The taxpayer, which carried on various real estate related businesses, was found to conduct an operation of collecting mortgage payments as agent for several mortgagees as a separate business. An amount which it received, pursuant to a major agency contract, for the cancellation of that contract was found to be a capital receipt given that the effect of the cancellation of that contract was to terminate its mortgage agency business. Furthermore, even if the mortgage agency operation was not a separate business, it nonetheless was important to the taxpayer (representing up to 51% of its net income) which again pointed to the compensation payment being a capital receipt.
The decision in Parsons-Steiner Ltd. v. MNR, 62 DTC 1148 (Ex Ct) was approved.