Bowie T.C.J.:
1 The Appellant appeals from her reassessment for income tax for the 1980 taxation year. In filing her return she claimed to be entitled to take into account in computing her income for taxation purposes a business loss in the amount of $2,005.00 suffered in connection with the business of distributing a speed reading course called “The Advanced Reading Course” (the course).
2 During the year 1980 she was approached by Eunice Nowlan of Cannon Business Systems Inc. who offered her the opportunity to purchase a license to distribute the course. The Canadian rights were held by St. John International Ltd. and she purchased a 20 year license to market the course in a territory comprised of part of the City of Hamilton, Ontario, having a population of approximately 42,000 people. For this license she paid a $100.00 license fee, and at the same time she was required to make an advance royalty payment of $20,000.00 to St. John International Ltd. As part of the arrangement she also entered into what is called a standard operating agreement with Raesan Development & Management Corporation under which Raesan would market the course for her in her territory in Hamilton, Ontario, paying her $35.00 for each course sold. Raesan also gave her a performance bond in the amount of $15,000.00 to guarantee the sale of 1,000 units. In her evidence the Appellant said quite candidly that this proposition was attractive to her both as a business from which she might potentially make income without personal involvement, and for the tax deferral involved. After taking the performance bond into account, her cash outlay was reduced to $5,100.00, an amount more than offset by the tax deferral resulting from the business loss she claimed arising out of the advance royalty payment. She also testified that she hoped to make a capital gain in the future by a resale of her license.
3 The Appellant testified that she had no knowledge of any business activity undertaken on her behalf by Raesan, and no knowledge of any sales force that Raesan might be able to deploy in her territory. She thought that at some time she had received a statement from them to the effect that they owed her $65.00, but she never received that or any other money from Raesan.
4 In assessing the Appellant the Minister made the following assumptions of fact:
1) The Appellant in taking part in the arrangements hereinbefore described, did not, at any relevant time, either by herself or through others acting for her or on her behalf, carry on business;
2) Raesan did not have a viable marketing program in place nor were there sufficient employees to carry out a marketing and distributing business.
Not only did the Appellant's evidence not rebut these assumptions, it reinforced them. I find that the Appellant did not carry on business during the 1980 year, either through her own efforts or through efforts expended by Raesan on her behalf. As Judge Bonner recently said in La Liberté v. R.“a business is a commercial activity and is not constituted by desire alone”.[FN1: <p>(1996), 96 D.T.C. 1483 (T.C.C.), at 148</p>] There is no commercial activity by or on behalf of the Appellant to be found in the evidence before me. It is trite to say that without a business, and one having a reasonable prospect of profit, there can be no business loss.[FN2: <p><em>Moloney v. R.</em>(1992), 92 D.T.C. 6570 (Fed. T.D.)and<em>Tonn v. R.</em>(1995), 96 D.T.C. 6001 (Fed. C.A.).</p>] 5 The appeal is dismissed.
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