Bezan v. R., [1999] 4 CTC 2001 (Informal Procedure)

Beaubier T. C.]. :

This appeal pursuant to the Informal Procedure was heard at Regina, Saskatchewan on June 25, 1999. The Appellant was the only witness.

Paragraphs 7 and 8 of the Reply to the Notice of Appeal read:

7. In reassessing the Appellant for he 1994 taxation year, the Minister of National Revenue (the “Minister”) reduced the Appellant’s claim for farm losses by $24,958.42, from $27,208.42 to $2,250.00 as follows:

1994

Even though the Appellant calculated a farm loss in the amount of $42,293.40 on his statement of farm income and expenses for the 1994 taxation year, he only claimed the amount of $27,208.42, which was the amount of the loss necessary to reduce his income for the year to nil. He then carried forward the excess portion of the farm loss that he did not require to subsequent years.

	Reported	Adjustments			Revised
Gross Income
Cattle Sales	$ 55,053.06		$ 1,574.23	$ 56,627.29
GST Refund	1,114.32				1,114.32
Feeder Calves	4,240.00				4,240.00
MIA			53,938.80		53,938.80
Total Income	$ 60,407.38		$55,513.03	$115,920,41
Expenses	$102,700.78		$ 1,402.84	$104,103.62
			14,316.79		14,316.79
MIA Included in
Income in Prior
Year
Total Deductions	$102,700.78		$15,719.63	$118,420.41
Total Farm Loss	($ 42,293.40)		$39,793.40	( $ 2,500.00)
		(	250.00)	(	250.00)
Less: Portion of
Loss Allocated to
Spouse
Net Farm Loss	($ 42,293.40)		$40,043.40	( $	2,250.00)
Less: Portion of
Farm Loss Carried
Forward	15,084.98
Net Farm Loss
Claimed	($ 27,208.42)*
Notes:

8. In reassessing the Appellant for the 1995 taxation year, the Minister assessed net farm income in the amount of $5,764.00 and allowed a restricted farm loss carry forward in the amount of $5,764.00. The net farm income assessed for the year was determined as follows:

1995

In calculating his farm loss for the year, the Appellant included in his farm loss calculation his carry forward of accumulated farm losses from prior years. He then utilized these farm losses to the extent necessary to reduce his income for the year to nil and he then carried forward the excess portion of the losses that he did not require to subsequent years.

	Reported	Adjustments			Revised
Gross Income
Cattle Sales	$93,038.26	$	809.36	$93,847.62
Total Income	$93,038.25	$	809.36	$93,847.62
Expenses	$37,948.76	($ 4,445.25)		$33,503.51
		53,938.80			53,938.80
MIA Included in
Income in Prior
Year
Total Deductions	$37,948.76	$49,493.55		$87,442.31
Total Farm In-	$55,089.50	$48,684.19		$ 6,405.31
come
		(	640.48)	(	640.48)
Less: Portion of
Loss Allocated to
Spouse
Net Farm Income	$55,089.50	$49,324.67		$ 5,764.83
(Loss)
Add: Farm Loss
Carried Forward	( 86,924.73)*
from Prior Years
Net Farm Loss	($31,835.23)
Less: Portion of
Farm Loss Carry
forward
	13,594.43 *
Net Farm Loss
Claimed	($18,240,80)*
Notes:

With respect to the issues to be decided, the Court finds:

(a) The Appellant did not dispute the correctness of the Mandatory Inventory Adjustment calculation. Nor did he establish that any of the assumptions in paragraph 9 of the Reply were incorrect. In particular, he did not refute the calculation or the basis for the calculation in paragraphs 7 and 8 of the Reply.

(b) Finally, paragraph 111(1)(c) of the Income Tax Act (“Act”) prevents the Appellant from carrying forward restricted farm losses against non-farm income.

For these reasons, the appeals are dismissed.

Appeal dismissed.