Bowman
J.T.C.C.:
—
This
is
an
appeal
from
reassessments
for
the
1989,
1990
and
1991
taxation
years
of
Mr.
Heropoulos.
Mr.
Heropoulos
testified
through
an
interpreter
and
the
evidence
was
a
little
confusing
and
I
have
great
sympathy
for
a
person
who
has
difficulty
with
either
of
Canada’s
official
languages
but
I
endeavoured
to
determine
what
the
facts
were
and
insofar
as
I
can
see
the
question
is
the
deductibility
of
certain
losses
sustained
by
Mr.
Heropoulos
on
two
properties
owned
by
him.
The
losses
are
set
out
in
the
Reply
to
Notice
of
Appeal,
and
it
has
not
been
suggested
that
the
figures
are
incorrect.
In
1971
approximately,
Mr.
Heropoulos
bought
property
at
705
Carlaw
where
he
lived
for
many
years.
The
property
originally
had
a
mortgage
on
it
which
was
paid
off
around
1975
or
’76.
In
1986,
he
moved
out
of
Carlaw
and
started
to
rent
it
but
he
put
a
mortgage
on
the
property;
and
I
come
now
to
the
first
key
finding
of
fact,
namely
the
losses
sustained
in
1989
and
1990
are
attributable
largely
to
mortgage
interest
on
the
Carlaw
property
in
the
amount
of
$12,112
and
$9,000
in
1989
and
1990,
respectively.
And
I
should
note
that
the
Carlaw
property
was
really
only
rented
for
a
couple
of
months
in
1990.
The
mortgage
he
put
on
the
Carlaw
property
appears
to
have
been
used
to
buy
a
car
or
to
purchase
another
piece
of
property
somewhere.
I
do
not
think
that
the
mortgage
interest
that
was
paid
in
1989
and
1990
could
reasonably
be
attributed
to
the
rental
operation;
and
indeed
if
the
$12,000
paid
in
1989
under
that
mortgage
were
removed
from
the
calculation
of
income
or
loss
on
the
Carlaw
property,
it
would
appear
to
indicate
that
he
should
have
had
a
profit
of
approximately
$6,000.
However,
it
is
not
within
the
jurisdiction
of
this
Court
to
refer
the
matter
back
to
the
Minister
of
National
Revenue
to
increase
the
tax.
The
same
observation
could
be
made
for
1990.
Accordingly,
the
assessments
for
1989
and
1990
have
not
been
shown
to
be
wrong
and
I
am
dismissing
the
appeal
for
those
years.
Insofar
as
1991
is
concerned,
Mr.
Heropoulos
bought
a
house
in
Richmond
Hill
for
$455,000.
(I
believe
that’s
about
the
figure.)
He
had
previously
bought
a
lot
for
$3,000
and
I
think
the
house
was
put
up
on
it.
There
was
a
substantial
mortgage
on
the
property
and
in
fact
the
mortgage
payments
of
principal
and
interest
appear
to
have
been
$16,788.
I
note
in
passing
that
even
if
the
mortgage
interest
were
deductible
as
claimed,
the
principal
payments
should
obviously
not
be
deductible.
However,
he
rented
the
property
for
about
six
months
at,
it
appears,
$1,200
a
month,
claimed
expenses
of
$19,000
including,
as
I
mentioned,
the
$16,000
principal
and
interest
payment,
which
raises
again
the
perennial
question
of
whether
there
was
any
reasonable
expectation
of
profit
as
the
sole
issue,
which
has
frequently
come
before
the
Court.
I
think
it
has
to
be
disposed
of
on
the
basis
of
reasonableness,
on
the
basis
of
whether
there
are
the
indicia
of
commerciality.
I
do
not
think
they
exist
here.
I
think
the
property
was
bought
without
any
clear
idea
of
when
or
if
any
profit
would
be
made.
There
was
a
large
mortgage
on
it.
He
endeavoured
to
recover
some
portion
of
the
costs
through
rental
but,
in
my
opinion,
it
is
not
reasonable
to
expect
there
would
ever
be
a
profit
from
the
property.
Accordingly,
based
upon
the
decision
of
the
Supreme
Court
of
Canada
in
Moldowan
and
many
other
cases
decided
under
this
question
of
whether
there
is
a
reasonable
expectation
of
profit,
I
find
that
the
1991
assessment
should
also
be
confirmed
and
the
appeal
is
dismissed
for
that
year.
Appeals
dismissed.
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