Mogan
J.T.C.C.
(orally):—This
is
an
appeal
in
respect
of
the
1989
and
1990
taxation
years.
There
are
two
issues
before
the
Court.
The
first
issue
is
whether
a
certain
amount
received
by
the
appellant
with
respect
to
the
last
payroll
period
for
1989
should
be
included
in
her
income
for
1989
or
1990.
The
second
issue
relates
to
a
business
which
the
appellant
claims
she
was
operating
in
the
period
ending
August
31,
1990,
and
whether
a
loss
in
respect
of
that
business
is
a
business
loss
(non-capital
loss,
to
use
the
technical
term)
which
can
be
set
off
against
other
source
income
for
1990
and
perhaps
carried
back
against
1989
income.
The
appellant
came
to
Canada
from
Czechoslovakia
around
1986.
At
that
time
she
had
higher
education
in
Czechoslovakia
which
would
be
something
like
a
commerce
degree
in
Canada.
It
gave
her
a
type
of
accounting
qualification
which
was
recognized
in
Czechoslovakia
perhaps
at
the
level
permitting
her
to
function
as
a
professional
accountant.
Her
qualifications
were
not
recognized
in
Ontario,
however,
and
so
she
could
not
practise
as
a
public
accountant
in
Ontario.
Nevertheless,
she
did
seek
work
in
areas
that
related
to
financial
matters
like
bookkeeping
and
an
accounts
payable
clerk.
I
will
consider
the
first
issue.
In
the
last
four
months
of
1989
the
appellant
worked
for
a
company
which
was
identified
as
Fame
Furniture
Co.
She
was
employed
originally
as
an
accounts
payable
clerk
but,
in
the
course
of
her
employment,
they
asked
her
to
perform
other
duties
in
the
area
of
general
bookkeeping.
She
worked
there
from
September
11,
1989
until
the
end
of
December,
1989,
at
which
time
she
left
the
employment
of
Fame
Furniture.
There
was
entered
in
evidence
a
document
(Exhibit
A-2)
prepared
by
Fame
Furniture
and
registered
with
Employment
and
Immigration
Canada,
perhaps
for
unemployment
insurance
purposes.
It
appears
to
be
a
standard
Government
of
Canada
form
for
Employment
and
Immigration
Canada
and
it
records
her
insurable
earnings
for
the
weeks
beginning
September
11,
1989
and
ending
with
the
last
pay
period
which
was
December
30,
1989.
There
is
no
issue
concerning
most
of
the
money
she
earned
from
Fame
Furniture.
That
is
to
say,
she
received
a
T4
slip
from
Fame
Furniture
for
1989
in
the
amount
of
$7,491.39
and
she
reported
that
in
her
1989
income
tax
return.
The
amount
in
issue
is
$793.66
which
is
the
amount
she
received
(and
I
have
to
be
careful
when
I
say
the
word
"received"
because
it
is
not
certain
when
she
received
it)
in
respect
of
the
last
pay
period
ending
December
30,
1989.
Exhibit
R-2
is
a
page
from
the
payroll
records
of
Fame
Furniture
showing
that
for
the
payroll
period
ending
December
30,
1989,
the
appellant
earned
her
regular
weekly
salary
of
$475
plus
vacation
pay
in
the
amount
of
$318.66.
Those
two
amounts
when
added
together
represent
her
gross
income
of
$793.66
for
the
last
pay
period
of
1989.
That
is
the
amount
which
is
the
basis
of
the
first
issue.
There
were,
of
course,
source
deductions
for
income
tax,
unemployment
insurance,
and
Canada
Pension
Plan,
so
that
her
net
take-home
pay
for
this
last
pay
period
was
$552.97,
but
that
net
amount
is
irrelevant
for
our
purposes.
Apparently
Fame
Furniture
issued
a
T4
slip
for
1990
showing
this
gross
amount
$793.66
as
part
of
her
1990
earnings.
The
Minister
accepted
that
T4
slip
and
included
the
amount
of
$793.66
in
the
appellant's
1990
income.
She
protests,
however,
and
says
that
the
amount
of
$793.66
was
earned
in
the
pay
period
ending
December
30,
1989,
and
received
in
1989,
which
would
clinch
the
matter
as
making
it
taxable
for
1989.
