The Supreme Court of Canada ruled 9-0 on Thursday that passing on future liabilities for land reclamation cannot be considered taxable at the time of the sale.
Revenue Canada had argued the cost of such liabilities should be treated like a mortgage and thus the value should be added to the sale price for tax purposes.
But Daishowa-Marubeni International Ltd., or DMI — with the backing of the Alberta government — argued that the obligation to reforest was embedded in the timber rights granted by the province.
The top court agreed that since Alberta wouldn't allow any transfer of those timber rights unless the buyer assumed the reforestation demands, that cost actually depressed the sale price.
