Tax Forum
No Pleasure, No Profit
FROM:
JANUARY 1998 ISSUE | BY
DON GOODISON
In
John Stacey (appellant) v. Her Majesty the Queen (respondent)[97 DTC 941], Revenue Canada disallowed business losses after the initial start-up years since the taxpayer had no reasonable expectation of profit and did nothing to mitigate the situation. Although an earlier Federal Court of Appeal decision,
Tonn et al v. the Queen [96 DTC 6001] (reviewed in "Tax Forum," April 1996) may have given some hope to taxpayers contesting a "no reasonable expectation of profit" ruling, two cases must be virtually identical in order to use one to support an argument in the other. The Court cited
Landry v. the Queen [94 DTC 6624] in making its determination. Considering the time needed to make Stacey’s
family–run enterprise profitable and subsequent years’ profit and loss record, his lack of planning and failure to adjust, even in the face of family difficulties, made the pursuit of profit an impossible dream.
Don Goodison, CFP, FCGA, is a partner of Kemp Harvey Goodison, Certified General Accountants, in Burnaby, B.C. E-mail
goodison@axionet.com.