On the early termination of a power purchase agreement between the taxpayer and the Alberta government, the taxpayer received $59.7 million from the Alberta government and the Alberta government became the beneficial owner of a power generation plant of the taxpayer, although the taxpayer continued as legal title owner and continued to operate the plant under an operating agreement with the Alberta government.
In finding that s. 12(1)(x) did not apply to the payment received by the taxpayer, Rossiter, ACJ noted (at para. 94) that this was not a reimbursement situation, i.e., "a situation where one party is forced to pay an amount that is properly the liability of another party and is therefore entitiled to be reimbursed the funds from the second party," and (at para. 99) that "paragraph 12(1)(x) of the Act was not enacted, in my view, for circumstances where someone has a legal obligation to make a payment, if the legal obligation arises from the course of legitimate negotiations", and went on to indicate that in any event, the exclusions in ss.12(1)(x)(v) and (viii) applied because the payment was credited to the undepreciated capital cost of the plant to the taxpayer, and represented a payment made in respect of the acquisition of property of the taxpayer (the beneficial ownership of the plant).