Windfalls In The Tax Court

A former land developer in Henco Industries Limited  v. The Queen ³² successfully argued before the Tax Court that a $15.8 million payment from the Ontario government should be characterized as a non-taxable capital receipt and a separate payment of $650,000 from the Ontario government should be characterized as a non-taxable windfall. Although the decision is noteworthy for concluding that these payments are not taxable, the decision by Miller J should also interest members of the tax community because of its analysis of various other issues discussed in the final ruling, including the distinction between eligible capital amounts and non- taxable capital receipts, the scope of paragraph 12(1)(x), the nature of inventory in the context of section 23, and the applicability of the parol evidence rule in interpreting agreements before the Tax Court.