McCullock Finney (Estate) v. The Queen (June 9, 2017 – 2017 TCC 103, Masse D.J.).
Précis: The taxpayer (since deceased) claimed a capital gains deduction in respect of two rental properties she disposed of in 2010 (which she had owned since 1979). CRA denied the deduction on the basis that she had not filed the requisite election with her 1994 income tax return. Her estate appealed to the Tax Court. The Tax Court dismissed the appeal. While the taxpayer might have intended to file the election in question there was no evidence that she had in fact filed it with her 1994 tax return. There was no order as to costs since this was an informal procedure appeal.
Decision: The taxpayer’s accountant testified the he believed she had intended to file the election in question:
 Mr. Lebrun is of the view that the Appellant clearly intended to take advantage of the capital gains exemption. He is convinced that the Appellant completed the necessary elections in Forms T664 and T657A and he concludes that she must have sent them to the CRA at the time of filing her 1994 personal tax return. Otherwise, why else would she go through the trouble of completing these forms and preserving copies of these forms in her personal files? Mr. Lebrun stated that he is in possession of a copy of the Appellant’s personal tax return for 1994. He candidly admits that she did not complete Schedule 3, “Capital Gains (or Losses) in 1994” and attach it to her personal tax return for 1994 as she was required to do. He admits that she did not report her electable taxable capital gain at line 127 of her 1994 personal tax return, as she was required to do. He also candidly admits that she did not claim the Capital Gain Deduction at line 254 of her 1994 tax return, as she was required to do.
The Court however found that the possible intention of the late taxpayer was not sufficient to overcome the express requirements of the Income Tax Act:
 In the case at bar, I am satisfied that the Appellant was an honest person who had every intention of complying with the requirements of the Act. However, there are difficulties with this appeal:
a. The Appellant’s representative and her accountant while she was alive are of the view that the forms T664 and T657A were filed because she went through the trouble of completing the forms and preserving copies of them in her personal records. The Respondent is of the view that the forms were not filed for if they were, it would be so indicated on the Option-C printout. On the basis of the evidence that has been presented to me, I am satisfied that the Appellant had every intention of filing the forms and making the proper election. However, on the evidence that has been led before me, there are two different sets of forms containing different information. They cannot both have been filed. I am unable to determine if the forms were in fact filed with her 1994 tax return and if so, which set of forms were filed. It is trite law that in tax cases, the burden of proof rests on the Appellant: see Hickman Motors Ltd. v. Canada,  2 SCR 336 at paras. 91 to 98. The weight of the evidence does not sway me one way or the other.
b. Even if the forms were filed, it is not disputed that the Appellant did not complete Schedule 3 nor did she attach it to her tax return for 1994.
c. Even if the forms were filed, it is admitted that the Appellant did not declare on line 127 of her 1994 return that she had elected a taxable capital gain.
d. Even if the forms were filed, it is admitted that the Appellant did not claim on line 254 of her 1994 return a Capital Gains Deduction.
 Even though the Appellant did intend to make a s. 110.6(19) election and actually produced working papers demonstrating that intention, she did not follow through on the election. In view of the incontrovertible fact that the Appellant did not complete and attach a Schedule 3, she did not declare a taxable capital gain and she did not claim a Capital Gain Deduction in her 1994 return, I come to the conclusion that the Minister was justified in disallowing the claimed Capital Gain Deduction.
As a result the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.