Subsection
5(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
states
(and
I
quote
only
the
relevant
parts):
5(1)
.
.
.a
taxpayer’s
income
for
a
taxation
year
from
an
office
or
employment
is
the
salary,
wages
and
other
remuneration,
including
gratuities,
received
by
him
in
the
year.
I
emphasize
the
last
few
words,
“received
by
him
in
the
year,”
because
those
words
indicate
that
income
from
employment
is
taxed
on
a
“received”
basis
and
not
on
an
"earned"
basis.
For
example,
if
a
person
were
employed
at
a
salary
of
$2,000
a
month
and
received
his
December
salary
for
a
particular
year
on
January
5
in
the
subsequent
year,
the
$2,000
for
December
would
be
part
of
his
income
for
the
subsequent
year.
That
is
the
kind
of
question
facing
the
appellant
in
this
case.
Was
the
$793.66
received
by
her
in
1989
or
in
19902
Counsel
for
the
respondent
has
drawn
to
my
attention
a
fact
of
which
I
may
take
judicial
notice
that,
in
1989,
December
30
was
a
Saturday.
Therefore,
December
31
was
a
Sunday,
and
the
next
business
day
would
probably
be
Tuesday,
January
2
if
New
Year's
Day
was
a
public
holiday.
When
the
appellant
was
questioned
on
the
regular
work
period
at
Fame
Furniture,
she
stated
that
the
work
week
was
Monday
to
Friday.
Exhibit
A-2,
a
document
I
have
already
referred
to
which
was
filed
and
prepared
by
Fame
Furniture
for
Employment
and
Immigration
Canada,
indicates
that
the
last
day
worked
was
December
29,
1989.
That
would
be
a
Friday.
On
the
other
hand,
the
payroll
document,
Exhibit
R-2,
prepared
by
Fame
Furniture,
shows
that
the
payroll
period
ended
on
December
30,
1989,
which
is
the
Saturday.
Therefore,
one
would
think
that
the
appellant
could
not
have
been
paid
on
Friday,
December
29
if
the
payroll
period
were
ending
on
the
next
day,
Saturday,
December
30.
At
first
blush,
I
am
inclined
to
the
view
that
if
the
payroll
period
ended
on
Saturday,
the
employees
were
probably
paid
on
the
first
business
day
of
the
following
week
which
in
this
case
would
have
been
January
2,
because
most
businesses
are
closed
on
New
Year's
Day.
That
is
only
a
first
blush
impression
I
have
from
the
facts.
There
is
no
direct
evidence
as
to
when
this
last
pay
cheque
was
delivered
to
the
appellant
and
received
by
her.
Exhibit
A-2,
the
document
filed
with
Employment
and
Immigration
Canada,
was
signed
by
Mr.
Francis
Lam,
an
officer
of
Fame
Furniture,
on
January
12,
1990.
Although
it
records
insurable
earnings
up
to
and
including
the
pay
period
ending
December
30,
1989,
it
does
not
disclose
the
date
when
the
pay
cheque
for
that
particular
period
was
delivered
to
the
appellant.
I
asked
the
appellant
if
she
had
a
bank
account
in
which
she
may
have
deposited
her
pay
cheques.
Her
answer
was
that
she
had
a
bank
account
for
only
a
very
short
period
and
that,
after
she
closed
out
her
bank
account,
she
was
able
to
cash
her
salary
cheques
by
going
to
the
bank
near
her
place
of
work
at
which
the
employer
banked.
That
is
to
say,
by
going
to
the
bank
where
Fame
Furniture
maintained
its
account,
she
was
able
to
present
and
cash
her
salary
cheque.
I
can
only
assume
from
the
appellant’s
evidence
that
the
bank
was
comfortable
in
cashing
her
cheque
(subject
to
identification)
because
that
particular
branch
would
have
immediate
access
to
the
payor's
account
and
would
know
if
there
were
funds
to
support
the
cheque.
This
is
one
of
those
issues
that
is
difficult
to
decide
because,
in
the
absence
of
direct
evidence
as
to
when
the
last
payroll
cheque
was
issued
and
delivered,
it
is
difficult
to
know
whether
the
appellant
might
have
been
paid
on
Friday,
December
29,
probably
the
last
business
day
in
1989.
