TaxTMI 
TaxTMI 
1933 (7) TMI 17
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....a company incorporated under the laws of the Province of Alberta, and having for its objects "drilling for and procuring the production and vending of oil." By this agreement the respondent sold to the provisos conditions and royalties hereinafter recovered." In consideration of the said sale" the sum of $5,000 in cash on the execution of the agreement, to issue to her 25,000 full paid shares of $1 each in the company, and further to deliver to her order: the royalty hereby reserved...namely 10 per cent of all the petroleum, natural gas and oil produced and saved from the said lands free of costs. 2. The company undertook to deliver this percentage at least once in every 30 days, to keep and make available to the respondent prop....
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....t she was subsequently assessed to tax in respect of this sum of $9,570.41 which, she had received from the oil company, the amount of the tax being $301.07 The Minister of National Revenue, the present appellant, to whom the respondent appealed, confirmed the assessment subject "to adjustment as to depletion in accordance with Section 4, Chap. 12, of the Statutes of 1928." The respondent having appealed to the Exchequer Court of Canada her appeal was dismissed by Audette, J. On a further appeal to the Supreme Court of Canada the respondent obtained a unanimous judgment in her favour, setting aside the assessment. From this judgment the Minister of National Revenue has now appealed to His Majesty in Council, The Income War Tax Act contains ....
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....h, M.R., in Perrin v. Dickson (1930) 1 K.B. 107 : 142 L.T.29 : 98 L.J.K.B. 683 : 45 T.L.R. 621 : 14 Tax Cas. 608 at p. 119 quoting previous authorities). It may be that ordinary mineral royalties, though not expressly mentioned in the definition section, are taxable income in Canada, subject to an allowance for exhaustion. The term "royalty" occurs in Section 27 of the Act, which provides that any non-resident person who receives a royalty for anything used or sold in Canada shall be deemed to be carrying on business in Canada and to earn a proportionate part of the income derived therefrom in Canada. 5. This section may have been enacted to obviate the argument that the mere receipt of royalties is not a carrying on of business, as was ....
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....hat a percentage of whatever oil was found should remain the property of the respondent. But this is not really so. The agreement provides for a sale to the company of all the respondent's right, title and interest in the land, which includes the right to any oil which it may contain. The respondent was not in any sense a joint adventurer with the company in the business of oil prospecting or oil production. 6. While their Lordships, of course, recognise that a profit or gain may be received in kind as well as in money it is not without some significance that the respondent bargained to receive her share in oil. What she has a right to is so much oil, and the fact that she accepted a sum of money in the year in question in lieu of he....