Petrowsky v. The Queen, docket 2001-4495(IT)I (Informal Procedure)

Date: 20021209

Docket: 2001-4495-IT-I

BETWEEN:

DARRELL PETROWSKY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Little, J.

A.                               FACTS

[1]            In 1996 the Appellant established a business of leasing snowmobiles in Yorkton, Saskatchewan. The Appellant purchased snowmobiles and leased the snowmobiles to various customers on a daily or weekly basis.

[2]            From 1996 to 1999 the Appellant reported rental income, expenses and losses as follows:

                                                                   Income                  Expenses                               Losses

1996                                         $ 2,739.00                                $ 3,902.00                                ($ 1,163.00)

1997                                         6,593.00                                 11,713.00                                ( 5,120.00)

1998                                         5,675.00                                 11,507.52                                ( 5,832.52)

1999                                         4,716.28                                 14,417.19                                ( 9,700.91)

[3]            Because of the continual losses suffered by the Appellant the snowmobile rental business was discontinued in 2002.

[4]            The Minister of National Revenue (the "Minister") reassessed the Appellant's 1998 and 1999 taxation years.

[5]            In reassessing the Appellant's 1998 taxation year the Minister disallowed the business loss of $5,832.52.

[6]            In reassessing the Appellant's 1999 taxation year the Minister reduced the business loss claimed by the Appellant from $9,700.91 to a business loss of $744.54.

B.                                ISSUE

[7]            Is the Appellant entitled to deduct business losses of $5,832.52 and $9,700.91 in determining his income for the 1998 and 1999 taxation years respectively?

C.             ANALYSIS

[8]            The Appellant testified that in the 1998 and 1999 taxation years he incurred various expenses in an attempt to establish a profitable snowmobile rental business.

[9]            I have carefully considered the Appellant's testimony and I have concluded that the following additional expenses should be allowed:

AMOUNTS TO BE ALLOWED

Expenses:                                                               1998                                      1999

                Advertising                                                            $ 42.80

                Meals and Entertainment                     -                                          $ 149.45

                Office Expenses                                     1,214.95

                Supplies                                                  1,238.72

                Travel                                                                      75.82                     503.05

[10]          With respect to capital cost allowance the following items should be added to the C.C.A. Schedule with no personal element recognized:

                Computer                                                                $ 1,135.50

                Garage Heater                                                        1,916.13

                Cellular Telephone                                                   399.00

[11]          I believe that the Minister is correct in moving the garage heater from Class 8 to Class 1.

[12]          The Minister of National Revenue is instructed to reassess the Appellant's 1998 and 1999 taxation years to allow the amountS as noted above.

Signed at Vancouver, British Columbia, this 9th day of December 2002.

"L.M. Little"

J.T.C.C.

COURT FILE NO.:                                                 2001-4495(IT)I

STYLE OF CAUSE:                                               Darrell Petrowsky and

                                                                                                Her Majesty the Queen

PLACE OF HEARING:                                         Regina, Saskatchewan

DATE OF HEARING:                                           November 22, 2002

REASONS FOR JUDGMENT BY:      The Honourable Judge L.M. Little

DATE OF JUDGMENT:                                       December 9, 2002

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Anne Jinnouchi

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-4495(IT)I

BETWEEN:

DARRELL PETROWSKY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on November 22, 2002, at Regina, Saskatchewan, by

the Honourable Judge L.M. Little

Appearances

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Anne Jinnouchi

JUDGMENT

                The appeals from the assessments made under the Income Tax Act for the 1998 and 1999 taxation years are allowed, without costs, and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.

Signed at Vancouver, British Columbia, this 9th day of December 2002.

"L.M. Little"

J.T.C.C.