Because
she
was
on
salary
and
not
an
hourly
paid
worker,
the
employer
might
have
simply
paid
her
on
Friday
for
the
last
pay
period
of
the
year
even
though
it
would
not
end
until
the
next
day.
On
the
other
hand,
it
is
just
as
likely
that
the
employer
would
not
issue
the
cheques
until
the
pay
period
had
come
to
an
end
according
to
the
calendar
which
would
mean
that
the
salary
cheques
could
not
be
delivered
until
the
first
business
day
after
the
weekend.
It
is
unfortunate
that
the
appellant
did
not
have
a
bank
account
where
she
deposited
her
pay
cheque
because
that
would
have
been
a
convenient
means
of
establishing
at
least
the
day
when
the
cheque
was
deposited.
Counsel
for
the
respondent
referred
me
to
an
old
decision
of
the
Tax
Appeal
Board
Jawl
v.
M.N.R.,
[1968]
Tax
A.B.C.
860,
68
D.T.C.
624,
which
was
a
decision
of
Mr.
Weldon,
a
member
of
the
Board.
There
was
a
question
as
to
when
Mr.
Jaw!
was
paid
a
particular
amount.
At
page
863
(D.T.C.
627)
of
that
decision,
Mr.
Weldon
stated:
By
way
of
supplementing
his
oral
testimony,
the
appellant
produced
a
formal
bank
statement
in
respect
of
his
account
in
the
Bank
of
Montreal
covering
the
period
from
January
1,
1965
to
1967.
He
makes
a
number
of
further
statements
which
I
will
omit,
and
then
he
stated
further:
It
seems
to
me,
in
allowing
this
appeal
following
the
hearing
thereof,
as
already
mentioned,
that
the
appellant
had
adequately
established.
.
.that
his
salary
figures
in
respect
of
his
1965
taxation
year
were
considerably
more
trustworthy
than
those
which
were
reported
by
the
employer
on
his
T4
Summary
return.
It
also
struck
me
as
being
particularly
significant
that
the
latter
was
not
readily
available
for
questioning
by
the
Minister’s
officials
and,
furthermore,
that
his
books
of
account
and
bank
account
were
not
also
readily
available
to
enable
the
assessors
to
verify
or
correct
his
figures
in
his
above-mentioned
T4
Summary
return.
The
evidence,
in
my
opinion,
is
tilted
against
the
appellant
here
because
of
the
fact
that
the
employer,
Fame
Furniture,
when
issuing
its
T4
slips,
identified
this
last
amount
of
$793.66
as
being
1990
earnings
even
though
the
employer
knew
that
the
appellant
had
ended
her
employment
on
December
29.
It
is
an
indication
that
the
employer
had
closed
off
its
books
for
the
amounts
of
salary
and
wages
which
were
delivered
to
the
various
employees
in
1989.
It
indicates
further
that
the
payroll
period
ending
December
30
for
all
employees
was
probably
not
recorded
as
a
1989
payment
delivered
in
1989.
Counsel
for
the
respondent
also
relied
on
the
old
decision
of
Johnston
v.
M.N.R.,
[1948]
S.C.R.
486,
[1948]
C.T.C.
195,
3
D.T.C.
1182,
to
support
the
position
that
the
onus
of
proof
was
on
the
appellant.
In
the
Minister’s
reply
to
notice
of
appeal,
there
is
a
statement
that
the
Minister
assumed
that
in
1990
the
appellant
received
from
Fame
Furniture
the
amount
of
$793.66.
That
assumption
was
probably
based
in
part
on
the
T4
slip
issued
by
Fame
Furniture
but
also,
the
evidence
itself
tilts
against
the
appellant.
The
onus
is
on
her
and
she
failed
to
discharge
that
onus.
I
shall
find
in
favour
of
the
Minister
of
National
Revenue
on
this
first
issue
and
hold
that
the
amount
of
$793.66
was
received
from
Fame
Furniture
sometime
in
1990
and,
therefore,
was
part
of
the
appellant’s
1990
income
and
not
part
of
her
1989
income.
I
turn
now
to
the
second
issue
which
is
more
complex.
The
appellant
was
discouraged
because
of
the
quality
of
employment
she
was
able
to
obtain
in
Canada
which
she
felt
was,
in
plain
language,
below
her
standards
of
professional
qualifications.
