income from property

The taxpayer was an individual resident in Quebec who took the position that her share of income earned by a New Jersey partnership engaged in bottling soft drinks was income from property, so that she was not subject to tax pursuant to Reg. 2601(2). In rejecting this position, Noël, ACJ stated (at p. 5008):

Dividends that the taxpayer paid to a US shareholder (“Penn Central”) were, as an historical matter, in lieu of amounts that Penn Central otherwise might have derived from the leasing of a railway line used in its business. Ryan J found that the function of regulation 805(1) is to exempt from withholding tax amounts that are subject to taxation under Part I by virtue of falling within subparagraph 115(1)(a)(ii) (income from businesses carried on in Canada).

Interest income derived by a golf club from the temporary investment of cash surpluses were taxable. Décary J.A. rejected a submission that income from activities that were incidental to the non-profit activities of the club were not intended to be taxable.

Net rental income which a company derived from an apartment building in its 1978 and 1979 taxation years (managed by an affiliated property management company) was income from property rather than income from an active business. Strayer J stated (at p. 5289):

The services which they [the taxpayer companies] provided to occupants were of a very limited nature and typical of what any owner of a modern apartment building would expect to have to provide. As such they must be seen as incidental to the making of revenue from property through the earning of rent.

The taxpayer, which had two employees including its shareholder, carried on a storage unit rental business.