Bowman
J.T.C.C.:
—
This
appeal
is
from
an
assessment
for
the
appellant’s
1992
taxation
year.
The
question
is
the
deductibility
of
certain
expenses
incurred
by
the
appellant
in
connection
with
what
he
alleges
is
a
business
of
writing
and
publishing
a
book
called
“The
Great
American
Quiz
Book”.
This
book,
of
which
a
draft
of
Volume
I
was
shown
to
the
court,
is
intended
to
cover,
in
a
comprehensive
way,
virtually
all
aspects
of
the
African-American
Heritage,
such
as
history,
music,
sports,
politics,
government,
arts,
entertainment,
folklore,
medicine,
engineering,
and
military
activity,
is
in
the
form
of
quizzes
and
questionnaires
in
various
formats
-
multiple
choice,
true/false
or
incomplete
sentences.
Several
preliminary
points
should
be
mentioned
at
the
outset:
(a)
It
is
not
alleged
that
the
amounts
in
issue
were
not
spent
or
incurred
by
the
appellant.
(b)
Of
the
$8,867.46
disallowed
by
the
Minister
in
1992,
$5,482.00
was
incurred
in
1988,
1989
and
1990.
This
amount
cannot
on
any
view
of
the
matter
be
deducted
in
computing
income
for
1992.
In
the
result
the
amount
in
issue
for
1992
is
$3,385.46.
(c)
Of
the
amount
of
$3,385.46
which
remains
in
respect
of
1992,
$148.91
was
spent
on
meals
and
entertainment,
$757.03
as
a
motor
vehicle
expense
and
$779.93
for
his
office.
The
balance
of
$1,699.59
is
simply
not
substantiated.
It
may
well
cover
a
variety
of
legitimate
expenses,
but
there
is
no
way
in
which
I
can
conclude
that
such
amounts
are
reasonably
attributable
to
any
business
that
was
carried
on.
We
are
therefore
left
with
$1,685.87
-
a
relatively
small
amount.
Nonetheless
a
question
of
principle
remains
and
it
is
this:
does
this
amount
represent
a
loss
from
a
business
carried
on
by
Mr.
Callender
in
1992?
Mr.
Callender
was
born
in
Barbados
in
1945
and
came
to
Canada
in
1967.
He
attended
Concordia
University
and
McGill
University.
He
studied
mechanical
engineering
as
well
as
education
and
obtained
a
Bachelor
of
Mechanical
Engineering
degree
from
Concordia
University.
He
studied
Naval
Architecture
at
the
University
of
Newcastle-on-Tyne,
from
which
he
received
a
certificate
of
Naval
Architecture,
a
field
in
which
he
worked
in
Montreal
and
Vancouver.
In
1981
he
lost
his
job
with
Matsumoto
shipyards
and
decided
to
go
back
to
teaching.
He
worked
as
a
substitute
teacher
for
about
eight
years
and
now
has
a
permanent
position
with
the
North
Vancouver
Public
School
Board.
In
1987
he
conceived
his
idea
of
a
book
covering
all
aspects
of
the
African-American
heritage.
He
was
struck
by
the
paucity
of
books
in
this
area
and
the
lack
of
knowledge
generally
of
the
public
about
this
important
aspect
of
American
history.
He
talked
to
educators
and
academics
about
the
project
and
concluded
that
there
was
a
market
for
such
a
book.
He
believed
that
the
potential
market
for
such
a
book
would
be
about
30,000,000
persons.
He
has
spent
a
great
deal
of
time
both
in
Canada
and
the
United
States
in
researching
the
project
and
the
result
is,
as
stated,
the
first
volume
of
the
book
“The
Great
American
Quiz
Book”.
The
project
is
ambitious,
imaginative
and
encyclopedic.
It
is
also
meritorious
and,
apparently,
needed.
I
am
satisfied
that
the
appellant
reasonably
and
in
good
faith
expected
to
realize
a
profit
from
it.
I
should
observe
that
at
the
assessment
level
the
auditor
took
the
position
that
the
business
had
not
yet
commenced
in
1992.
On
objection
the
position
was
set
out
in
a
detailed
letter
from
the
appeals
assessor
that
there
was
“no
reasonable
expectation
of
profit”.
In
this
court
the
respondent
took
the
position
that
the
sole
issue
was
whether
the
appellant
had
a
reasonable
expectation
of
profit
from
“the
Activity”.
