equity of the [mining companies]… intentionally [made]…with a view to further strategically enhancing its future growth, and recoveries/cash flow generated from its business.”
Quoting (at para. 17 of her reasons) Canada Safeway, she stated:
That the appellant may have
“contemplated the possibility of resale of [the shares] is not, in itself, sufficient to conclude … the existence of an adventure in the nature of trade”… .
Finally, she did not find significant support for the proposition advanced (at para. 19) by the appellant that “losses incurred by disposing of property that is ‘inextricably linked’ to the ongoing operation of the business are on income account”.