Section 38 - Taxable capital gain and allowable capital loss

A commercial real estate broker donated land to the City of Ottawa, received a charitable receipt for its appraised value and claimed that his (substantial) gain was exempted under s. 38(a.2).

Owen J found that the evidence, including that the taxpayer applied for subdivision approval before donating, suggested that a secondary intention of developing and selling the land may have partly motivated the taxpayer's original purchase. However, per Zelinski, "a secondary intention to resell at a profit only acquires importance where a taxpayer follows through on that intention," whereas the land was donated instead. Accordingly, the taxpayer's taxable capital gain arising on the donation was exempted under s. 38(a.2). See summary under s. 9 – capital gain v. profit – real estate.