She
thought
that
she
was
qualified
to
do
more
sophisticated
accounting
and
bookkeeping,
but
she
was
able
to
get
work
only
as
an
accounts
payable
clerk
and
similar
work.
Therefore,
she
decided
that
she
would
try
to
develop
a
bookkeeping
business.
In
that
regard,
she
decided
to
operate
a
proprietorship
under
the
name
Russell
Business
Services.
She
claims
that
the
first
fiscal
period
for
that
proprietorship
was
from
September
1,
1989
to
August
31,
1990.
At
one
point
in
her
discussions
with
Revenue
Canada
Taxation,
she
suggested
that
her
work
at
Fame
Furniture
was
really
part
of
professional
fees
earned
by
her
proprietorship
and
not
employment
income.
She
asked
Revenue
Canada
to
take
the
total
earnings
from
Fame
Furniture
out
of
her
1989
income
and
include
it
as
part
of
the
fiscal
period
of
her
proprietorship
ending
August
31,
1990.
Revenue
Canada
flatly
refused
to
do
that
because
they
characterized
her
income
from
Fame
Furniture
as
employment
income
and
not
fees
for
professional
services
or
revenue
from
any
kind
of
business
she
was
Carrying
on.
She
accepted
that
decision
by
Revenue
Canada
and
does
not
contest
that
decision
in
the
appeal
I
have
to
decide
today.
I
mention
that
fact
only
to
indicate
that
the
appellant
has
a
degree
of
sophistication.
She
is
by
no
means
a
babe
in
the
woods
when
it
comes
to
accounting
matters
and
tax
planning,
and
the
little
suggestion
I
just
referred
to
would
have
given
her
the
benefit
of
tax
deferral
by
throwing
over
into
1990
the
income
from
Fame
Furniture
which
she
earned
in
1989.
She
has
real
accounting
sophistication
in
tax
matters.
When
filing
her
1990
tax
return,
the
appellant
initially
reported
employment
income
of
$4,000.
This
was
shown
as
income
from
a
numbered
Ontario
corporation,
932716
Ontario
Inc.
(which
I
shall
refer
to
as
number
"716").
It
is
the
only
employment
income
which
she
reported
for
1990,
but
she
also
in
a
subsequent
document
submitted
to
Revenue
Canada
asked
them
to
recognize
a
loss
of
$15,352.37
which
she
had
suffered
in
the
operation
of
her
business
being
the
proprietorship
known
as
Russell
Business
Services.
She
filed
with
Revenue
Canada
one
of
their
standard
documents
being
a
statement
of
income
and
expenses
from
a
professional
practice
which
is
form
T2032.
In
that
document,
she
shows
professional
fees
of
$7,172.12,
being
her
gross
revenue;
she
shows
expenses
in
the
aggregate
amount
of
$22,524.49,
producing
the
loss
of
$15,352.37.
I
should
deal
with
the
$4,000
item
first.
The
Minister
recognized
the
$4,000
as
employment
income
but
the
Minister
refused
to
recognize
the
claimed
loss
as
being
a
loss
or,
if
it
was,
that
it
was
a
loss
in
connection
with
a
business.
In
the
reply
to
the
notice
of
appeal,
the
Minister
makes
the
following
assumption
in
paragraph
6(d):
in
the
1990
taxation
year
the
appellant
did
not
incur
expenses
in
the
amount
of
$22,524.49
in
relation
to
the
Russell
Business
Services;
however,
if
they
were
incurred,
they
were
not
incurred
for
the
purpose
of
gaining
or
producing
income
from
business
or
property.
The
Minister
therefore
put
in
issue
before
this
Court
whether
the
appellant
had
even
incurred
these
expenses,
and,
if
she
had
incurred
them,
the
Minister
goes
on
to
claim
that
they
were
not
incurred
for
the
purpose
of
gaining
or
producing
income
from
a
business.
The
appellant
therefore
comes
to
Court
having
to
show
that
she
paid
the
amounts
and
that
there
was
a
bona
fide
business.
In
evidence
the
appellant
entered
Exhibit
A-1
which
she
called
and
has
the
title
"932716
Ontario
Inc.,
Income
Statement,
Consolidated
Statement,
August
31,
1990”.
As
the
evidence
came
out,
that
title
has
to
be
inaccurate
because
number
716
was
not
incorpo-
rated
until
February
1991.
