Hubert C Reventlow-Criminil v. Minister of National Revenue, [1972] CTC 2062, 72 DTC 1065

Roland St-Onge:—This appeal was heard at Victoria, BC, on November 1, 1971, by the Tax Appeal Board, as it was then constituted, and involves a taxpayer who sought to deduct from his personal income in the 1968 and 1969 taxation years substantial losses allegedly incurred in the operation of a farm.

In December 1967, the appellant purchased a 14.7-acre farm for $30,000 with a house and barn thereon. It was very badly run down and 7 acres thereof lacked proper drainage and was under water most of the year. He testified that his intention was to board horses, raise cattle and harvest hay, but primarily he had to work the land and put in better drainage in order to obtain a better crop of hay. In that respect the appellant, in 1968, ploughed and tilled 3% acres of land, and for the years under appeal he reported his expenses and revenues as follows:

The particulars of the expenses claimed by him are as follows:

During this time, the appellant was also working ten hours a day as a mechanical engineer, for which services he received a gross income of $8,447 in 1968 and $6,004 in 1969, and his wife was attending a course and working at a university so was unable to be of very much help on the farm. The appellant, with his wife and daughter, resided in the house, and the daughter was fond of horses and liked to ride. In 1970 he sold the farm for $43,000 and was not taxed on the $14,000 profit.

The respondent refused to allow the farm losses as a deduction on the grounds that the expenses incurred were personal or living expenses, and that the appellant did not have any reasonable expectation of making a profit from the farm in the foreseeable future (paragraphs 12(1)(h) and 139(1)(ae)).

According to the evidence adduced, it appears that the only thing the appellant did was to increase the value of his land and buildings, and the outlays made for this purpose constituted capital expenditures. In the years under appeal he did not buy any cattle or livestock; in 1968 he ploughed and tilled only 3 /4 acres of land to determine the best yielding crops for the type of soil but had not yet attempted to plant a crop of any kind. This, in no way whatsoever, could be construed as farming with a reasonable expectation of profit, especially when the income from hay was so nominal and the expenses so substantial.

As to the yearly income of $240 for boarding horses, the appellant did not show any definite plan to expand this aspect of his farming operation to an extent that would provide any reasonable expectation of making a profit therefrom within the next year or two.

Furthermore, it is inconceivable that a taxpayer who works ten hours a day as a mechanical engineer would have enough time to operate a farm with a reasonable expectation of profit, taking into account the small amount of land suitable for farming, the fact that such time as was spent in farming was spent by part-time employees, and the generally unproductive nature of his farming operations.

In the absence of any plan for concentrating on any particular type of farming operation, and in the light of the substantial outlays which were more in the nature of personal or living expenses than expenses incurred to earn income from farming, the Board has no alternative but to dismiss the appeal.

For the above reasons, the appeal is dismissed.

Appeal dismissed.

GORDON C THOMSON, Appellant,

and MINISTER OF NATIONAL REVENUE, Respondent.

Tax Review Board (Maurice Boisvert, QC), January 5, 1971.

Income Tax Act, RSC 1952, c 148 — 59(1) — Date for filing notice of appeal.

The notice of appeal was not filed within the 90-day statutory period.

HELD:

The Board had no jurisdiction to hear the appeal after the expiration of the 90-day period. Appeal dismissed.

The Appellant acted on his own behalf.

J Potvin for the Respondent.

Maurice Boisvert:—When this appeal came on for hearing at Montreal, Province of Quebec, on October 18, 1971, before the Tax Appeal Board as it was then constituted, a motion for dismissal was made by counsel for the respondent. Evidence was introduced to show that the notice of appeal was not filed within the 90-day period as provided for in subsection 59(1) of the Income Tax Act (RSC 1952, c 148 as amended).

The taxpayer sent in his notice of appeal on February 26, 1971, by registered mail, two days after the expiry date of the above-mentioned 90 days.

The Board having no jurisdiction to hear an appeal filed after the expiration of the 90-day period, the appeal is dismissed.

Appeal dismissed.