Property

The taxpayer and his wife allowed a charity to use two rooms of their house for free (an office and a storage room), and claimed charitable credits for the fair market value of the use of the rooms (i.e. rent). C Miller J disallowed these credits, as the charity had no legally enforceable right to the space - and without an enforceable right, there was no property to donate.

However, C Miller J disagreed with CRA's position in 2003-0018595 that a grant of use cannot constitute a transfer of property. Manrell provides that "property" entails some exclusive right to make a claim against someone else (para. 6).

Before going on to find that fishing licences of the taxpayer were capital property, so that an amount received by the taxpayer from the federal government for their cancellation by the federal government gave rise to a capital gain, Webb J. stated (at para. 26):

"Since any person who has a licence under the Fishery (General) Regulations has a right 'to apply for and resist an arbitrary denial of, renewal or re-issuance of his licence', this right would ... be property for purposes of the Act."

Before going on to find that a purported transfer of an undeveloped project by the taxpayer to a corporation as reflected in a journal entry showing $370,000 owing by the corporation to him was ineffective, Bell J. stated (at p. 1579):

"My conclusion is that information, ideas, knowledge and/or know-how, do not fall within the meaning of the words 'property'. They are not exclusive to one person and are not, in that simple form, capable of being described as property."

Chrysler Canada would sell cars to the taxpayer (an automobile dealer) under conditional sales contracts, and sell the conditional sales contracts to the Canadian finance arm of Chrysler (Chrysler Credit). In finding that the vehicles shipped by Chrysler Canada to the taxpayer represented property to it, Trafford J. stated (at p. 796) that "despite the contractual limitations on its beneficial ownership, QEW has a property interest in the new vehicles that includes the possession of the vehicles, the rights to sell a vehicle free of any lien except for the purchase money security interest created by the inventory and lease financing security agreement in favour of Chrysler Credit, the right to negotiate the price of the sale to the retail consumer and the entitlement to profit from the proceeds of a sale".

A bankrupt's interest in a post-bankruptcy income tax refund was "property" for purposes of the Bankruptcy Act notwithstanding that the refund did not become due and payable until a return was filed.

A milk quota under the Milk Act (Ontario) was not property, and its transfer accordingly could not be challenged under the Fraudulent Conveyances Act (Ontario).

The word "property" in the Matrimonial Property Act (Alberta) (a term which is not specifically defined) does not include university degrees and professional licences.

A licence to produce tobacco was not property. "The notion of 'property' imports the right to exclude others from the enjoyment of, interference with or appropriation of a specific legal right. This is distinct from a revocable licence, which simply enables a person to do lawfully what he could not otherwise do"

A lump sum which the taxpayer (a British holding company) received as consideration for a non-competition agreement given by it to the U.S. purchaser of three operating companies indirectly owned by it was found to be a capital gain pursuant to s. 22(3) of the Finance Act 1965 which provided that:

"There is ... a disposal of assets by their owner where any capital sum is derived from assets notwithstanding that no asset is acquired by the person paying the capital sum ... ."

Nichols L.J. stated (at p. 468):

"I agree that the liberty or freedom to trade enjoyed by everyone, is not a form of 'property' within the meaning of Sec. 22. This liberty, or freedom, is a 'right' if that word is given a very wide meaning, as when we speak of a person's rights in a free society ... . The context in the instant case is a taxing Act which is concerned with assets, and with disposals and acquisitions, gains and losses. I can see no reason to doubt that in Sec. 22 'property' bears the meaning of that which is capable of being owned, in the normal, legal sense, and that it does not bear the extended meaning that would be needed if it were to include a person's freedom to trade."

He went on to find that the substance of the payment was a capital sum received by the taxpayer in exchange for agreeing not to exploit its reputation (a form of goodwill) and that, under the scheme of the Act, goodwill was an asset of the taxpayer.

A payment of £50,000 by an employee to his employer in consideration of his employer releasing him of all obligations under the employment contract was held to be a capital sum chargeable to capital gains tax under the Finance Act, 1965 (U.K.). At issue was whether the employer corporation should be considered to have realized a chargeable gain in respect of the disposal by it of an "asset", which was defined in subsection 22(1) of the Finance Act 1965 to include "all forms of property". Lord Russell stated the following (at p. 270):

"If, as here, the employer is able to exact from the employee a substantial sum as a term of releasing him from his obligations to serve, the rights of the employer appear to me to bear quite sufficiently the mark of an asset of the employer, something which he can turn to account, notwithstanding that his ability to turn it to account by a type of disposal is limited by the nature of the asset."

