Cardin,
TCJ:—Mr
David
L
Jones
is
appealing
from
an
assessment
of
tax
with
respect
to
the
1977
taxation
year.
In
his
tax
return
the
appellant
claimed
expenses
in
the
amount
of
$5,062
incurred
during
his
fiscal
period
from
February
1,
1976
to
January
31,
1977.
Of
the
total
expenses
claimed
the
respondent
allowed
but
$790.85
and
disallowed
$4,215.15
on
the
ground
that
that
amount
had
not
been
expended
to
earn
income
but
had
gone
toward
the
appellant’s
personal
expenses
and
was
not
deductible
by
virtue
of
both
paragraph
18(l)(a)
and
paragraph
18(l)(h)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended.
Summary
of
Facts
The
appellant,
a
designing
engineer,
exercised
his
profession
under
the
registered
name
of
Delta
Designs.
His
contention
was
that
in
his
1977
taxation
year
he
was
an
independent
operator
and
as
such
could
properly
deduct
expenses
necessary
in
the
exercise
of
his
designing
business:
Evidence
which
was
not
denied
by
the
appellant
was
that
he
had
applied
to
a
technical
placement
agency
for
work
as
a
designing
engineer.
As
a
result
of
his
application,
the
appellant
obtained
work
as
a
draftsman
for
Kilborn
Engineering
Ltd
(“Kilborn”)
for
the
months
of
February
and
March
1976.
He
also
obtained
work
as
a
draftsman
for
Hatch
Associates
(“Hatch”)
from
March
1976
to
December
1976
again
as
a
result
of
his
application
to
a
placement
agency.
For
services
rendered
to
Kilborn
and
Hatch,
the
appellant
received
a
total
amount
of
$19,350.
The
appellant
also
worked
for
MGH
International
Ltd
(“MGH”)
from
December
1976
to
January
31,
1977,
the
end
of
the
appellant’s
fiscal
year,
and
received
an
amount
of
$2,466
for
his
services.
Both
Kilborn
and
Hatch
had
provided
all
the
equipment
and
office
space
necessary
for
the
drafting
services
rendered
by
the
appellant
for
the
period
of
March
to
December
1976,
during
that
period
neither
of
these
companies
required
the
appellant
to
provide
an
office
in
his
home
in
the
exercise
of
his
duties
nor
was
he
required
to
exercise
his
duties
in
a
location
other
than
on
the
companies’
premises.
While
it
may
have
been
the
intention
of
the
appellant
to
exercise
his
professional
work,
as
an
independent
contractor
at
some
future
date,
there
was
no
evidence
to
support
the
appellant’s
allegation
that
he
was
in
the
drafting
business
on
his
own
account
during
the
period
of
February
to
December
1976.
There
was
some
evidence
of
the
appellant’s
desire
and
indeed
his
efforts
to
operate
his
own
drafting
business
in
his
working
relationship
with
MGH
during
the
period
following
his
employment
with
Kilborn
and
Hatch
from
December
1976
to
January
1977
and
it
may
well
be
that
subsequent
to
January
31,
1977
the
appellant
did
succeed
in
establishing
his
own
drafting
firm.
This
eventuality
has
no
bearing
on
the
present
issue
since
there
is
no
indication
that
the
appellant
had
achieved
that
goal
from
March
1976
to
December
1976.
The
portion
of
the
expenses
incurred
by
the
appellant
during
the
period
of
December
1976
to
January
31,
1977
and
allowed
by
the
respondent
($790.45
—
ie
11.3
per
cent
of
the
total
amount
of
expenses
claimed)
appeared
to
me
to
be
consistent
with
the
facts.
The
greater
portion
of
the
expenses
($4,271.15
—
ie
88.7
per
cent
of
the
total
expenses
claimed
by
the
appellant)
were
expenses
incurred
from
February
1976
to
December
1976
at
which
time
the
appellant
was
not
operating
his
own
drafting
enterprise
but
had,
through
the
good
offices
of
placement
agencies,
obtained
employment
with
Kilborn
and
Hatch.
The
appellant’s
working
arrangement
with
both
Kilborn
and
Hatch
was
clearly
that
of
an
employee/employer
relationship.
For
these
reasons,
I
hold
that
the
amount
of
$4,271.15
of
the
total
expenses
claimed
was
properly
disallowed.
That
amount
was
not
expended
to
produce
income
within
the
meaning
of
paragraph
18(l)(a)
of
the
Act
but
was
the
appellant’s
personal
expenses
and
not
deductible
by
virtue
of
paragraph
18(1)(h)
of
the
Act.
Judgment
will
go
dismissing
the
appeal.
Appeal
dismissed.
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