Delmer
E
Taylor:—These
are
appeals
heard
on
common
evidence
from
income
tax
assessments
for
the
year
1972.
The
matter
at
issue
is
the
claim
by
the
appellants
that
the
total
farming
loss
for
the
year
in
question
should
be
deductible
from
their
other
income,
whereas
the
Department
of
National
Revenue
has
applied
the
provisions
of
the
Income
Tax
Act
dealing
with
restricted
farm
losses,
and
disallowed
in
the
case
of
Fred
Goring
an
amount
of
$6,675.17,
and
in
the
case
of
Mr
Dennis
Goring
an
amount
of
$363.39.
The
contention
of
the
appellants
is
that
they
were
in
the
business
of
full-time
farming,
not
“hobby”
farming.
The
respondent
relies,
inter
alia,
upon
section
31
and
subsections
9(2)
and
248(1)
of
the
Income
Tax
Act,
RSC
1952,
chapter
148
as
amended
by
SC
1970-71-72,
chapter
63.
Mr
Fred
Goring
has
been
employed
since
about
1950
as
an
engineer
with
General
Motors
of
Canada
Limited
in
St
Catharines.
Mr
Dennis
Goring
(the
son
of
Mr
Fred
Goring)
has
for
several
years
been
employed
as
a
schoolteacher
by
the
Lincoln
County
Board
of
Education,
also
in
St
Catharines,
Ontario.
Although
neither
of
these
positions
requires
the
active
involvement
of
the
appellants
on
a
24
hour
per
day,
seven
day
per
week
basis,
they
cannot
in
any
way
be
classified
as
part-time
employment.
They
are
positions
regarded
by
the
employers,
I
would
be
quite
satisfied,
as
full-time
occupations,
leaving
only
the
normal
non-working
hours
available
to
the
appellants
for
the
pursuit
of
other
activities.
In
the
case
of
Mr
Dennis
Goring,
this
would
include
a
fairly
lengthy
summer
break.
The
income
of
the
two
appellants
in
the
year
in
question
from
such
employment
was
—
Mr
Fred
Goring
$14,339.51
and
Mr
Dennis
Goring
$6,818.02.
In
addition
Mr
Fred
Goring
filled
two
other
positions,
both
public,
one
on
the
Corporation
of
the
Town
of
Niagara-on-the-Lake,
and
the
other
on
the
Regional
Municipality
of
Niagara,
which
respectively
brought
him
amounts
of
$2,573.33
and
$3,333
for
his
efforts.
Gross
income
from
the
farming
operations
during
the
year
was
an
amount
of
$8,144.32,
and
total
expenses
attributable
thereto
amounted
to
$22,538.20,
leaving
a
loss
of
$14,393.88,
the
origin
of
this
appeal.
The
farm
property
in
question
consists
of
35
acres
with
an
address
as
Rural
Route
#4,
St
Catharines.
It
has
been
in
the
Goring
family
since
1784
and
became
the
property
of
Mr
Fred
Goring
in
1970,
after
the
death
of
his
father
and
mother.
Mr
Dennis
Goring
is
in
the
business
operation
of
the
farm
property
with
his
father.
Originally
a
very
productive
fruit
farm,
it
fell
into
disuse
and
after
its
acquisition
in
1970
by
Mr
Fred
Goring,
he
has
attempted
to
restore
it.
Its
use
in
the
year
in
question
was
a
combination
of
general
farming,
fruit
farming,
and
raising
and
boarding
of
horses.
It
is
now
(in
1976)
almost
exclusively
used
in
a
manner
to
support
the
raising
and
boarding
of
race
horses.
There
was
some
question
raised
by
counsel
for
the
respondent
regarding
the
use
of
the
property
for
purposes
of
boarding
horses,
and
the
degree
to
which
this
should
be
regarded
as
farming,
but
the
evidence
indicated
the
direction
taken
by
the
appellants
would
eventually
lead,
if
successful,
to
use
of
the
property
to
the
maximum
extent
possible
by
their
own
stock
of
horses.
The
Board
accepts
that
in
this
set
of
circumstances,
there
being
two
horse-racing
tracks
in
the
general
area
of
the
farm,
this
should
qualify
as
farming.
The
matter
remains
regarding
the
nature
and
extent
of
the
farming,
and
the
full-time
or
part-time
characteristics
associated
with
it.