The granting by the Crown to a crown corporation of a commercial monopoly in the export of fish from Manitoba, which had the effect of putting the appellant out of business, constituted the taking of property, namely, goodwill, away from the appellant.

The sale of property at a price that is less than its value does not result in a transfer of "property" to the purchaser.

The settlor of a trust delivered voting trust certificates to the trustee on terms that the income of the trust fund was to be paid during the settlor's lifetime to her or her issue and that on the death of the settlor, the trust fund was to be distributed among her issue as she might by will direct. With respect to an argument made on behalf of the estate of the settlor that was based on the proposition that the gift of the voting trust certificates was severable into income and capital interests, Dickson J. stated (at p. 191):

"Essentially the subject - matter of the gift was a block of shares... . Although the trust indenture provides that the income from the trust fund is to be handled in one manner and the corpus in another, that does not have the effect of constituting two properties... . The substance of the matter in my view is that there was one gift, the subject - matter being 99,986 common shares... ."

Pigeon J.,in his concurring judgment, indicated that the right of children in an agreement between them and the deceased to require a corporation controlled by the deceased be wound-up was "property" for purposes of the Estate Tax Act (Canada), which defined that term as including "a right of any kind whatever".

Variable payments made by the taxpayer for the use by it of know-how provided by a U.S. corporation were subject to withholding tax as being "for the use in Canada of property". Mr. Davis noted that in the Rolls-Royce case (40 TC 443), The House of Lords "established that what has come to be known in industry as 'know-how' is undoubtedly an asset, even though it may be an intangible one which never becomes depleted".

A testator (A) domiciled and resident in British Columbia, who died in 1921, bequeathed his property to his surviving wife (B), with the assets of the estate not being administered until beyond the year 1944. B died, while domiciled in British Columbia in 1924, leaving her estate to an individual (C), who was domiciled and resident in California. In 1941 C died leaving her estate to her husband (D) who, in turn died in August 1944 leaving his estate to a nephew (E), of California, who lost his life in December 1944. Administration with the will annexed was granted in California to the respondent in the estates of D and E.

In finding that the right which devolved upon the death of D (namely, the right to have the estate of his deceased wife administered) was not "property" for purposes of the Dominion Succession Duty Act (Canada),Kellock J. stated (at p. 113):

"In my opinion, while 'property' is defined by section 2(k) of the statute as including every estate and 'interest' in real and personal property capable of being devised or bequeathed by will or of passing on death, I see no reason for construing the statute, without more express language, as including an interest in an interest or more remote interests."

Licence fees to be earned by an American company for the communication of know-how to an Australian licensee did not represent income from a property situate in Australia given that the knowledge to be communicated did not represent property.

Lord Radcliffe stated (p. 585):

"There is no property right in 'know-how' that can be transferred, even in the limited sense that there is a legally protected property interest in a secret process. Special knowledge or skill can indeed ripen into a form of property in the fields of commerce and industry, as in copyright, trade-marks and designs and patents, and where such property is parted with for money what is received can be, but will not necessarily be, a receipt on capital account. But imparting of 'know-how' for reward is not like this, any more than a teacher sells his knowledge or skill to his pupil."

It was held that where a court order was made under the Companies Act 1929, for the amalgamation of two corporations, including an order for the "transfer" of all the "property" of the predecessor corporations to the amalgamated corporation, the court order did not automatically transfer employment contracts between employees and the predecessor corporations to the amalgamated corporation. "Property" was defined in the Companies Act 1929 to include "rights and powers of every description". Lord Chancellor Viscount Simon stated (p. 1024):

"S.154 when it provides for 'transfer' is providing in my opinion for the transfer of those rights which are not incapable of transfer and is not contemplating the transfer of rights which are in their nature incapable of being transferred."

Rowlatt J., before going on to find that U.K. income tax should have been deducted from the payment of royalties to non-resident authors on the basis that they represented annual profits from property situated in the United Kingdom, namely, copyright, rejected (at p. 750) a submission "that the element of property only emerges when a transaction takes place to exploit the copyright by giving a licence" and stated that "it seems to me the copyright itself is property".