Per Lyons J in Kokai-Kuun Estate v R, 2015 TCC 217: a taxpayer cannot add to the cost of vacant land interest and property taxes paid in respect of the land where it was acquired for “investment” purposes but never rented or used in a development business (that is, the land was acquired to realize a capital gain).
The deceased taxpayer’s representative had also tried to claim the benefit of a capital loss supposedly realized in a prior year in respect of amounts the taxpayer had advanced to a corporation. Justice Lyons wasn’t entirely happy with the evidence presented regarding the amounts advanced, but she found that the fact the taxpayer had never claimed the loss or, more importantly, filed an election under paragraph 50(1)(a) in respect of the bad debt was fatal to the claim. She pointed out that the taxpayer’s representative might have applied under the taxpayer relief provisions to permit the late-filing of the election (per subsection 220(3.2) and paragraph 600(b) of the Regulations). The representative hadn’t done so, however, and the Tax Court did not have the jurisdiction to entertain such a request.
