Allan,
T.C.C.J.:—In
this
case
the
appellant
has
claimed
expenses
personally
incurred
by
him
during
the
taxation
year
which
have
been
disallowed
by
the
Minister
on
the
basis
that
they
were
capital
in
nature
and
not
his
expenses,
but
those
of
a
company
which
took
over
the
business.
The
testimony
of
the
appellant
is
that
having
been
in
business
in
the
United
States
he
decided
to
investigate
the
posssibilities
in
Vancouver
and
the
Lower
Mainland
in
late
1987
and
he
formed
a
partnership
or
he
registered
a
partnership
in
British
Columbia
and
incurred
expenses
preliminary
to
opening
a
business.
He
was
aware
of
a
kind
of
tile
which
had
a
good
sale
in
the
United
States,
particularly
in
the
city
of
Portland,
and
had
also
been
sold
successfully
in
the
city
of
Seattle,
Washington.
He
wanted
to
find
out
whether
there
was
a
market
for
it
in
Vancouver
and
the
Lower
Mainland
and
he
directed
his
inquiries
to
that
end.
He
says
that
he
wanted
to
assure
a
supply
of
the
goods
for
sale
and
he
wanted
to
make
business
contacts
and
prepare
a
business
plan.
He
says
that
a
company
was
in
fact
incorporated
in
British
Columbia
in
March,
1988
solely
for
the
purpose
of
protecting
a
name
which
he
anticipated
might
be
used
in
the
business.
A
showroom,
a
lease
was
entered
into
and
a
showroom
opened
on
Granville
Street
in
September,
1988,
the
taxation
year
in
question.
Prior
to
that
at
some
time
it
appears
his
interest
in
the
business,
the
proposed
business
was
transferred
to
the
company
and
the
business
was
carried
on
in
the
name
of
the
company
after
that
date.
The
expenses
incurred,
he
says,
were
not
capital
expenditures
but
were
necessary
current
expenses
for
anyone
opening
a
business
in
that,
in
the
retail
field.
Counsel
for
the
respondent
has
cited
to
me
the
case
of
Bancroft
v.
M.N.R.,
[1989]
1
C.T.C.
2196,
89
D.T.C.
153,
which
I
think
is
distinguishable
because
it
was
a
case
in
which
there
was
found
to
be
no
reasonable
expectation
of
profit,
the
business
never
really
commenced,
the
moneys
expended
were
expended
on
a
tourist
resort
which
was
partly
constructed
and
never
completed,
which
is
a
different
situation
from
this
one
in
which
the
business
commenced
by
Mr
Xuereb,
the
taxpayer
in
this
case,
was
turned
over
to
a
company
in
which
he
was
a
shareholder
and
which
subsequently
commenced
business
and
continues
to
be
in
business.
Counsel
has
also
cited
to
me
the
case
of
Rolland
v.
M.N.R.,
[1987]
2
C.T.C.
2001,
87
D.T.C.
341,
a
judgment
given
in
this
Court
in
which
the
taxpayer
took
preliminary
steps
to
begin
a
business
in
carrying
passengers
by
hot
air
balloon.
He
went
so
far
as
to
obtain
a
licence
but
did
not
really
begin
acccepting
passengers
for
hire
until
1983.
He
wanted
to
gain
flying
experience
before
doing
so.
He
claimed
losses
for
the
previous
years,
1980
and
1981,
before
he
was
actually
in
business.
Those
losses
were
disallowed
and
the
taxpayer's
appeal
was
dismissed.
It
was
held
by
the
judge
that
in
that
case
the
taxpayer
was
not
in
business
in
the
taxation
years
in
issue
and
that
accordingly
the
losses
were
not
deductible.
Again,
it
appears
to
me
that
that
case
is
distinguishable
on
the
basis
that
the
claims
were
made
for
previous
years
before
the
business
opened.
In
this
case
the
claim
for
business
expense
is
made
for
the
year
1988,
the
year
in
which
the
business
was
begun
and
in
which
the
business
was
transferred
to
the
company
incorporated.
I
hold
that
these
are
proper
business
expenses
that
should
be
allowed
and
I
allow
the
appeal.
Appeal
allowed.
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