Capital vs Business Income

Question 1

What factors do the courts consider in assessing whether a property is capital or inventory?

Answer 1

Primary & Secondary intention (if primary is frustrated)

Question 2

What factors are considered in assessing a taxpayer’s intention with respect to a property?

Answer 2

1. Relationship of the transaction to the taxpayer’s business
2. Nature of the asset
3. Number and frequency of the transactions
4. Length of period of ownership
5. Feasibility of intention
6. Extent to which intention was carried out

Question 3

What election is available to treat all dispositions as capital transactions?

Answer 3

Election available on Canadian securities. It cannot be undone.

Not available to trader or dealer in securities, a bank, corp in primary bus of lending, or non-residents