Saskatchewan Wheat Pool v. Her Majesty the Queen

Date Closed

January 15, 2008

Lead Office


When the Saskatchewan Wheat Pool’s (SWP) subsidiary, which held certain property as inventory, defaulted on its obligations to the SWP, the SWP enforced the debt obligation, acquired the property and promptly sold it, realizing an accounting gain. For tax purposes, the SWP relied on Section 79.1 of the Income Tax Act to add the amount of the debt to its cost of the property taken on realization, and claimed a C30-million business loss in respect of the disposition of the property. The Minister of National Revenue sought to characterize this as a “capital loss.” On January 15, 2008, the Tax Court accepted the SWP’s position that its loss was on “income account” as a loss from an adventure in the nature of trade, rather than a “capital loss.” The taxpayer was also successful on a number of other issues, including its claims for capital cost allowance and investment tax credits.

McCarthy Tétrault LLP advised the Saskatchewan Wheat Pool with a team led by Ed Kroft.