Therefore,
the
corporation
did
not
even
exist
in
the
calendar
year
1990,
but
it
did
come
into
existence
in
February
of
1991
before
the
appellant’s
1990
income
tax
return
was
filed.
She
gave
the
financial
statement
(Exhibit
A-1)
the
name
of
the
company
even
though,
in
my
view,
it
could
be
nothing
more
than
the
financial
statement
of
her
proprietorship
for
the
fiscal
period
ending
August
31,
1990.
Counsel
for
the
respondent
suggested
in
argument
that
that
was
the
only
practical
way
to
view
the
financial
statement.
What
I
have
then
is
really
two
financial
statements.
I
have
the
form
T2032
(Exhibit
R-6)
which
the
appellant
provided
to
Revenue
Canada
as
the
basis
for
claiming
her
expenses
of
$22,524.49,
and
that
appears
to
have
been
provided
sometime
around
1991.
And
I
have
Exhibit
A-1,
which
is
the
consolidated
financial
statement
as
at
August
31,
1990,
for
her
proprietorship,
mistakenly
given
the
title
of
the
numbered
company.
Both
documents
show
that
the
fiscal
period
covered
is
September
1,
1989
to
August
31,
1990.
I
say
they
both
show
that,
although
Exhibit
R-6
actually
shows
in
numbers
the
closing
of
the
fiscal
period
being
day
31,
month
10,
year
1990.
Month
10
would
be
October
31.
I
regard
the
10
as
a
typographical
error
and
that
she
really
intended
the
10
to
be
8
which
would
have
made
it
August,
because
in
other
respects
the
amounts
in
Exhibit
R-6
and
A-1
have
similarities,
enough
similarities
indicating
they
must
be
for
the
same
fiscal
period.
Unfortunately,
they
also
have
discrepancies.
For
example,
Exhibit
R-6,
the
first
document
shows
fees
of
$7,172.12,
but
no
allowance
or
reserve
for
doubtful
debts
or
anything
like
that,
indicating
that
was
the
gross
revenue.
Exhibit
A-1
shows
fees
of
$6,600
with
an
allowance
for
doubtful
debts
of
$1,100,
making
basically
a
net
gross
revenue
of
$5,500.
The
appellant
explained
Exhibit
A-1
on
the
basis
that
she
had
only
one
client,
a
corporation
called
Compact,
and
that
she
billed
them
$6,600,
but
they
paid
only
$5,500,
and
that's
why
she
set
up
the
reserve
of
$1,100.
She
was
asked
if
she
had
any
other
clients
in
this
fiscal
period
and
she
said
there
was
no
other
client
who
paid
her
but
Compact.
She
actually
obtained
the
client
by
going
to
discuss
with
Compact
some
kind
of
computer
or
software
services
that
she
thought
she
may
need
in
the
bookkeeping
business,
and
when
they
found
out
what
she
was
doing
and
what
her
qualifications
were,
they
said
they
had
some
bookkeeping
which
she
could
do.
And
so
she
took
them
on
as
a
client,
the
only
client
she
had.
Having
regard
to
the
fact
that
she
had
only
one
client,
it
is
difficult
to
justify
the
magnitude
of
the
expenses
which
she
ran
up
in
that
fiscal
period
remembering
that
she
was
a
full-time
employee
of
Fame
Furniture
in
the
first
four
months
of
that
same
fiscal
period.
In
other
words,
she
really
had
only
the
last
eight
months
of
the
fiscal
period,
being
the
first
eight
months
of
1990,
to
give
herself
over
full-time
to
this
new
proprietorship.
The
appellant
was
cross-examined
at
length
and
closely
on
the
expenses
and
I
must
say
tnat
I
found
her
answers
wanting
in
a
number
of
instances.
I
do
recognize
the
fact
that
for
the
appellant,
having
come
from
Czechoslovakia,
English
is
not
her
mother
tongue.
She
does
speak
English
reasonably
well,
however,
and
as
I
have
already
indicated,
she
is
a
professional
person
with
a
reasonably
high
level
of
sophistication
and
knowledge
in
tax
and
accounting
matters.
In
particular,
she
was
evasive
on
a
number
of
questions,
evasive
in
areas
where
I
think
she
should
not
have
had
to
wonder
or
evade
questions.
