Bonner,
TCJ
[ORALLY]:—I
will
deal
first
with
the
claim
of
Mr
Mihajlovic
to
deduct
the
expenses
listed
in
paragraphs
4(c)
and
(e)
of
the
reply
to
notice
of
appeal.
I
find
the
evidence
far
too
vague
to
be
persuasive.
No
vouchers
were
produced.
It
seems
rather
improbable
that
business
considerations
alone
led
the
appellant
to
conclude
that
it
was
desirable
to
spend
$650
in
one
year
and
$350
the
next
year
to
entertain
job
placement
agents.
I
would
assume
that
the
placement
agencies
which
provide
workers
for
companies
performing
engineering
work
are
paid
directly
for
the
service
they
provide.
In
the
absence
of
detailed
evidence
as
to
the
precise
relationship
between
the
appellant
and
the
person
entertained
and
as
to
the
necessity
for
entertainment
at
all
and
on
the
scale
claimed
here,
I
cannot
find
that
the
appellant
has
proved
either
expenditure
or
purpose.
Similarly,
I
doubt
that
the
appellant
found
it
necessary
to
spend
the
amounts
claimed
for
publications
in
which
he
said
that
he
searched
for
job
advertisements.
The
costs
were
described
in
the
tax
returns
as
subscriptions,
but
the
appellant
could
not
identify
any
magazine
to
which
he
subscribed.
It
was
not
shown
that
Mr
Mihajlovic’s
apartment
served
any
function
in
the
incomeearning
process.
Mr
Mihajlovic
was
provided
with
adequate
facilities
at
the
premises
of
the
firms
for
which
he
worked.
Thus,
“studio”
claims
fail.
I
doubt
that
the
appellant
spent
$115
in
one
year
and
$35
in
the
other
in
mailing
résumés
when
he
had
an
agency
looking
for
work
for
him.
The
vagueness
in
the
evidence
and
the
absence
of
any
vouchers,
coupled
with
the
probability
of
exaggeration,
leads
me
to
find
that
the
appellant
has
not
proved
entitlement
to
the
deductions
claimed
on
the
balance
of
probabilities.
My
previous
comments
apply
mutatis
mutandis
to
the
evidence
given
by
Mr
Mihajlovic
in
support
of
his
wife’s
appeal.
His
personal
knowledge
of
most
of
his
wife’s
expenditures
was
minimal.
The
only
area
in
which
Mr
Mihajlovic
had
personal
knowledge
of
the
expenditures
made
by
his
wife
was
in
relation
to
the
claims
for
studio
and
car
expenses.
I
can
give
no
weight
to
the
hearsay
evidence
entered.
It
is
necessary
only
to
add
that
the
claims
for
car
expenses
and
parking
tickets
were
founded
on
use
made
by
Mrs
Vasiljevic
in
travelling
from
home
to
work.
Since
I
cannot
find
that
the
home
played
any
part
in
her
income-earning
process,
her
use
of
the
automobile
must
be
regarded
as
a
personal
expense.
I
turn
next
to
the
losses
from
the
horse-racing
operation.
It
was
carried
on
in
part
by
Mr
Mihajlovic
alone
and
in
part
in
concert
with
his
spouse.
Mr
Mihajlovic’s
evidence
does
not
persuade
me
that
there
was
any
reasonable
expectation
of
profit.
Beyond
the
bald
assertion
that
he
had
some
experience
with
horses
in
Yugoslavia,
Mr
Mihajlovic
gave
no
evidence
as
to
his
qualifications
in
the
harness-racing
business.
Although
there
was
some
evidence
as
to
profits
in
1982
and
1983,
those
profits
were
rather
small
when
compared
with
losses
of
prior
years.
It
was
not
shown
that
the
losses
were
due
to
start-up
costs
which
could
be
regarded
as
unlikely
to
be
repeated.
Overall,
the
operation
appears
to
have
been
an
uncontrolled
gamble.
I
heard
no
evidence
which
would
lead
me
to
conclude
that
an
informed
and
rational
observer
would
in
1977
and
1978
have
regarded
the
operation
as
one
more
likely
than
not
to
generate
profits
at
appropriate
levels
within
the
foreseeable
future.
I
say
“appropriate
levels”
because
I
am
conscious
that
there
were
profits,
but
they
were
rather
small
in
relation
to
the
prior
losses
and
they
appeared
to
be
of
an
unstable
nature.
When
I
say
“unstable”
I
mean
that
there
is
no
likelihood
demonstrated
that
profits
could
be
expected
to
continue
for
subsequent
years.
The
appeals
of
both
appellants
therefore
fail
on
this
branch.
Both
appellants’
appeals
will
therefore
be
dismissed.
Appeals
dismissed.
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