Christie
J.T.C.C.:
—
These
appeals
are
governed
by
the
informal
procedure
provided
for
under
section
18
and
following
sections
of
the
Tax
Court
of
Canada
Act.
The
years
under
appeal
are
1991,
1992,
1993.
The
issue
is
whether
in
computing
his
income
for
those
years
the
appellant
is
entitled
to
deduct
claimed
rental
losses
of
$13,633.42,
$11,293.76,
$11,980.00.
In
reassessing
the
appellant’s
liability
for
income
tax
in
respect
of
the
years
just
mentioned
the
Minister
of
National
Revenue
(the
“Minister”)
disallowed
the
deductions.
Paragraph
7
of
the
Reply
to
the
Notice
of
Appeal
reads:
7.
In
so
reassessing
the
Appellant,
the
Minister
made
the
following
assumptions
of
fact:
(a)
the
facts
hereinbefore
admitted
or
stated;
(b)
in
December
1989,
the
Appellant
purchased
a
two-storey
detached
house
located
at
10
Thornton
Avenue,
Toronto,
Ontario
(the
‘Property’),
which
was
his
principal
residence;
(c)
during
1991,
1992
and
1993,
the
Appellant
rented
part
of
the
Property
to
his
father
at
$600.00
per
month;
(d)
during
1991,
1992
and
1993,
the
Appellant
reported
rental
income,
expenses
and
losses
as
follows:
1991
|
|
INCOME
|
EXPENSES
|
LOSSES
|
$7,200.00
|
$27,778.16
|
|
Less
personal
portion
|
6,944
54
|
|
|
$20,833.62
|
|
|
$13,633.62
|
1992
|
|
INCOME
|
EXPENSES
|
|
|
LOSSES
|
|
$7,200.00
|
$24,658.36
|
|
Less
personal
portion
|
6,164.60
|
|
|
$18,493.76
|
$11,293.76
|
1993
|
|
INCOME
|
EXPENSES
|
LOSSES
|
|
$7,200.00
|
$25,574.26
|
|
Less
personal
portion
|
6.393.57
|
|
|
$19,180.69
|
$11,980.69
|
(e)
the
Appellant
reported
losses
from
renting
the
Property
in
other
years
as
follows:
YEARS
|
LOSSES
|
1990
|
$10,494.00
|
1994
|
$
6,374.00
|
(f)
the
Appellant
rented
part
of
the
Property
to
help
defray
the
cost
of
maintaining
his
principal
residence;
(g)
the
Appellant
did
not
incur
the
expenses
in
the
1991,
1992
and
1993
taxation
years
to
maintain
a
bona
fide
rental
property;
(h)
the
rental
expenses
in
excess
of
the
amounts
allowed
were
not
made
or
incurred
or
if
made
and
incurred
were
not
made
for
the
purpose
of
gaining
or
producing
income
from
business
or
property;
(i)
the
Appellant
had
no
reasonable
expectation
of
profit
from
the
Property
during
the
1991,
1992
and
1993
taxation
years;
(j)
the
rent
charged
was
insufficient
to
cover
the
mortgage
interest
expenses
incurred;
(k)
the
rental
expenses
were
personal
or
living
expenses
of
the
Appellant.
The
only
witness
at
trial
was
the
appellant.
His
evidence
in
chief
is
that
he
purchased
his
home
in
December
1989
for
$219,000.00.
It
was
mortgaged
to
secure
a
loan
in
the
amount
of
$180,000.00.
The
home
consists
of
a
basement
and
two
floors.
The
basement
and
main
floor
are
530
square
feet
and
the
second
floor
is
430
square
feet.
The
appellant
placed
in
evidence
a
document
showing
allocation
of
space
as
between
his
tenant
and
himself.
The
tenant
was
his
father.
It
reads:
Allocation
based
on
square
footage
Tenant
Personal
Total
ist
floor
Kitchen
|
85
|
85
|
170
|
Living
room
|
100
|
100
|
200
|
Washroom
|
15
|
15
|
30
|
Hallway
|
15
|
15
|
30
|
Bedroom
|
100
|
©
|
100
|
|
315
|
215
|
230
|
2nd
floor
|
|
Hallway
|
50
|
50
|
100
|
Washroom
|
25
|
25
|
50
|
Bedroom
|
130
|
0
|
130
|
Master
bedroom
Q
|
150
|
110
|
|
295
|
225
|
430
|
|
520
|
440
|
960
|
Allocation
|
54.17%
|
45.83%
|
100.00%
|
Assume
|
50.00%
|
50.00%
|
|
The
appellant’s
returns
of
income
for
1991,
1992,
1993
are
in
evidence
and
each
includes
a
statement
of
real
estate
rental.
They
verify
the
figures
in
paragraph
7(d)
of
the
Reply
to
the
Notice
of
Appeal.
The
fact
that
the
appellant’s
tenant
was
his
father
suggests
a
personal
motivation
in
relation
to
the
partial
renting
of
his
home.
In
the
circumstances
the
appellant
is
required
to
establish
that
when
objectively
regarded
a
reasonable
expectation
of
profit
existed
in
the
years
under
ap-
peal.
This
has
not
been
done.
Indeed
the
whole
of
the
evidence
indicates
that
no
such
expectation
existed.
The
figures
speak
for
themselves.
For
example,
in
1991
income
was
34.5
per
cent
of
claimed
expenses.
The
same
percentages
for
1992
and
1993
are
39
per
cent
and
37.5
per
cent
respectively.
Although
the
foregoing
is
sufficient
to
dispose
of
these
appeals
in
favour
of
the
respondent,
the
appellant’s
own
view
about
expectation
of
profit
is
reflected
in
the
following
questions
that
were
asked
by
counsel
for
the
respondent
in
cross-examination
and
the
answers
given
by
the
appellant:
Q.
Okay.
You
said
you
bought
it
(i.e.
the
appellant’s
home)
for
investment
purposes.
A.
Yes.
Q.
But
each
year
you
are
showing
a
loss.
What
year
did
you
expect
to
begin
earning
a
profit?
A.
To
earn
profit?
I
didn’t
expect
to
earn
profit.
It
was
an
investment
made
to
the
house
for
something
to
have
in
the
future.
I
started
in
that
case
of
renting
it
so
in
the
future
hopefully
have
a
plan
or
house
to
live
in.
Basically
that’s
what
I
wanted.
Q.
So,
you
purchased
it
as
a
house
to
live
in?
A.
Yes,
in
the
future.
Q.
And
you
didn’t
foresee
a
profit?
A.
No.
It’s
just
for
an
investment
for
the
future,
just
to
have
something.
Q.
As
a
personal?
A.
As
a
personal
investment.
The
appeals
are
dismissed.
Appeal
dismissed.