In
other
areas
she
was
candid,
to
the
extent
that
it
hurt
her
case.
For
example,
in
Exhibit
R-6,
the
first
statement
she
filed
with
Revenue
Canada,
under
the
heading
"motor
vehicle:
fuel,
insurance,
and
repairs",
she
deducted
expenses
of
$3,608.91,
but
Exhibit
A-1
which
she
filed
in
Court
shows
car
expenses
of
$1,758
and
repairs
and
maintenance
of
$697,
making
a
total
of
about
$2,450,
two-thirds
of
the
amount
she
had
deducted
in
Exhibit
R-6.
Those
are
significant
expenses
given
the
fact
that
she
had
no
clients
except
Compact.
Also,
it
turns
out
that
she
does
not
have
a
license
which
permits
her
to
drive
in
the
Province
of
Ontario
and,
therefore,
she
did
not
drive
a
car.
Indeed,
she
did
not
own
a
car!
The
automobile
in
question
was
registered
in
the
name
of
her
husband,
a
man
from
whom
she
separated
in
the
period
1988-89.
Apparently,
the
separation
was
on
relatively
friendly
terms
because,
although
they
were
living
separate
and
apart,
the
husband
did
permit
her
to
use
some
space
in
his
apartment
to
store
some
of
the
material
or
equipment
or
records
which
she
claimed
were
needed
in
connection
with
this
bookkeeping
business.
But
the
car
was
his
and
there
was
very
limited
evidence
that
she
would
need
the
car
much
in
connection
with
her
business.
I
assume
the
husband
had
a
driver's
license
and
so
was
able
to
drive
the
car
and
use
it
most
of
the
time
for
his
own
purposes.
The
astonishing
thing
about
the
two
sets
of
financial
statements
is
that
in
each
case
there
is
a
claim
for
capital
cost
allowance
or
depreciation
in
the
amount
of
$6,731.
In
Exhibit
R-6
that
claim
is
supported
by
showing
that
she
claimed
$6,000
depreciation
in
respect
of
a
car
which
had
an
undepreciated
capital
cost
of
$20,349
when
she
did
not
own
the
car.
I
would
have
thought
that
the
most
elementary
knowledge
of
accounting
and
tax
would
have
led
her
to
conclude
that
she
could
not
claim
depreciation
on
a
car
she
did
not
own.
Therefore,
the
financial
statements
and,
in
particular,
the
expenses
which
are
running
at
a
rate
of
$22,524
per
year
are
skewed
by
at
least
$6,000
because
the
appellant
is
not
entitled
to
depreciate
an
asset
she
does
not
own.
There
are
also
other
amounts
which
are
troubling.
She
has
an
amount
in
Exhibit
R-6
called
property
taxes
or
rent
on
business
property,
$2,830.
In
Exhibit
A-1,
the
same
amount
appears
called
rent
and
utilities.
She
claims
that
those
were
amounts
paid
to
her
separated
husband
during
this
fiscal
period
to
compensate
him
for
letting
her
store
some
of
her
records
in
his
apartment.
It
turns
out
that
it
was
a
bachelor
apartment.
A
bachelor
apartment
has
very
limited
space.
It
is
not
like
a
two
or
three
bedroom
apartment
in
which
a
tenant
could
convert
one
bedroom
into
an
office.
Indeed,
it
appears
to
me
that
she
was
paying,
if
these
amounts
were
paid,
about
half
the
rent.
This
last
comment
brings
me
to
the
most
critical
thing
concerning
her
financial
statements
and
that
is,
there
is
no
evidence
that
the
amounts
were
paid.
She
did
not
produce
any
evidence
that
she
had
a
bank
account.
There
was
no
monthly
statement;
there
are
no
cancelled
cheques.
Indeed,
in
connection
with
her
employment
income,
in
the
last
four
months
of
1989,
when
the
maintenance
of
a
bank
account
might
have
helped
win
her
appeal
on
the
first
issue
concerning
the
payment
of
the
last
payroll
cheque,
she
said
she
did
not
have
a
bank
account.
I
believe
her.
I
take
her
at
her
word.
If
she
had
no
bank
account
in
the
last
weeks
of
December
1989
and
the
first
weeks
of
January
1990,
when
did
she
get
one?
