In December 1991 the taxpayers (who were Canadian residents) acquired most of the partnership interests in a U.S. partnership ("Klink") that had been formed approximately 12 years earlier and whose principal asset, in December 1991, was an IBM mainframe computer which originally had cost U.S.$3.7 million but which had a current fair market value of $5,000. Klink then transferred the computer to a recently-formed British Columbia limited partnership in consideration for a partnership interest therein.
After stating (at para. 44) that the object and spirt of the recapture and terminal loss provisions "is to provide for the recognition of money spent to acquire qualifying assets to the extent that they are consumed in the income earning process," Noël J.A. found (at para. 50 that:
"The only cost which the Act provides for in the present fact situation is the original or full cost, and I do not believe that I could read into the Act the type of modification incorporated by the 1994 addition of paragraph 96(8) to alter this result without infringing on the role of Parliament."