Hudon v. Canada, 2001 DTC 5630, 2001 FCA 320 -- summary under Small Business Corporation

In the years in question a corporation ("Hall River") which owned forest concessions and rights to develop the hydro electric potential of a river was engaged in negotiations with Hydro-Quebec and other activities with a view to developing that potential. The Court reversed the finding of the Tax Court that Hall River was not carrying on business. Desjardins J.A. stated (at p. 5639) that "to require the existence of an agreement on the sale of electricity before Hall River may be considered to be 'carrying on business' is to add an element not found in the legislation" and noted that the exemption for the disposition of qualified small business corporation shares found in s. 110.6(2.1) of the Act was intended to unleash the entrepreneurial dynamism of individual Canadians.