To
be
in
the
business
of
farming,
thereby
establishing
farming
as
a
chief
source
of
income,
it
would
appear
to
me
that
there
should
be
some
indication
that
the
matter
has
been
approached
by
those
involved
in
a
very
objective
and
calculating
manner;
and
that
there
be
some
evidence
in
support
of
the
expectation
of
profits
in
the
future,
based
on
a
reasonable
anticipation
of
the
investment
required,
farm
production
capability,
and
market
potential
for
the
products
involved.
For
a
taxpayer
to
enter
into
any
form
of
farming
without
such
a
fairly
complete
analysis
along
these
lines
does
not
lend
much
support
to
a
claim
that
the
venture
was
intended
as
a
main
source,
and
eventually
perhaps
the
only
source,
of
income.
Such
an
approach
would
establish
a
rationale,
and
the
parameters
within
which
one
might
anticipate
early
operating
losses,
and
probably
even
other
losses
arising
on
a
periodic
basis
after
the
first
development
period.
Without
such
a
plan
or
guide,
one
could
not
realistically
anticipte
improvement,
but
only
hope
for
it:
and
although
hard
work
and
conscientious
effort
would
likely
be
evidenced,
these
factors
alone
would
not
be
sufficient
in
my
opinion
to
support
a
case
for
Classifying
the
venture
as
full-time
farming.
In
this
case
there
was
no
evidence
provided
by
the
appellants
which
could
lead
me
to
the
conclusion
that
such
a
study
or
survey
of
the
situation
and
prospects
had
been
made.
Under
circumstances
where
no
such
predetermined
program
existed,
the
alternative
evidence
which
might
be
put
forward
in
support
of
the
complete
deductibility
of
early
years
operating
losses
would
be
the
production
of
net
operating
income
within
a
reasonable
period
of
time.
It
is
recognized
that
"a
reasonable
period
of
time”
may
be
difficult
to
determine,
but
in
this
case
it
should
be
noted
that
although
there
was
limited
evidence
brought
forward
that
at
least
gross
revenue
from
the
farm
was
increasing
during
current
periods,
there
was
also
the
evidence
that
operating
losses
were
continuing
at
a
substantial
level.
So
here
also
the
appellants
have
fallen
short
in
factual
data
to
support
an
intent
and
a
program
for
the
purpose
of
gaining
or
producing
income.
There
was
considerable
evidence
of
a
laudable
effort
to
rehabilitate
the
property
and
turn
it
into
a
base
for
the
family
estate,
and
the
same
evidence
also
indicated
strongly
the
motivation
for
this
effort
to
be
both
a
a
love
of
rural
life
and
farming
as
an
occupation,
as
well
as
a
deep
and
understandable
attachment
to
this
particular
homestead
property.
It
is
evident
to
me
that
it
is
at
least
partially
in
recognition
of
these
latter
human
feelings
that
the
Income
Tax
Act
does
contain
the
provisions
in
section
31,
permitting
the
deductibility
of
a
portion
of
the
loss
in
the
year
in
which
it
it
is
incurred
(up
to
a
maximum
of
$5,000)
as
a
a
“restricted
farm
loss”.
In
paragraph
111
(1)(c)
some
flexibility
is
also
provided
to
the
taxpayer
in
taking
advantage
of
the
loss
amounts
in
excess
of
the
“restricted
farm
loss”
against
profits
earned
during
other
periods
of
the
farm
operation
even
though
there
is
not
sufficient
evidence
of
a
planned
program,
or
of
current
results
to
support
the
proposition
at
this
time.
It
is
in
recognition
of
this
inbetween
situation
that
the
Minister
has
provided,
in
the
Act,
the
relevant
provisions
dealing
with
restricted
farm
losses.
The
alternative
would
be
to
regard
the
operation
as
merely
the
base
for
a
personal
retreat,
recreation
or
hobby.
In
my
opinion
there
is
no
evidence
to
establish
that
the
expenses
were
incurred
in
1972
in
a
reasonable
expectation
of
producing
income.
At
the
same
time
it
would
be
manifestly
improper
not
to
regard
the
operation
as
farming,
and
thereby
to
deny
the
appellants
the
financial
encouragement
of
the
annual
restricted
farm
loss
deduction
against
other
income.
The
Department
of
National
Revenue
has
made
an
appropriate
assessment
of
the
situation
of
the
appellants
in
the
year
under
review.
The
appeals
are
dismissed.
Appeals
dismissed.
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