Sternberg v. R., [1997] 3 C.T.C. 149, 98 D.T.C. 6627

MacGuigan J.A.:

1 We have not been persuaded that Sarchuk J.T.C.C. made any reviewable error as to the facts in the case at bar. Nor do we believe he overlooked any evidence, and of course the weighing of that evidence was within his sole discretion.

2 The appellant also argued that the learned Tax Court Judge fell into other errors of law, principally by not taking account of this Court's decision in Tonn v. R. (1995), 96 D.T.C. 6001 (Fed. C.A.)(which the appellant acknowledged was decided only subsequently), where Linden, J.A. wrote for the Court that:

The Moldowan[[1978] 1 S.C.R. 480] test should be applied sparingly where a taxpayer's “business judgment” is involved, where no personal element is in evidence, and where the extent of the deductions claimed are not on their face questionable.

3 But not only is Tonn not a farming case, it also deals with the issue of a reasonable expectation of profit, rather than with the question in the case at bar, viz., is farming a chief source of income? A finding of a reasonable expectation of profit, as I had occasion to put it in Timpson v. Minister of National Revenue (1993), 93 D.T.C. 5281 (Fed. C.A.),

gets, at best, only to a finding that farming is “a source of income,” not that it is “a chief source of income,” as required by s. 31(1) of the Income Tax Act.

4 The appellant raised a separate argument as to cases that readily recognized start-up costs, but as this Court held in Roney v. Minister of National Revenue (1991), 91 D.T.C. 5148 (Fed. C.A.), 5155 (per Desjardins, J.A.) “start-up costs ... cannot be considered as the basis for an alternative ground of decision.” The issue comes back inevitably to that of the chief source of income.

5 The appeal will therefore be dismissed with costs.