John
B
Goetz:—The
appellant
appeals
from
an
assessment
for
his
1976
taxation
year.
The
assessment
was
made
on
the
basis
that
the
claimed
deductions
of
$2,618.45
allegedly
incurred
by
the
appellant
were
considered
by
the
Minister
as
being
a
deduction
from
income
and
constituted
personal
or
living
expenses.
The
Minister
relied,
inter
alia,
upon
subsection
9(2),
paragraph
18(1)(h)
and
subsection
248(1)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended.
Facts
The
appellant
by
trade
is
a
welding
fabricator
and
in
the
year
1976,
the
taxation
year
in
question,
earned
$16,000.
In
1975
he
bought
a
piece
of
land
consisting
of
5.24
acres
and
started
to
build
a
house.
On
this
land
was
an
apple
and
pear
orchard
and
the
apples
and
pears
were
picked
by
him
on
evenings
and
weekends.
In
1975
he
went
to
the
local
Co-Op,
attempting
to
ascertain
the
situation
with
respect
to
what
he
considered
a
final
payment
and
at
that
time
was
told
that
he
had
been
paid
$432
in
January
for
his
full
shipment
of
12
tons
of
pears.
He
left
the
Co-Op
in
a
state
of
rage,
telling
them
that
he
would
no
longer
grow
apples
and
pears
and
within
weeks
cut
down
all
of
the
fruit
trees
on
his
5.24
acres.
Shortly
after
the
municipal
assessor
approached
the
appellant,
advising
him
that
in
that
all
the
trees
had
been
knocked
down,
his
land
could
no
longer
be
considered
as
farm
land
and
would
be
taxed
at
a
higher
tax
rate
as
residential
property.
The
appellant
says
that
as
a
result
of
this
he
decided
to
turn
the
land
into
an
animal
farm,
raising
chickens,
ducks
and
geese.
The
Department
of
National
Revenue
refused
to
permit
his
purported
loss
from
farming
operations
in
1976
in
that
he
was
not
engaged
in
farming
and
did
not
qualify
under
section
31
of
the
Act.
Findings
In
cross-examination
the
appellant
admitted
that
he
had
made
no
inquiries
whatsoever
as
to
what
the
yield
would
be
from
the
fruit
orchard,
or
how
much
money
he
would
need
to
meet
minimum
requirements
to
make
a
profit,
and
his
conversion
to
what
he
called
“animal
farm’’
obviously
was
precipitated
by
the
visit
of
the
municipal
tax
assessor.
In
the
case
of
William
Moldowan
v
Her
Majesty
the
Queen,
[1977]
CTC
310;
77
DTC
5213,
Mr.
Justice
Dickson
in
reference
to
subsection
13(1)
of
the
Income
Tax
Act,
RSC
1952,
c
148,
as
amended,
(now
section
31),
stated
the
following
at
315
and
5216
respectively:
In
my
opinion,
the
Income
Tax
Act
as
a
whole
envisages
three
classes
of
farmers:
(1)
a
taxpayer,
for
whom
farming
may
reasonably
be
expected
to
provide
the
bulk
of
income
or
the
centre
of
work
routine.
Such
a
taxpayer,
who
looks
to
farming
for
his
livelihood,
is
free
of
the
limitation
of
s
13(1)
in
those
years
in
which
he
sustains
a
farming
loss.
(2)
the
taxpayer
who
does
not
look
to
farming,
or
to
farming
and
some
subordinate
source
of
income,
for
his
livelihood
but
carried
on
farming
as
a
sideline
business.
Such
a
taxpayer
is
entitled
to
the
deductions
spelled
out
in
s
13(1)
in
respect
of
farming
losses.
(3)
the
taxpayer
who
does
not
look
to
farming,
or
to
farming
and
some
subordinate
source
of
income,
for
his
livelihood
and
who
carried
on
some
farming
activities
as
a
hobby.
The
losses
sustained
by
such
a
taxpayer
on
his
nonbusiness
farming
are
not
deductible
in
any
amount.
It
is
my
view
that
the
appellant
really
held
no
reasonable
expectation
of
profit
from
his
so-called
animal
farm
operation
but
that
he
embarked
into
that
narrow
area
of
operation
of
farming
in
order
to
escape
the
higher
taxes
if
he
were
to
be
assessed
on
a
residential
basis.
He
therefore
falls
in
the
third
category
of
farmers
as
set
out
by
Mr
Justice
Dickson
in
Moldowan
(supra).
For
the
above
reasons,
I
dismiss
the
appeal.
Appeal
dismissed.
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