Savage – Tax Court of Canada finds that a “dog kennel” operation was a source of revenue, but not of income

A couple had two dogs, which supposedly were part of an objective of developing a show dog business, but were not registered. The couple had about $2,000 a year in revenues from dog sitting and training. C. Miller J found that they were not able to deduct their claimed losses of $15,000 to $22,000 per year, as there could be no “objective finding of commerciality” for their “dog kennel” operation, and the evidence “smack[ed] more of a hobby than a business,” so that the operation did not represent a source of income. Accordingly, it was unnecessary to resume the hearing to review evidence as to the expenses incurred by them.

The effect of the CRA assessments, which thus were confirmed, was that they received their revenues on a tax-free basis, irrespective of the reasonableness of their claimed expenses.

Neal Armstrong. Summary of Savage v. The Queen, 2017 TCC 247 under s. 3(a) – business source.