When the taxpayer filed his 2007 return, the capital cost allowance schedule attached to his return showed a terminal loss arising in the year (from his sale of a fish farm) of $74,250. However, he deducted only $16,670 of this amount in that return, and did not claim the balance (as non-capital losses) until his 2008 and 2009 returns. (It is not entirely clear from the reasons that $16,670 is the deduction which reduced his income for 2007 to nil.)
The Minister argued that the taxpayer could not claim these non-capital losses as he had failed to report the related deductions in his 2007 return. Woods J. found that this failure to claim the full amount of the terminal loss was not fatal because the terminal loss deduction under s. 20(16) was not elective ("there shall be deducted"). She stated (at para. 9):
The carryover is based on the terminal loss deduction required by the legislation and not what has been claimed by the taxpayer.