Couture,
C.J.T.C.C.:—
This
is
an
appeal
under
the
informal
procedure
in
respect
of
the
1990
taxation
year.
The
appellant
was
represented
by
its
president
John
M.
Cornell.
The
evidence
which
was
not
contested
disclosed
that
the
appellant
which
operates
a
chicken
farm
deducted
an
amount
of
$45,005
as
feed
expense
in
computing
its
income
for
the
taxation
year
1990.
This
amount
was
deducted
pursuant
to
the
following
transaction.
On
or
about
December
31,
1990,
the
appellant
entered
into
an
agreement
to
purchase
16,840
bushels
of
corn
from
W.G.
Thompson
&
Sons
Limited
(Thompson)
at
a
price
of
$45,005.
As
part
of
this
agreement
and
as
evidenced
by
a
document
undated
filed
as
exhibit
R-3,
but
agreed
by
the
appellant's
agent
that
it
was
signed
on
December
31,
1990,
Thompson
undertook
to
repurchase
the
corn
in
question
at
any
time
at
market
price
plus
20
cents
per
bushel
less
storage
costs.
It
must
be
mentioned
that
the
appellant
never
took
possession
of
the
corn
which
remained
on
Thompson's
premises.
The
agent
explained
that
the
transaction
was
entered
into
as
a
means
of
hedging
on
its
costs
of
feed.
If
the
price
of
the
corn
increased
it
would
be
sold,
but
if
it
decreased
then
the
appellant
would
keep
it
as
feed.
If
the
transaction
eventually
gave
rise
to
a
gain
then
this
gain
would
be
applied
against
the
costs
of
feed.
In
assessing
the
appellant’s
income
tax
return
the
respondent
disallowed
the
deduction
in
question
claimed
by
the
appellant
on
the
ground
that
it
was
not
expense
incurred
for
the
purpose
of
earning
income
from
farming.
Counsel
for
the
respondent
submitted
that
the
whole
transaction
was
merely
a
speculation
on
the
part
of
the
appellant
completely
unrelated
to
its
farming
operations.
He
contended
that
it
was
entered
into
for
the
sole
purpose
of
reducing
his
taxes
for
1990.
In
support
of
his
submission,
counsel
referred
the
Court
to
the
case
of
The
Queen
v.
Clark,
[1974]
C.T.C.
305,
74
D.T.C.
6242
(F.C.T.D.).
The
relevant
facts
with
respect
to
this
case
are
essentially
identical
to
those
of
the
present
appeal
except
that
instead
of
dealing
with
a
purchase
of
corn
Clark
had
purchased
cattle.
At
page
311
(D.T.C.
6246),
Cattanach,
J.
says:
There
is
no
impediment
to
a
taxpayer
from
so
arranging
his
affairs
in
accordance
with
the
law
as
enacted
so
as
to
attract
a
minimum
of
tax.
However,
in
the
present
appeal
it
is
crystal
clear
that
the
outlay
the
defendant
made
in
the
purchase
of
cattle
in
his
1966
and
1967
years
and
the
immediate
resale
in
the
next
succeeding
taxation
years
to
the
vendor
at
the
same
price
by
pre-arrangement
was
for
the
sole
purpose
of
reducing
his
tax
in
those
years
and
was
not
laid
out
for
the
purpose
of
gaining
or
producing
income
from
his
business
of
farming
within
the
meaning
of
paragraph
12(1)(a).
While
in
this
case
the
cattle
was
repurchased
at
the
same
price
rather
than
at
a
possible
profit,
this
distinction
is
of
no
material
difference.
In
the
light
of
the
evidence
adduced
at
the
hearing
I
am
satisfied
that
the
alleged
expense
of
$45,005
deducted
in
computing
its
income
was
not
incurred
for
the
purpose
of
earning
income
from
its
farming
operations.
For
the
above
reasons
the
appeal
is
dismissed.
Appeal
dismissed.
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