Moloney v. Canada
A-73-89
Hugessen J.A.
5/10/92
4 pp.
Appeal from dismissal of assessment whereby Minister disallowed deductions for business expenses -- Expenses "advance royalty payments" in respect of two licence areas for marketing and sale in U.S.A. of speed reading courses -- Although licences calling for payment of $20,000 in advance as royalties, appellant not required to put up any cash -- Related companies providing loans, repayable only when income tax refund received -- No actual investment in marketing scheme -- Trial Judge finding appellant neither intending to carry on business of marketing speed reading course himself, nor having means or ability to do so, and sole purpose of scheme to obtain tax refunds -- Appeal dismissed -- Findings solidly based in evidence -- Deduction not in respect of business -- To qualify as business, expenses of which deductible under s. 18(1)(a), must be engaged in with reasonable expectation of profit and profit must be anticipated to flow from activity itself rather than exclusively from provisions of taxing statute -- Unnecessary to also disallow deduction as unreasonable under s. 67 and as artificial reduction of income under s. 245 given finding no business in first place -- Income Tax Act, S.C. 1970-71-72, c. 63, ss. 18(1)(a), 67, 245(1).