Collier, J.:—This is an appeal by the plaintiff from a reassessment, by the Minister of National Revenue, in respect of the plaintiff’s 1980 taxation year.
In his 1980 tax return, the plaintiff claimed a deduction of $8,212.50 as an allowance in respect of the capital cost of a mini motorhome. The Minister would not allow the deduction, and reassessed accordingly.
The plaintiff was a probation officer with the Ontario Ministry of Correctional Services.
On November 21, 1980 the plaintiff and his wife offered to purchase a 21-foot Glendale motorhome from a dealer, Go Camping Limited, of Brampton, Ontario (“the dealer”). The delivery date was December 20, 1980. The price was $27,214. Payments were to commence January 20, 1981 (the document reads “Jan. 20/80”; that has to be an error).
Financing was arranged through the Bank of Montreal. A conditional sales contract was entered into, on December 20, 1980, between the dealer and the plaintiff. The contract was assigned to the bank.
The plaintiff intended to use the motorhome in a business. The business was the selling of vacation packages, with the use of the motorhome, to European visitors to Canada. The dealer was to be the plaintiff’s agent for that purpose.
The plaintif took legal possession of the vehicle about the time the bank financing was completed. It was left at the dealers’ [sic] premises.
No management, or agency, contract was signed with Go Camping Limited in 1980. Nor was the vehicle used by, or rented, to others in 1980.
The plaintiff said he, after acquiring it, personally “promoted the utilization of that vehicle to colleagues”.
When the plaintiff purchased the motorhome, he understood, from the dealer, there could be tax advantages in respect of the proposed plan for the vehicle. The dealer held a seminar at some time following the offer to purchase. Before going to the seminar, the plaintiff went to Revenue Canada in Toronto to ask about tax advantages. He testified he told them he proposed to start a commercial business; he would hire the dealer to perform, on his behalf, a variety of services in respect of the vehicle. The tax people he spoke with agreed, according to the plaintiff, he could claim capital cost allowance; if a loss was created, “that was fine because I had a business”.
The plaintiff conceded, in cross-examination, the conversation was a general one.
The plaintiff did not receive, in 1980, any revenue attributable to the motorhome. When he asserted the capital cost allowance of $8,212.50, he claimed a net business loss of that amount.
The Minister’s ground for disallowance was as follows:
The capital cost allowance of $8,212.50 for leasing property, claimed as a deduction from income in 1980 does not qualify as a deduction under paragraph 20(1)(a) of the Act because of the restriction in Regulation 1100(15) of the Act.
Regulations 1100(15) and 1100(17) are relevant. I set them out:
Leasing Properties
(15) Notwithstanding subsection (1), in no case shall the aggregate of deductions, each of which is a deduction in respect of property of a prescribed class that is leasing property owned by a taxpayer, otherwise allowed to the taxpayer by virtue of subsection (1) in computing his income for a taxation year, exceed the amount, if any, by which
(a) the aggregate of amounts each of which is
(i) his income for the year from renting, leasing, or earning royalties from, a leasing property or a property that would be a leasing property but for subsection (18), (19) or (20) where such property is owned by him, computed without regard to paragraph 20(1)(a) of the Act, or
(ii) the income of a partnership for the year from renting, leasing or earning royalties from, a leasing property or a property that would be a leasing property but for subsection (18), (19) or (20) where such property is owned by the partnership, to the extent of the taxpayer’s share of such income,
exceeds
(b) the aggregate of amounts each of which is
(i) his loss for the year from renting, leasing or earning royalties from, a property referred to in subparagraph (a)(i), computed without regard to paragraph 20(1)(a) of the Act, or
(ii) the loss of a partnership for the year from renting, leasing, or earning royalties from, a property referred to in subparagraph (a)(ii), to the extent of the taxpayer’s share of such loss.
(17) Subject to subsection (18), in this section and section 1101, “leasing property” of a taxpayer or a partnership means depreciable property other than
(a) rental property,
(b) property of Class 31 or 32 in Schedule II and furniture, fixtures or equipment, if any, located within and ancillary thereto, or
(c) property referred to under paragraph (n) of Class 12 Schedule II,
where such property is owned by the taxpayer or the partnership, whether jointly with another person or otherwise, if, in the taxation year in respect of which the expression is being applied, the property was used by the taxpayer or the partnership principally for the purpose of gaining or producing gross revenue that is rent, royalty or leasing revenue, but for greater certainty, does not include a property leased by the taxpayer or the partnership to a lessee, in the ordinary course of the taxpayer’s or partnership’s business of selling goods or rendering services, under an agreement by which the lessee undertakes to use the property to carry on the business of selling, or promoting the sale of, the taxpayer’s or partnership’s goods or services.
The plaintiff submitted the motorhome was acquired, in 1980, for the purpose of earning income from a business; the capital cost allowance was, therefore, properly claimable.
The evidence before me does not, to my mind, establish the plaintiff was, as an issue of fact, carrying on business in 1980. He had not, in 1980, made any agreement or arrangement with the dealer, concerning the use of the motorhome for vacation packages.
In the statement of claim (paragraph 3), the plaintiff alleged an agreement, dated January 10, 1981, whereby
.. . the Plaintiff engaged Go Camping Limited to provide management services in connection with the commercial use of the R.V.
I agree with the submission of the defendant: that, in 1980, the evidence indicates only that the plaintiff intended, perhaps in the ensuing year, to rent out the motorhome, as a business endeavor.
I find the plaintiff had not yet established his intended business in 1980. But he had acquired the motorhome for use in a projected business; he intended then to use it “... for the purpose of gaining or producing gross revenue".
I turn now to the Regulations earlier set out.
There was a difference of view, between the parties, as to whether Regulation 1100(17) applied in this case. Was the motorhome, in 1980, a leasing property? The regulation provides that leasing property is “depreciable property" owned by the taxpayer, if in the taxation year, the property
. . . Was used by the taxpayer. . . principally for the purpose of gaining or producing gross revenue that is rent, royalty or leasing revenue ... .
The dispute centred on the words “was used". The plaintiff submitted the words must be given their ordinary meaning; on the evidence, the motorhome was not, in fact, used, in 1980, for the purpose of gaining or producing gross revenue.
The defendant contends that, on the evidence, the plaintiff intended to rent out the motorhome to others; even though no rentals took place in 1980, it was used within the meaning of the regulation.
I disagree. I concur with the plaintiff’s submissions.
The words “was used” must, in my opinion, be given their plain ordinary meaning. The leasing property must have, in fact, been used. Hoped for, or intended use, is not included.
On the evidence here, I find the motorhome was not used, in 1980, as set out in Regulation 1100(17). The limitation, provided by Regulation 1100(15), is therefore not applicable.
The assessment by the Minister of National Revenue is set aside. The claimed deduction is allowable.
The plaintiff is entitled to his costs.
Appeal allowed.