Date: 20010129
Docket: A-133-99
CORAM: DESJARDINS J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
BETWEEN:
JEAN-PAUL AUDET
Appellant
- AND -
HER MAJESTY THE QUEEN
Respondent
Hearing held at Québec, Quebec on Monday, January 29, 2001.
Judgment from the bench at Québec, Quebec on Monday, January 29, 2001.
REASONS FOR JUDGMENT OF THE COURT BY: DESJARDINS J.A.
Date: 20010129
Docket: A-133-99
CORAM: DESJARDINS J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
BETWEEN:
JEAN-PAUL AUDET
Appellant
- AND -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
(Delivered from the bench at Québec, Quebec
on Monday, January 29, 2001)
DESJARDINS J.A.
[1] The appellant is objecting to a decision by the Tax Court of Canada (unreported decision, case 97-24-17 (IT)G, Dussault J.T.C.C.), which affirmed the decisions of the Minister of National Revenue ("the Minister") disallowing the deductions by the appellant which he was claiming following the purchase of a condo in 1988. The Minister argued that the taxpayer did not have a reasonable expectation of profit in the 1992 and 1993 taxation years.
[2] Counsel explained that the outcome of this appeal might resolve about 100 other pending cases.
[3] Let us briefly review the facts.
[4] The appellant obtained two loans and entered into the proposed purchase of a condo with a financing structure corresponding to 100% of the amount required, which as the trial judge noted made any reasonable expectation of profit absolutely impossible before an uncertain number of years. The trial judge also pointed out that there would have to have been an occupancy rate three times greater than what was expected for the taxpayer to achieve a satisfactory result. He concluded from this that simply from an arithmetical standpoint it was not possible to achieve that result. The trial judge added that even if there was some restructuring of the condo project in 1989, 1990 and 1992, it was not until 1995 that the appellant took the initiative of repaying one of the loans and looking after rental of the condo himself, which made it possible by another approach to contemplate a reasonable expectation of profit in subsequent years.
[5] The appellant argued in this Court that the respondent having accepted expense deductions for the business for some years she was not in a position to question the very existence of the business by applying the theory of a reasonable expectation of profit.
[6] We cannot rewrite the precedents laid down by this Court in Mohammad v. The Queen, [1998] 1 F.C. 165 (F.C.A.), and Stewart v. Canada, 254 N.R. 326 (F.C.A.).
[7] However, the latter case is before the Supreme Court of Canada and to be heard shortly.
[8] In the circumstances, this appeal will be dismissed without costs.
Québec, Quebec
January 29, 2001
Certified true translation
Suzanne M. Gauthier, LL.L. Trad. a.
FEDERAL COURT OF APPEAL
Date: 20010129
Docket: A-133-99
Between:
JEAN-PAUL AUDET
Appellant
- AND -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
FEDERAL COURT APPEAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE No.: A-133-99
STYLE OF CAUSE: JEAN-PAUL AUDET
Appellant
AND:
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING: Québec, Quebec
DATE OF HEARING: January 29, 2001
REASONS FOR JUDGMENT
OF THE COURT BY: Desjardins J.A.
DATED: January 29, 2001
APPEARANCES:
Guy Cavanagh for the appellant
Martin Gentile for the respondent
SOLICITORS OF RECORD:
CAVANAGH & LACROIX for the appellant
New-Richmond, Quebec
Morris Rosenberg for the respondent
Attorney General of Canada
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