A
J
Frost:—This
is
an
income
tax
appeal
in
respect
of
the
appellant’s
1969
taxation
year.
Upon
Notice
of
Objection
duly
signed
and
filed,
the
Minister
of
National
Revenue
confirmed
the
assessment
on
September
23,
1971.
In
1958
the
appellant
purchased
a
150-acre
property
known
as
the
Holland
farm
and
in
1964
acquired
a
one-quarter
interest
in
another
property
known
as
the
Gwillimbury
farm.
The
two
properties
were
operated
as
tree
farms
for
several
years
prior
to
the
1969
taxation
year,
during
which
time
the
Minister
recognized
the
appellant’s
farming
status
as
coming
under
section
13
of
the
Income
Tax
Act.
However,
in
respect
of
the
1969
taxation
year,
the
Minister
reversed
his
position
and
denied
the
appellant
the
right
to
claim
any
benefits
under
section
13
of
the
said
Act,
and
assessed
the
appellant
on
the
ground
that
the
expenses
claimed
were
personal
and
living
expenses
within
the
meaning
of
subparagraph
139(1
)(ae)(i)
of
the
Income
Tax
Act
and
therefore
not
deductible
by
virtue
of
the
provisions
of
paragraph
12(1)(h)
of
the
Act.
On
the
evidence,
I
find
that
the
appellant
did
in
fact
operate
a
tree
farm
which
entailed
some
initial
tillage
to
fit
the
ground
for
the
growing
of
trees.
The
evidence
further
indicated
that
the
essential
difference
between
a
tree
farm
and
a
vegetable
garden
is
the
time
element.
The
expert
witnesses
called
by
the
appellant
agreed
on
one
main
point,
namely,
that
the
appellant
was
operating
farms
in
an
economic
sense
despite
the
fact
that
they
were
not
a
source
of
immediate
income
and
might
not
be
a
source
of
income
for
many
years
to
come.
It
takes
time
to
grow
trees.
Counsel
for
the
respondent,
in
his
argument,
contended
that
the
expenses
relating
to
the
two
farms
were
not
incurred
in
respect
of
properties
maintained
in
connection
with
a
business
carried
on
with
a
reasonable
expectation
of
profit.
The
question
of
what
is
reasonable
in
this
case
must
of
necessity
relate
to
the
circumstances
involved.
Fifty
years
may
not
be
an
unreasonable
period
for
a
tree
farmer,
whereas
a
single
year
might
be
too
long
for
a
chicken
or
bee
farmer
to
wait.
However,
the
prospect
of
profit
is
not
the
main
question
in
issue
but
rather
—
what
is
the
relationship
of
subparagraph
139(1
)(ae)(i)
to
section
13
of
the
Income
Tax
Act?
Subparagraph
139(1
)(ae)(i)
speaks
of
the
expense
of
properties
not
maintained
in
connection
with
a
business
carried
on
with
a
reasonable
expectation
of
profit.
The
word
“farming”
isn’t
even
mentioned
in
the
section.
On
the
other
hand,
section
13
deals
specifically
with
farming
and
although
it
sets
a
limit
in
respect
of
losses
claimed
as
a
result
of
farming
where
it
is
not
a
principal
source
of
income,
it
does
not
speak
of
“a
reasonable
expectation
of
profit”.
If
one
could
apply
subparagraph
139(1
)(ae)(i)
to
farming
in
the
same
manner
as
to
the
expense
of
maintaining
properties
for
the
use
of
the
taxpayer,
then
farm-
ing
of
marginal
land,
and
perhaps
other
types
of
farming
such
as
“hobby
farming”,
might
well
come
under
that
particular
section
of
the
Act.
However,
without
stressing
the
obvious,
it
seems
to
me
that
Parliament
enacted
the
provisions
of
subsections
13(1)
and
(2)
to
curtail
farming
enthusiasts
taxwise
without,
in
the
national
interest,
placing
too
great
a
restriction
on
their
love
of
farming.
Hobby
farmers
may
indulge
their
hobby,
but
the
Act
places
a
limitation
on
the
amount
of
loss
such
taxpayers
can
claim.
In
other
words,
Parliament
decided,
in
effect,
that
a
reasonable
expectation
of
profit
is
not
a
criterion
for
farming
per
se.
This
means
that
section
13
takes
precedence
over
the
limitation
contained
in
subparagraph
139(1
)(ae)(i)
and,
as
a
consequence,
the
business
of
farming
has
been
lifted
out
of
that
provision
of
the
Income
Tax
Act.
I
am
therefore
of
the
opinion
that
land
owned
by
a
taxpayer
and
used
for
the
growing
of
natural
or
primary
products,
including
trees,
and
under
management
with
a
view
to
ultimate
marketing,
regardless
of
the
time
element,
constitutes
farming
within
the
meaning
of
paragraph
139(1)(p)
irrespective
of
subparagraph
139(1
)(ae)(i)
of
the
Income
Tax
Act.
It
is
my
view
that
in
this
case
subparagraph
139(1
)(ae)(i)
has
been
incorrectly
and
inappropriately
applied
by
the
Minister.
The
appeal
is
allowed
and
the
matter
referred
back
to
the
Minister
for
reassessment
in
accordance
with
the
foregoing.
Appeal
allowed.
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