Larkin – Tax Court of Canada permits a geologist with no current income to deduct various expenses documented only in spreadsheets
A retirement-age geologist with decades of successful experience as a prospector, entrepreneur and inventor, worked on a number of unsuccessful projects in and around his 2011 taxation year, e.g., seeking to apply novel techniques for exploiting graphite or nickel projects, and unsuccessfully bidding on an oil sands property and then a kerogen property, without generating any business revenue in his 2011 year.
Masse DJ nonetheless found that the taxpayer was carrying on business, stating:
… He certainly could demonstrate better business practices and I note that his record keeping leaves much to be desired but I still conclude that he conducted his activities with a level of commerciality sufficient to constitute a business. …. His ventures have seen prior successes and he … is continuing to pursue similar opportunities in hopes of repeating his prior success.
Although the taxpayer’s expenses were only documented in his spreadsheets (he did not provide any invoices, receipts etc.), Masse DJ allowed a significant portion of the claimed expenses – but disallowed others, for example, only allowing the expenses of the taxpayer’s cell phone but not his two land lines (stating that “it is more reasonable to dedicate one telephone … for business use.”)
Neal Armstrong. Summary of Larkin v. The Queen, 2020 TCC 98 under s. 3 – business source/reasonable expectation of profit.