Renaud – Federal Court of Appeal affirms that a benevolent law practice for indigent clients thereby had a “personal aspect," justifying use of REOP test to deny losses

A Quebec lawyer who worked full-time as a federal government employee also worked 5 to 15 hours a week providing legal services to clients of modest means. Of the four years in issue, practice revenues ranged between $850 (or 5% of claimed expenses) and $3,850 (37% of claimed expenses). Jorré J below observed that the taxpayer’s part-time law practice verged on charitable volunteerism – and, more generally, found that since such practice had a personal aspect, the question as to whether her practice was a business could (consistently with Stewart) be tested through determining whether it had a reasonable expectation of profit, as to which there was none. Her claimed losses were non-deductible.

In affirming the decision below, Nadon JA stated that “there is no doubt that the law practice of the appellant … certainly qualifies as having a personal aspect."

Neal Armstrong. Summary of Renaud v. Canada, 2019 CAF 154 under s. 3(a) – reasonable expectation of profit.