Brulé
J.T.C.C.:
—
These
two
appeals
were
heard
on
common
evidence
and
arose
after
the
appellants
were
reassessed
for
the
1991
and
1992
taxation
years
where
the
Minister
of
National
Revenue
disallowed
certain
deductions
from
income.
Facts
The
appellant,
John
S.
Rumbles,
gave
evidence
in
a
very
forthright,
believable
manner.
He
had
a
good
knowledge
of
the
business
of
woodcutting
and
decided
to
pursue
this
in
addition
to
being
a
full-time
employee
of
Dofasco.
In
order
to
carry
out
the
business
a
dump
truck
was
purchased
in
partnership
with
the
spouse.
This
created
a
great
expense.
During
the
years
in
question
of
1991
and
1992
very
little
use
of
the
dump
truck
was
made
for
wood-cutting
but
this
was
rather
a
dump
truck
business.
With
decreasing
receipts
to
the
appellants
from
the
business
they
decided
to
abandon
the
project.
Issue
The
issue
is
whether
the
appellants
had
a
reasonable
expectation
of
profit
from
the
business
in
the
1991
and
1992
taxation
years.
Appellants’
Position
It
was
argued
that
the
appellants
wanted
to
develop
a
business
and
to
do
so
it
was
necessary
to
acquire
a
truck.
Unfortunately
the
market
dried-up
and
the
economy
was
bad
but
the
appellants
still
believed
they
had
a
reasonable
expectation
of
profit.
Respondent's
Position
While
it
was
conceded
that
the
appellants
worked
hard
to
make
a
profit
in
the
business
they
abandoned
their
efforts
too
early
to
show
there
was
a
chance
of
profit.
Counsel,
in
argument,
relied
largely
on
the
definition
of
reasonable
expectation
of
profit
in
Moldowan
v.
R.
(sub
nom.
Moldowan
v.
Minister
of
National
Revenue)
(sub
nom.
Moldowan
v.
The
Queen),
[1978]
1
S.C.R.
480,
[1077]
C.T.C.
310,
77
D.T.C.
5213
and
the
case
of
Potulicki
v.
R.
(sub
nom.
Potulicki
v.
Canada),
[1993]
1
C.T.C.
417,
93
D.T.C.
5196
(F.C.T.D.).
In
the
latter
case
the
appellant
ceased
to
operate
his
business
and
the
Court
concluded
that
there
was
no
reasonable
expectation
of
profit
and
hence
the
expenses
claimed
were
not
allowed.
Conclusion
Here
the
appellants
were
somewhat
short
of
capital
at
the
outset.
The
purchase
of
a
truck
created
a
burden
and
it
is
not
unimportant
that
the
business
was
only
a
sideline
endeavour,
Mr.
Rumbles
holding
a
full-time
job
at
Dofasco.
Lacking
the
full-time
in
the
business
and
the
market
declining
the
project
was
abandoned
with
the
result
that
there
was
no
reasonable
expectation
of
profit.
Because
of
this
the
appeals
are
dismissed.
Appeal
dismissed.
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