The
Chairman:—The
appeal
of
John
Barnard
Photographers
Ltd
is
from
a
reassessment
dated
January
25,1978,
by
which
the
Minister
disallowed
the
deduction
of
$1,669.51
and
$3,234.65
claimed
for
boat
expenses
and
further
disallowing
the
amounts
of
$700
and
$1,000
for
car
expenses
in
each
of
the
taxation
years
1975
and
1976
respectively.
By
Notice
of
Reassessment
dated
September
7,
1978
the
Minister
allowed
the
car
expenses
previously
disallowed.
The
Issue
The
issue
therefore
is
whether
the
expenses
incurred
by
the
appellant
relative
to
the
boat
in
the
pertinent
taxation
years
were
properly
disallowed.
Summary
of
Facts
The
appellant
company,
whose
principal
shareholder
is
John
Lynn
Barnard,
is
engaged
in
the
business
of
illustrative
photography
and
publishing
and
is
recognized
as
being
a
successful
businessman.
Mr
Barnard
had
trained
as
a
photographer
in
Europe
and
was
employed
by
such
publications
as
“House
and
Garden’’,
“Vogue”
and
“Time
Magazine”.
Some
twenty
years
ago
Mr
Barnard
organized
his
own
business
and
published
in
different
forms
photographs
of
various
scenes
of
interest.
Within
eight
years
his
business
grossed
one
quarter
of
a
million
dollars
in
revenue.
The
appellant
company
expanded
by
diversifying
its
photographic
publications
to
include
such
things
as
post
cards,
calendars
and
mapping
systems.
Special
photographic
publications
were
made
for
the
Chamber
of
Commerce
and
a
book
on
the
City
of
Victoria.
Photographs
of
the
Butchart
Gardens
were
also
published
by
the
appellant.
(Exhibits
A-1,
A-2
and
A-3).
In
1975,
Mr
Barnard
conceived
the
idea
of
having
the
appellant
publish
a
fishing
almanac
for
the
use
of
sportsmen
on
the
West
Coast.
This
almanac
is
to
contain
information
as
to
the
movement
of
various
species
of
fish
at
different
periods
of
a
year
and
illustrations
by
means
of
photography
as
to
the
different
methods
of
catching
fish
depending
on
the
season
in
which
the
fishing
is
done.
A
considerable
amount
of
research
is
required
before
the
almanac
can
be
published.
For
that
purpose,
the
appellant
company
purchased
a
boat
for
some
$13,000
(Exhibit
A-4),
and
used
it
to
accumulate
information
for
the
fishing
almanac.
Mr
Barnard
estimated
the
cost
of
publishing
the
almanac
between
$12,000
and
$15,000
and
expects
a
return
of
at
least
double
that
amount.
The
appellant
company’s
publications
are
aimed
particularly
at
the
tourist
trade
which
in
Victoria
is
the
largest
industry.
The
fishing
almanac
is
considered
by
Mr
Barnard
as
an
important
publication
for
tourists
and
the
information
it
is
to
contain
on
the
weather,
the
feeds,
the
birds
and
the
movement
of
fish
can
only
be
obtained
by
actual
experience,
recording
data
and
photographing
from
a
boat.
The
boat
chosen
for
the
purpose
is
a
23-foot
all-weather
boat,
considered
as
a
commercial
boat
by
the
vendors,
and
used
by
such
agencies
as
the
police
and
coast
guards.
Although
the
appellant
kept
no
log
of
the
boat’s
movements
he
testified
that
it
had
operated
in
research
work
for
some
120
hours.
Very
little
use,
if
any,
was
made
of
the
boat
for
pleasure.
The
boat
is
moored
in
front
of
Mr
Barnard’s
waterfront
home,
which
is
where
his
office
and
studio
are
located
and
his
equipment
is
kept.
Mr
Barnard
testified
that
the
boat
was
chosen
because
of
its
practical
and
safety
features
since
the
equipment
he
used
for
research
was
valued
at
$10,000.
