Canadian CANNAINVESTOR Magazine October 2017 | Page 208

In addition to the attractiveness of low cost production, Sutton says investors should be drawn to greenhouse growers for another reason altogether:

“the opportunity to touch a consumer base who are buying more than just a product; they are buying the sustainability of our production methodology to protect our natural environment for generations to come.”

There is no doubt that the industry is anxiously awaiting to see what quality of product Tantalus’ SunLab can churn out. If Sutton is right, and the SunLab is capable of producing cannabis of a quality level that rivals or surpasses that of other traditional indoor growers, many more might start marching to the beat of Sutton’s mantra:

“Sungrown is the future. Adapt or perish.”

To read more from the Cannabis Industry Practice Group at Minden Gross LLP, visit Canada Cannabis Legal (“CCL”) at www.canadacannabislegal.com. CCL brings its readers timely content about legal developments that impact stakeholders in the Canadian cannabis industry. CCL covers any topic that touches the Canadian cannabis industry, whether the topic is municipal, provincial, federal or international in nature. Whether you are a novice with no prior knowledge of the laws that shape the Canadian cannabis industry, or an experienced industry participant looking to stay current with legal developments as they happen, CCL is your online destination to become and stay informed about the laws affecting the Canadian cannabis industry.

In recent years, the Canada Revenue Agency (“CRA”) has been reviewing high value TFSAs and assessing accounts with high volume trading activity as carrying on a business. There has always been a level of uncertainty as to what the threshold limit is in terms of trading activity or account balance in a TFSA before an audit is triggered. Further, the CRA has never issued specific guidance on the matter. However, this past June at the 19th annual STEP2 Canada National Conference, the CRA did provide some clarifying comments.

At the conference, the CRA stated that the determination as to whether a particular taxpayer “carries on a business” is a question of fact that can only be determined following a review of the taxpayer’s particular circumstances. In making this determination, the CRA referred to the factors listed in its Interpretation Bulletin IT-479R (“Transactions in Securities”, February 29, 1984), which are as follows: frequency of transactions; period of ownership; knowledge of securities markets; security transactions forming a part of a taxpayer's ordinary business; time spent on activity; advertising, and the speculative nature of the securities involved.

To illustrate how these factors have been applied by the courts let’s review two cases of note.

Mr. Mittal worked for Shaw Canada as an engineer from 1998 to 2012. Claiming to also be a trader in securities, he deducted business losses from that activity in his 2006 and 2007 tax returns. The CRA denied these losses, assessing on the basis that the losses were capital losses since Mr. Mittal was “neither a trader or engaged in an adventure in the nature of trade.”

2 Society of Trust and Estate Practitioners. 3 Mittal v The Queen, 2012 TCC 417.

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