General Motors of Canada Limited ("GMC") made "residual value support payments" to the taxpayer ("GMAC"), which purchased vehicles subject to leases, in consideration for GMAC increasing the residual values (thereby reducing lease payments). These payments were received by GMAC on income account. For the period in issue, "true up" payments were made on the lease terminations based on the actual loss (if any) experienced by GMAC relative to the (inflated) residual value, so that if that loss were less than the support payment (or nil, if the customer purchased the vehicle for the residual value), GMAC refunded the support payment to GMC to that extent (and, conversely, received a further payment from GMC if the loss were greater.)
Graham J stated (at para. 37):
[T]he residual value support payments were earned at the end of the lease. Although GMAC had use of the money at the beginning of a lease, it did not have any entitlement to keep it until the lease ended and GM and GMAC knew whether GMAC had had to sell the vehicle and, if so, what price it had been sold for.
See summaries under s. 12(1)(x), s. 9 – compensation payments, and s. 9 – computation of profit.