Among
the
assumptions
stated
to
have
been
made
by
the
Minister
in
the
Reply
to
the
Notice
of
Appeal
on
assessing
are
the
following:
(a)
sometime
in
1988,
the
Appellant
began
an
activity,
the
purpose
of
which
is
to
write,
publish,
promote
and
sell,
by
mail
order,
books,
booklets,
games
and
other
products
(the
“Activity”);
(b)
as
of
November,
1995,
the
Appellant
had
produced
a
650
page
manuscript
which
is
only
the
first
volume
of
a
two
page
project;
(c)
the
Activity
is
undercapitalized;
(d)
the
Appellant
has
devoted
little,
or
no,
time
to
planning
the
promotion
or
marketing
of
the
intended
products;
(e)
the
Appellant
does
not
plan
any
material
changes
to
the
Activity
in
the
near
future;
(f)
the
Appellant
has
no
training
in
the
Activity;
(g)
at
all
material
times
the
Appellant
was
employed
full
time
as
a
school
teacher;
(h)
before
starting
the
Activity,
the
Appellant
prepared
no
business
plan
to
determine
if
it
would
be
profitable.
This
litany
of
observations
is
regularly
intoned
with
little
variation
in
most
of
the
numerous
“no
reasonable
expectation
of
profit”
cases
that
come
before
the
court.
They
seldom
bear
any
relationship
to
the
facts
of
the
particular
case.
The
use
of
the
word
“activity”
is
presumably
intended
to
avoid
making
an
admission
that
the
appellant
was
engaged
in
a
business.
Yet
the
description
in
paragraph
(a)
accurately
sets
out
what
the
appellant
was
doing
and
what
he
intended.
The
project
was
not
fanciful
nor
was
the
expectation
farfetched.
The
650
page
manuscript
is
an
impressive
piece
of
work
and
it
is
not
surprising
that
it
would
take
considerable
time
to
prepare
it.
Paragraph
(c)
by
itself
is
meaningless
without
some
indication
of
what
appropriate
capitalization
should
be.
The
failure
to
plan
the
promotion
and
marketing
does
not
mean
that
there
was
no
business.
It
merely
means
that
the
appellant’s
priority
was
as
a
matter
of
business
judgement
to
prepare
the
book
before
trying
to
market
it.
With
reference
to
paragraph
(e)
I
fail
to
see
the
relevance.
The
appellant
is
proceeding
in
a
direction
that
his
business
judgement
tells
him
to
follow.
The
respondent
has
suggested
no
material
changes
that
might
be
desirable.
In
paragraph
(f)
it
is
stated
that
the
appellant
had
no
training
in
the
Activity.
Many
successful
entrepreneurs
have
not
formal
training
in
their
chosen
line
of
endeavour.
Many,
if
not
most,
successful
writers
are
autodidacts.
With
reference
to
(h)
the
absence
of
a
business
plan
does
not
prove
the
absence
of
a
business.
The
short
answer
to
the
respondent’s
position
is
that
we
have
a
reasonable
and
feasible
business
activity
carried
out
with
a
view
to
profit.
It
is
neither
frivolous
nor
fanciful.
The
fact
that
the
appellant
enjoys
what
he
is
doing
and
is
motivated
to
some
degree
by
idealism
does
not
detract
from
its
commercial
nature
or
make
the
expenses
personal.
The
assessment
and
the
letter
from
the
appeals
branch
were
prior
to
the
decision
of
the
Federal
Court
of
Appeal
in
Tonn
v.
R.
(sub
nom.
Tonn
v.
Canada),
[1996]
1
C.T.C.
205,
96
D.T.C.
6001.
That
case
may
be
taken
generally
as
applying
a
more
common
sense
commercial
approach
to
business
activities
rather
than
that
used
in
previous
cases
which
involved
a
mechanical
recitation
of
certain
passages
taken
out
of
context
from
Moldowan
v.
R.
(sub
nom.
Moldowan
v.
Minister
of
National
Revenue),
[1978]
1
S.C.R.
480,
[1977]
C.T.C.
310,
77
D.T.C.
5213.
I
find
as
a
fact
that
the
appellant
had
a
reasonable
expectation
of
profit
from
the
writing
and
publishing
of
the
book
“The
Great
American
Quiz
Book”.
The
appeal
from
the
assessment
for
the
1992
taxation
year
is
allowed
and
the
assessment
is
referred
back
to
the
Minister
of
National
Revenue
for
reconsideration
and
reassessment
to
allow
the
deduction
in
computing
his
income
of
$1,685.87.
The
appellant
has
succeeded
in
recovering
considerably
less
than
one
half
of
what
he
was
claiming.
Therefore
there
will
be
no
order
as
to
costs.
Appeal
allowed.
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