October 07, 2011

Anthony G. Pendergast (Appellant) v. The Minister of National Revenue (Respondent)

83 DTC 341
Tax Review Board
June 3, 1983

Loss — Restricted farm loss — Farm was a sideline business — Loss property restricted — Income Tax Act, S.C. 1970-71-72, c. 63, ss. 31(1).

The taxpayer and his family resided on a 78-acre farm which he had acquired from his father. The farm operation consisted of raising cattle, pigs, growing hay and grain, an egg operation and growing of other cash crops. In the years prior to 1979, the taxpayer had filed his tax returns on a restricted farm loss basis. However, in 1979 he claimed full farm losses. During the year the taxpayer was employed on a full-time basis as office manager of a brokerage house. The taxpayer performed farm chores before and after work and worked on the farm on weekends and during three of his four weeks of vacation. The taxpayer’s income from sources other than farming for 1979 was $44,294.04. The Minister restricted the taxpayer’s farm loss for the 1979 taxation year to $5,000 and disallowed non-capital losses from other years. The taxpayer appealed to the Tax Review Board.

Held: The taxpayer’s appeal was dismissed. The Board found that there was no evidence that farming in 1979 or at any time prior to or after that date could reasonably be expected to provide the bulk of the taxpayer’s income and that farming was not the centre of the taxpayer’s work routine. An intention to change his occupational direction in the future was not convincingly demonstrated. Farming was a sideline business for the taxpayer and his farm loss was therefore properly restricted. The Board dismissed the taxpayer’s appeal accordingly.