Canada v. Zelinski, 2000 DTC 6001 (FCA) -- summary under Commodities, and commodities futures and derivatives

The taxpayers purchased numerous paintings of Morrisseau - initially because of the advantageous price and, later, in greater volume after they learned of the tax benefits of donating the paintings. In rejecting a submission that the gains realized on donation did not qualify for exemption under s. 39(1)(a)(i.1) because the paintings were acquired on income account, Sexton J.A. found that properties purchased for the purpose of donation are, therefore, not acquired in connection with a 'scheme for profit-making'. Furthermore, the doctrine of the secondary intention could not be applied to the taxpayers because their primary intention (i.e., purchasing the paintings either with no specific intention, or with the intention to donate them) was not frustrated and, in any event, the possibility of reselling was not an operating motivation for the acquisitions.