The taxpayer, a commercial real estate broker, donated land in 2009 to the City of Ottawa, received a charitable receipt for its appraised value of $1,935,000 and claimed that his gain resulting under s. 69(1)(b) from the donation was exempted under s. 38(a.2) (respecting donations of capital property described in the "total ecological gifts" definition in s. 118.1(1)). The Minister assessed the gain as being from the disposition of land held as inventory or as an adventure in the nature of trade (so that the taxpayer's claimed and unclaimed donation credits were largely offset by tax on this inventory gain).
Before consideration of the "adventure" concept, the land was not inventory of a business. The taxpayer had acquired it from his father for $70,000 in 2000 in order to provide him with needed cash. Owen J noted (at para. 78) that there were none "of the typical indicia of a business, such as a business plan or strategy, a marketing plan, financial records, an office, furniture, office supplies, a telephone listing, an e-mail address, a computer, stationery, business cards, one or more employees, actual or prospective customers, advertising, marketing, a website, banking arrangements, solicitations of business, business-related documents, etc." and (at para. 80) that "the commercial activities of [his] corporations cannot be attributed to Mr. Staltari personally without evidence that he, and not the corporations, was conducting those activities."
Respecting whether the land was held as an adventure in the nature of trade, although the taxpayer applied for subdivision approval, this apparently was done in order to crystallize grandfathering from a City proposal to freeze estate lot development, and "any prudent individual could be expected to take steps to preserve the value of an asset" (para. 89). (The taxpayer testified that he spent $104,719 to install a gravel road for ¾ of the property length in order to free up a pick-up truck that had become stuck in peat.) When it transpired that the land might be designated as having ecologically sensitive wetlands (thus jeopardizing subdivision approval), he donated it to the City.
Although the subdivision application suggested that he believed the property had development potential, it was not clear whether such potential was an operating motivation in its purchase. However, as per Zelinski (at para. 35), "a secondary intention to resell at a profit only acquires importance where a taxpayer follows through on that intention," whereas the property was donated instead: "any secondary intention to profit that he may have had became irrelevant once he chose to donate the Land" (para. 98). Furthermore, "a bona fide gift of land is not a transaction that can be described as being ‘in the nature of trade' if it is otherwise unconnected with a business" (para. 95), the deemed proceeds under s. 69(1)(c) could not be treated as consideration for this purpose (para. 103) and "the nature of the gift as a transfer of property for no consideration is not changed simply because there are favourable income tax consequences" (para. 101).