This week, the Supreme Court of Canada heard arguments in one case likely to be of interest to Canadian businesses and professions. Judgment was reserved.
The appeal to the Supreme Court is from the ruling in Daishowa-Marubeni International Ltd. v. Her Majesty the Queen, 2011 FCA 267. At issue is the proper tax treatment of long-term, contingent reforestation liabilities (imposed by statute). The taxpayer subject to the reforestation liabilities had disposed of the relevant operating assets. The purchaser of those assets has assumed responsibility for the liabilities. The Federal Court of Appeal ruled that the purchaser's assumption of the taxpayer's liability constituted consideration which ought to have been included in the taxpayer's proceeds of disposition in the amount agreed upon by the parties. The taxpayer appealed to the Supreme Court. The oral arguments before the Court may be viewed here, and the written arguments may be viewed here.
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