In disclosure documents the taxpayer, which was a non-resident company that was promoting a proposed plantation in Costa Rica, specified that 99% of the amount invested in the project would give rise to deductions from income during the first two years and that, after eight years, the investors would have the right to require the taxpayer to buy-back their investment for an amount approximating 70% of most costs incurred on behalf of the investors, with a deposit being provided to secure that buy-back right.
Dussault J. found that the buy-back right represented an amount that "may reasonably be expected, having regard to statements and representations made in respect of the interest, to be received or enjoyed by a person (... 'the purchaser') ... which receipt or enjoyment would have the effect of reducing the impact of any loss that the purchaser may sustain in respect of the interest" and found that the buy-back right could also be concluded to be more specifically referred to in Regulation 231(6)(c). Accordingly, the taxpayer was subject to the 25% penalty in s. 237.1(7.4) of the Act for failure to register the property.