Mackenzie v. M.N.R.
T-2297-88
Cullen J.
10/6/93
12 pp.
Appeal from Tax Court decision dismissing appeal from notices of reassessment for 1980 to 1983 -- M.N.R. limiting loss from farming business to be $5,000 on basis chief source of income neither farming nor combination of farming and some other source of income: Income Tax Act, s. 31(1) -- Plaintiff born on ranch -- Service in RCMP revolved around riding and caring for horses -- In 1979 purchasing property on which grew crops to feed horses -- Intending to train, jump, show horses and resell at profit -- During taxation years under appeal plaintiff worked in office of land-assembly business connected with oil industry -- Shareholder's loan and taxable capital gains constituting income -- In 1980, 1981 spending six hours per day working at farm -- In 1982, 1983 spending only three or four hours at office -- Several horses had to be sold at loss because lame, injured or overvalued -- Appeal dismissed -- No appeal from "nil" assessments for 1982, 1983 -- Application of criteria from Moldowan v. The Queen, [1978] 1 S.C.R. 480 to determine whether taxpayer's chief source of income either farming or combination of farming and some other source -- Whether reasonable expectation of profit objective determination to be made from all facts -- Key criteria from Moldowan reasonable expectation of income from various income sources and ordinary mode and habit of work -- Onus on taxpayer to satisfy Court major preoccupation farming -- Plaintiff not establishing reasonable expectation horse farm income would become chief source of income -- Although plaintiff devoted more time to horse farm than to land-assembly business, Court not satisfied horse farm major preoccupation -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 31 (as am. by S.C. 1973-74, c. 14, s. 7; 1979, c. 5, s. 9).