TITLE:

Analysis of the Notion of Business

AUTHOR(S): 

Auger, François

EDITOR:

Department of Justice Canada

This research report inspired an article that was published in:

• Auger, François, “Analysis of the Notion of Business”, The Harmonization of Federal Legislation with Quebec Civil Law and Canadian Bijuralism,  – Collection of Studies in Tax Law, Montreal, Association de planification fiscale et financière, 2002, pp. 4 :1-48.

PAGE(S) :

SERIE(S) :

The Harmonization of Federal Legislation with Quebec Civil Law and Canadian Bijuralism – Collection of Studies in Tax Law

SUBJECT(S):

Canadian Bijuralism
Tax law

Abstract:

The abstract is an exact copy taken from The Harmonization of Federal Legislation with Quebec Civil Law and Canadian Bijuralism – Collection of Studies in Tax Law.

The Income Tax Act provides that income is calculated depending on the source from which it arises. The sources specifically named in the I.T.A. are income from an office, employment, business, property and capital gains.  Inherent to the concept of business income is the idea of activity, whereas the notion of income from property is associated to passivity.  The concepts of business and the carrying on of a business developed in tax law are related to the notion of business income and allow a distinction to be made between income from property, which is passive income, and income from an active business.  This concept is used in several situations, particularly when distinguishing between the carrying on of a business and an adventure or concern in the nature of trade, determining whether a business is an active business, whether there is a reasonable expectation of profit and whether a business is operated continuously.  In Quebec, the coming into force of the Civil Code of Québec gave new spirit to the notion of enterprise by defining what the carrying on of an enterprise is.  It is common knowledge that the legislator was inspired to a great extent by French doctrine, as well as by the rules developed in tax law, in formulating the provisions of the C.C.Q. regarding the carrying on of an enterprise.

TABLE OF CONTENTS:

INTRODUCTION

I. DEFINITION

1.1 ANALYSIS OF THE CONCEPT OF ENTERPRISE IN QUEBEC CIVIL LAW (UNDER THE CIVIL CODE OF QUÉBEC)

                1.1.1 The law

                1.1.2  Jurisprudence

1.2 ANALYSIS OF THE CONCEPT UNDER THE COMMON LAW

1.3 ANALYSIS OF THE CONCEPT UNDER THE INCOME TAX ACT

1.1.1  Distinction between “carrying on of a business” and an “adventure in the nature of trade”

1.1.2  Active business

1.1.3  Reasonable expectation of profit

1.4 FEDERAL ADMINISTRATIVE POSITION

1.5 OTHER TAX LEGISLATION

2. DIFFERENCE BETWEEN THE CONCEPT IN TAX LAW AND IN CIVIL LAW: DISSOCIATION BETWEEN THE TWO CONCEPTS

3. OUR RECOMMENDATIONS

BIBLIOGRAPHY