Fyfe – Tax Court of Canada rejects a CRA position that a taxpayer who regularly reported business income was not carrying on a business

The taxpayer spent approximately six months per year doing work for one client (mostly construction and repair work), and the balance of the year sailing in the Bahamas. He reported annual income (of around $11,000) that was just below the level at which the Working Income Tax Benefit (“WITB”) (now the Canada Workers Benefit) began to be reduced. He kept no business records.

CRA denied his WITB claims on the surprising basis that he had no source of income and, therefore, no income – rather than on the basis that he was under-reporting his income. Masse DJ allowed his appeal, stating:

Although he was only carrying on a small business and only for 6 months of the year and had essentially only one client, this does not mean that he was not carrying on a business. The appellant's testimony is corroborated by his client, Mr. Huet, and I accept their testimony.

Neal Armstrong. Summary of Fyfe v. The Queen, 2022 CCI 20 under s. 122.7(1) – working income – para. (c).