If
she
did
not
get
a
bank
account
in
the
first
eight
months
of
1990,
how
did
she
go
about
paying
these
extraordinary
expenses
that
amount
to
—
I
will
not
say
$22,000
because
that
includes
depreciation
—
the
cash
outlays
come
to
$15,793.
That
is
a
significant
amount
of
money
for
any
person
to
pay
out
in
connection
with
a
business
over
an
eight
month
period
if
that
person
does
not
have
a
bank
account.
Then
I
could
consider
the
other
side.
Suppose
she
did
have
a
bank
account.
Why
was
it
not
produced
in
evidence?
Why
do
I
not
have
monthly
statements
and
cancelled
cheques
supporting
at
least
some
of
these
claimed
amounts?
The
appellant
said
that
when
Revenue
Canada
asked
for
verification
of
these
amounts
she
gave
them
the
documentation.
The
correspondence
was
entered
in
evidence,
and
I
do
not
intend
to
deal
with
it
now,
but
there
were
four
or
five
letters
exchanged
between
Revenue
Canada
and
the
appellant
in
the
period
March
to
June,
1993,
indicating
that
they
asked
for
documentation
and
did
not
get
it.
Indeed,
at
the
end
of
her
submissions
in
Court
today,
she
said
she
is
willing
to
submit
additional
documents
to
Revenue
Canada,
Taxation
if
the
Court
orders
her
to
do
so.
It
is
too
late
for
that.
The
correspondence
makes
it
clear
that
they
were
asking
for
those
documents
between
March
and
June,
1993
and
did
not
get
satisfactory
documents.
It
is
not
up
to
me
now
to
order
her
to
provide
them.
If
she
has
them
she
should
have
brought
them
with
her
to
Court.
I
find
against
the
appellant
on
this
second
issue
for
two
reasons.
Firstly,
I
think
she
has
not
proven
that
she
paid
the
expenses
of
$15,793.49
which
are
listed
in
Exhibit
R-6.
She
was
required
to
prove
those
expenses
because
in
the
Minister’s
reply
he
flatly
denied
that
those
amounts
were
paid.
I
put
a
higher
onus
on
the
appellant
because
she
is
an
accountant.
She
is
not
just
some
simple,
unsophisticated
taxpayer
who
wanders
into
Court
looking
for
relief.
She
knows
about
audits;
she
knows
about
accounting;
she
knows
about
verification
of
amounts
expended;
but
she
came
to
Court
basically
empty-handed
in
terms
of
verifying
any
of
these
outlays.
The
second
reason
on
which
I
would
find
against
her
on
this
issue
of
the
deductibility
of
the
loss
in
1990
is
that
I
think
she
had
no
business.
Her
intended
bookkeeping
business
was
in
the
development
stage.
She
did
not
have
any
clients
except
the
one
she
got
by
chance.
Normally
a
person
can
suffer
start-up
losses
and
deduct
them
where
there
is
an
ongoing
enterprise;
where
there
are
customers
or
clients
coming
in
the
door
or
phoning
to
obtain
services
or
writing
letters
with
instructions
to
come
and
do
certain
bookkeeping.
There
is
no
evidence
of
that
ebb
and
flow
of
commerce
in
what
the
appellant
claimed
was
the
business.
Indeed,
even
if
the
expenses
were
incurred,
and
I
doubt
that
they
all
were,
I
would
call
them
the
capitalization
of
an
enterprise
that
may
begin
some
day.
I
think
there
was
no
business
being
carried
on,
and
what
she
picked
up
from
the
Compact
company
was
basically
casual
employment.
But
even
if
it
was
taken
on
as
a
professional
client,
there
was
no
reasonable
expectation
of
profit
from
this
enterprise
in
the
fiscal
period
ending
August
31,
1990,
particularly
having
in
mind
the
fact
that
the
appellant
was
a
full-time
employee
during
the
first
four
months
of
that
fiscal
period.
Having
regard
to
the
expenses
she
incurred,
she
could
not
possibly
earn
a
profit
in
the
last
eight
months
of
that
fiscal
period
with
these
expenses
and
absence
of
clients,
save
for
Compact.
For
those
reasons,
I
would
hold
against
the
appellant
on
the
second
issue
and
dismiss
the
appeal.
Appeal
dismissed.
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