Bonner,
TCJ:—This
is
an
appeal
from
an
assessment
of
income
tax
for
the
appellant’s
1981
taxation
year.
The
sole
issue
is
whether
the
appellant
carried
on
in
the
year
a
“non-qualifying
business’’,
a
term
defined
by
paragraph
125(6)(f)
of
the
Income
Tax
Act.
The
parties
agreed
that
the
business
was
not
one
described
in
subparagraphs
(i)
or
(ii)
of
paragraph
(f).
Thus,
the
question
is
whether
the
business
carried
on
by
the
appellant
in
the
taxation
year
was
one:
.
.
.
the
principal
purpose
of
which
(was)
to
provide
managerial,
administrative,
financial,
maintenance
or
other
similar
services,
to
lease
property
(other
than
real
property),
or
to
provide
any
such
services
and
to
lease
property
(other
than
real
property),
to
one
or
more
businesses
connected
at
any
time
in
the
year
with
the
corporation
..
.
The
appellant
was
incorporated
in
1977.
The
persons
who
brought
about
the
incorporation
were
Curtis
A
Lazerte
and
Eldon
D
Schmidt.
They
were
lawyers
who
practised
law
in
partnership
in
Campbell
River,
British
Columbia.
In
February
of
1977
the
company
entered
into
a
management
contract
with
the
partnership.
Subsequently,
when
a
third
lawyer
joined
the
partnership
in
1978,
he
too
became
a
shareholder
in
the
appellant
and
a
party
to
the
management
contract.
Evidence
was
given
that
the
incorporators
both
hoped
that
the
company
would
be
able
to
engage
in
business
in
several
other
fields,
one
of
which
was
the
management
of
rental
properties
owned
by
offshore
investors.
In
March
of
1978
the
company
entered
into
an
agreement
with
one
such
owner
to
manage
two
apartment
buildings
in
Campbell
River.
Other
businesses
in
which
the
appellant
engaged,
both
during
the
taxation
year
in
question
and
during
prior
years,
included
provision
of
photocopying
services
and
general
corporate
services.
Corporate
services
consisted
of
providing
a
registered
office,
preparing
corporate
records
and
returns
and
filing
such
returns.
The
overwhelming
majority
of
corporations
for
which
registered
office
and
record
services
were
provided
were
clients
of
the
law
firm.
An
analysis
of
net
income
was
prepared
by
Sharon
Magnusson,
a
partner
in
the
firm
of
chartered
accountants
which
acted
for
the
appellant.
That
analysis
concluded
that
49.7
per
cent
of
the
net
income
of
the
appellant
for
the
1981
fiscal
year
was
generated
by
managing
the
law
firm
and,
further,
that
$15,738
or
25.4
per
cent
of
net
income
for
the
year
was
generated
by
photocopy
services.
Only
$115
in
gross
revenues
came
from
the
provision
of
photocopy
services
to
customers
of
the
appellant
other
than
the
law
firm.
Finally,
corporate
work
accounted
for
20
per
cent
of
net
income
for
the
year.
It
was
not
suggested
that
services
provided
to
the
law
firm
under
the
management
contract
were
not
..
managerial,
administrative
...
or
similar
services
.
.
.”
within
the
meaning
of
the
subparagraph.
Indeed,
the
contract
is
entitled
“Management
Contract”
and
many
of
the
services
which
are
required
to
be
provided
are
described
in
the
contract
as
administrative
services.
Further,
it
was
common
ground
that
the
business
of
the
law
firm
was
a
“.
.
.
business
connected
..
.
in
the
year
with
the
.
.
appellant
within
the
meaning
of
subparagraph
(iil).
Virtually
the
first
thing
the
partners
did
after
incorporating
the
company
in
1977
was
to
enter
into
the
management
contract
with
it.
They
did
so,
according
to
a
recital
in
the
contract,
because
they
were
.
.
desirous
of
minimizing
their
involvement
with
non-professional
activities,
such
as
the
administration
of
their
practice,
so
as
to
be
in
a
position
to
devote
more
of
their
time
and
effort
to
the
practice
of
law”.
Those
circumstances
point
to
a
conclusion
that
the
provision
of
services
of
the
type
referred
to
in
subparagraph
125(6)(f)(iii)
was,
at
the
outset,
the
principal
purpose
of
the
appellant.
Nothing
in
the
evidence
leads
to
a
conclusion
that
the
primary
of
this
purpose
diminished
at
any
time
before
the
end
of
the
1981
taxation
year.
No
other
activity
of
the
appellant
yielded
as
high
a
percentage
of
net
profit.
The
provision
of
services
under
the
management
contract
occupied
four
out
of
five
of
the
appellant’s
employees.
I
can
discover
no
characteristic
of
any
of
the
other
purposes
which
existed
during
the
1981
taxation
year
which
might
be
regarded
as
endowing
them
with
greater
importance.
For
the
foregoing
reasons
the
appeal
will
be
dismissed.
Appeal
dismissed.
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