In
disallowing
the
boat
expenses,
the
respondent
relied
on
paragraph
18(1
)(l)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended,
which
reads:
(1)
In
computing
the
income
of
a
taxpayer
from
a
business
or
property
no
deduction
shall
be
made
in
respect
of
(I)
an
outlay
or
expense
made
or
incurred
by
the
taxpayer
after
1971,
(i)
for
the
use
or
maintenance
or
property
that
is
a
yacht,
a
camp,
a
lodge
or
a
golf
course
or
facility,
unless
the
taxpayer
made
or
incurred
the
outlay
or
expense
in
the
ordinary
course
of
his
business
of
providing
the
property
for
hire
or
reward,
or
(ii)
as
membership
fees
or
dues
(whether
initiation
fees
or
otherwise)
in
any
club
the
main
purpose
of
which
is
to
provide
dining,
recreational
or
sporting
facilities
for
its
members;
or
The
respondent
contends
that
the
word
“yacht”
which
is
not
defined
in
the
Income
Tax
Act
but
which
the
dictionary
meaning
of
the
word
(particularly
the
French
definition)
tends
to
relate
“yacht”
to
a
pleasure
craft,
is
the
definition
to
be
applied
to
the
appellant’s
boat
and,
therefore,
it
comes
within
the
prohibition
of
paragraph
18(1)(l)
of
the
Income
Tax
Act.
Counsel
for
the
respondent
suggests
that
the
design
of
the
boat
is
that
of
a
pleasure
craft
and
not
that
of
a
work
boat.
She
also
claims
that
Mr
Barnard
used
it
for
fishing.
It
appears
to
me
that
paragraph
18(1
)(l)
is
aimed
at
recreational
facilities
including
a
yacht
used
for
pleasure.
I
do
not
believe
that
the
design
of
a
boat
can
by
itself
determine
whether
or
not
a
boat
is
a
pleasure
craft.
The
only
valid
criteria,
as
I
see
it,
in
determining
whether
or
not
a
boat
is
a
yacht
within
the
meaning
of
paragraph
18(1
)(l)
is
the
use
that
is
generally
made
of
it.
The
respondent
claims
that
Mr
Barnard
used
the
boat
for
fishing.
In
his
testimony,
Mr
Barnard,
who
was
a
credible
witness,
admitted
he
used
the
boat
to
gather
information
for
his
fishing
almanac
and
fishing
was
part
of
the
research
he
was
conducting.
I
do
not
believe
that
fishing
in
those
circumstances
is
very
different
from
commercial
fishing
and
in
either
case
the
boat
from
which
the
fishing
is
done
is
not,
in
my
opinion,
a
pleasure
craft
or
a
yacht,
regardless
of
its
design.
Counsel
for
the
appellant
contends
that
the
boat
was
purchased
for
the
purpose
of
carrying
out
research
on
the
fishing
almanac
project
and
was
in
fact
used
for
that
purpose
only.
Counsel
claims
that
the
boat
was
as
necessary
a
tool
in
carrying
on
the
appellant’s
business
as
were
the
use
of
helicopters
and
planes
in
photographing
sites
and
scenes
which
the
appellant
could
not
photograph
otherwise.
The
whole
of
paragraph
18(1)(l)
deals
with
the
use
of
recreational
facilities
as
such
and
the
administrative
difficulties
of
dealing
with
claims
which
have
overtones
of
business
expenditures
in
relation
to
these
recreational
facilities
is
reflected
in
the
Department
of
National
Revenue
Interpretation
Bulletin
IT-148R.
However,
I
do
not
believe
that
the
intent
of
the
legislator
was
to
encompass
within
the
meaning
of
the
word
“yacht”
in
paragraph
18(1)(l)
anything
that
had
a
bow,
a
stern,
a
hull,
a
cabin
and
a
motor,
regardless
of
the
use
it
was
put
to.
I
conclude
that
paragraph
18(1)(l)
does
not
apply
to
the
facts
of
this
appeal
and
that
the
expenses
claimed
in
relation
to
the
boat
were
business
expenses
necessary
in
the
appellant’s
operations
and
are
deductible.
Conclusion
The
appeal
is
therefore
allowed
and
the
matter
referred
back
to
the
Minister
for
reassessment
on
that
basis.
Appeal
allowed.
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