Bonner,
M
J
(Orally):—The
appellant
appeals
from
assessments
of
income
tax
for
the
1977,
1978
and
1979
taxation
years.
On
assessment,
the
Minister
disallowed
the
appellant’s
claims
to
restricted
farm
loss
deductions.
The
sole
question
is,
therefore,
whether
the
appellant,
during
the
relevant
period,
had
a
reasonable
expectation
of
profit
from
his
farming
operations.
Farming
was
a
secondary
activity
of
the
appellant.
During
the
relevant
time
he
was
employed
full
time
as
an
engineer.
He
had
no
farming
experience
prior
to
the
purchase
of
the
farm
in
the
summer
of
1977.
His
wife
did.
She
had
grown
up
on
a
farm.
It
cannot
be
said
on
the
evidence
before
me
that
the
appellant,
at
the
time
of
purchase
of
the
farm,
had
any
firm
plans
as
to
the
type
of
farming
in
which
he
proposed
to
engage.
One
of
the
appellant’s
main
concerns
at
the
outset
was
to
determine
what
sort
of
operation
would
generate
sufficient
gross
revenue
to
entitle
him
to
a
farm
property
tax
credit.
Without
doubt,
the
appellant
desired
to
develop
a
farming
operation
which
was
profitable
but,
equally
without
doubt,
he
recognized
that,
having
regard
to
the
limitations
on
the
capital
he
could
employ,
the
size
of
the
farm
and
the
time
he
had
available,
it
was
unlikely
that
the
eventual
profit
would
ever
be
large.
Following
the
purchase,
the
appellant
and
his
wife
took
several
educational
courses
to
establish
and
enrich
their
knowledge
of
farming.
They
made
prodigious
efforts
and
investments
of
time
in
improving
the
farm
as
a
whole
by
working
on
the
buildings,
fences
and
land,
and
in
operations
of
a
current
revenue-generating
nature.
They
have
improved
and
continue
to
improve
the
quality
and
size
of
the
goat
herd
and
of
the
poultry
operation.
They
have
acquired
a
range
of
farm
machinery
at
the
most
advantageous
prices
available
and
have
stringently
controlled
costs
in
making
capital
improvements.
Barring
set-backs
in
revenue-generating
activities,
and
barring
any
substantial
increase
in
the
cost
of
mortgage
money,
they
can
look
forward
in
1982
to
a
break-even
position
with
perhaps
even
a
small
profit.
During
the
years
in
question,
however,
I
cannot
find
that
the
appellant
had
a
reasonable
expectation
of
profit.
The
test
is,
I
emphasize,
objective
and
not
subjective.
It
was
evident
during
the
period
in
question
that
the
scale
of
operations
would
be
limited
by
the
restricted
capital,
the
time
available
and
by
the
size
of
the
farm.
The
absence
of
any
clear
plan
as
to
the
type
of
operation
to
be
developed
makes
it
evident
that
during
the
first
three
years
or
so
it
could
not
have
been
said,
with
any
reasonable
degree
of
confidence,
that
future
operations
would
produce
profit.
The
operation
was
one
which,
I
infer
on
all
of
the
evidence
before
me,
was
essentially
at
the
outset
experimental
in
nature.
The
great
diligence
shown
by
the
appellant
and
his
wife
does
not
alter
that
fundamental
characteristic
of
the
operation.
It
follows,
therefore,
that
the
appeals
must
be
dismissed.
I
should
emphasize,
however,
that
my
finding,
that
in
the
years
under
appeal
the
requisite
expectation
was
absent
is
founded
on
a
conclusion
based
on
the
experimental
nature
of
the
operation
and
other
factors
present
during
the
three
years
in
question.
It
may,
therefore,
be
useful
to
observe
that
those
factors
may
not
have
remained
present
in
the
subsequent
years
when
the
appellant
had
accumulated
some
capital
and
had
more
experience.
My
conclusion
should,
therefore,
not
be
taken
as
intended
to
apply
to
subsequent
years.
Appeal
dismissed.
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