The taxpayer financed its work on the manufacture of defence products under two contracts by receiving advances from the prime contractor or an affiliated company. Noël J.A. found that the advances did not qualify as reserves which were included in capital under s. 181.2(3)(b) because the taxpayer had claimed a reserve for s. 20(1)(m) purposes. Instead, the amounts were included under s. 181.2(3)(c) as advances. Noël J.A. stated (at p. 5325):
"The effect of an advance, be it in the sense of a payment on account or a loan, is to make the amount of money it represents available to the person or corporation which receives it. In the instant case, the advances were an integral part of the financial resources available to the appellant at the end of its 1989 fiscal year ... ."