Hugessen,
J.A.:—While
it
is
trite
law
that
a
taxpayer
may
so
arrange
his
business
as
to
attract
the
least
possible
tax
(see
Duke
of
Westminster's
case,
[1936]
A.C.
1),
it
is
equally
clear
in
our
view
that
the
reduction
of
his
own
tax
cannot
by
itself
be
a
taxpayer's
business
for
the
purpose
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
To
put
the
matter
another
way,
for
an
activity
to
qualify
as
a"
business”
the
expenses
of
which
are
deductible
under
paragraph
18(1)(a)
it
must
not
only
be
one
engaged
in
by
the
taxpayer
with
a
reasonable
expectation
of
profit,
but
that
profit
must
be
anticipated
to
flow
from
the
activity
itself
rather
than
exclusively
from
the
provisions
of
the
taxing
statute.
The
appellant
appeals
the
dismissal
by
the
trial
division
of
an
assessment
whereby
the
Minister
disallowed
claimed
deductions
for
business
expenses.
Those
expenses
are
said
to
be
"advance
royalty
payments’
amounting
to
$40,000,
being
$20,000
in
respect
of
each
of
two
licence
areas
for
the
marketing
and
sale
in
the
United
States
of
speed
reading
courses
the
copyright
to
which
was
held
by
Applied
Research
Ltd.,
an
offshore
company.
While
those
licences
each
called
for
the
payment
of
$20,000
in
advance
as
royalties,
the
scheme
as
devised
(apparently
by
Applied
Research
and
a
number
of
related
companies
with
which
the
trial
judge
found
it
not
to
be
dealing
at
arm's
length)
did
not
require
the
appellant
then
or
ever
to
put
up
any
cash
from
his
pocket.
The
actual
marketing
of
the
speed
reading
courses
was
supposed
to
be
done
by
Omni
Educational
Marketing
Corp.
(one
of
the
related
companies)
which
provided
the
appellant
with
a"
performance
bond"
in
the
form
of
a
payment
of
$17,500.
That
$17,500
had
in
fact
come
from
Applied
Research
through
the
vehicle
of
another
related
company,
Cawin
Financial
Corporation.
The
balance
of
the
$20,000
with
regard
to
each
licence
area
was
provided
to
appellant
by
a
loan
from
yet
another
related
company,
H.N.
Thill
&
Associates,
which
had
in
turn
also
received
the
necessary
funds
from
Applied
Research.
Notwithstanding
that
the
loan
from
Thill
to
appellant
was
evidenced
by
a
promissory
note,
the
trial
judge
found
as
a
fact
that
it
was
only
payable
as
and
when
appellant
obtained
a
refund
of
income
tax
from
Revenue
Canada;
appellant
contests
this
finding
but
there
is
no
doubt
that
there
was
evidence
to
support
it
and
that
we
should
not
interfere
with
it.
The
upshot
of
all
these
arrangements
was
not
only
that
the
appellant
made
no
actual
investment
in
the
marketing
scheme,
but
that
the
circularity
and
simultaneity
of
the
transactions
between
the
related
companies
resulted
in
there
being
in
effect
no
actual
capital
or
credit
engaged
by
anyone
in
the
so-
called
business.
The
learned
trial
judge
set
it
out
in
diagrammatic
terms
as
follows:
[not
reproduced].
Appellant's
counsel
conceded
that
this
representation
was
substantially
correct.
In
our
view
the
judgment
under
appeal
is
based
on
the
trial
judge's
findings
of
fact,
notably
that
the
appellant
never
intended
to
carry
on
the
business
of
marketing
the
speed
reading
course
himself
or
through
Omni,
that
neither
the
appellant
nor
Omni
had
the
means
or
the
ability
to
do
so,
and
that
the
sole
purpose
of
the
scheme
was
to
obtain
tax
refunds
and
nothing
else.
Those
findings
were
solidly
based
in
the
evidence.
Indeed
it
is
difficult
to
see
how
any
contrary
findings
could
have
been
made
without
error.
That
being
so,
it
is
clear
that
the
claimed
deduction
was
not
in
respect
of
a
business
and
that
the
trial
judge
was
correct
to
uphold
the
Minister's
assessment.
The
appeal
will
be
dismissed
with
costs.
Appeal
dismissed.
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