Taylor T.C.J.:
1 This is an appeal heard in London, Ontario, on June 12, 1997, against assessments under the Income Tax Act (the “Act”) for the 1992 and 1993 taxation years in which the Respondent disallowed amounts of $28,474.08 and $31,693.84 respectively claimed as “business losses”, by reducing such losses to $1 for 1992 and $2,698 for 1993.
2 I say at the outset that I see little merit — from a legal viewpoint — in the mathematical exercise by the Respondent which resulted in the loss amounts noted above which were allowed to the Appellant. However, that is not my problem at this trial, and I can only assume that in some perverse, even reverse, way the Respondent felt impelled to use the latitude apparently seen in Section 67 of the Act to make some concession. The result of that concession, of course, is the general admission by the Respondent that at the minimum there was a “reasonable expectation of profit” in the two particular “ventures” allegedly entered into by the Appellant, from which some small revenue was derived, and which were termed by the Appellant as “Stiles Office Supplies” and “Barber-Ellis Paper Distribution” but which also included in 1993 a very substantial “training” charge for a separate venture termed “Xantrax”. A simple review of these two operations to include an appropriate charge, (even the most modest percentage of the two main amounts at issue, items termed “consulting and amounts fees” of $29,500 for 1992 and $23,000 for 1993) would result in huge losses, not the minimal losses allowed. In my view the Respondent could refrain from such esoteric re-writings of history, even to accomplish an otherwise laudable objective of being fair to the Appellant, if that was the purpose. Enough of that however, even though that exercise has made the task more difficult for Counsel for the Respondent to portray the facts to the Court, and for the Court to reduce the appeal to a basic question for decision purposes. The Appellant denied consistently that she was in the businesses labeled as “Stiles Office Supplies” and “Barber-Ellis Paper Distribution”, and conversely that her business was that described in the Notice of Appeal, which was over arching and all encompassing to any of the individual operations (including the two noted above) which were examined and analyzed. I quote from her Notice of Appeal:
— In order to carry out her plan, the Appellant established a sole proprietorship which was registered with the Ministry of Consumer and Commercial Relations on June 29, 1992 under the name D.S. Enterprises. In addition, the Appellant established a tank account under the name D.S. Enterprises. In addition the Appellant deposited the sum of $20,000.00 in the said bank account in order to fund the activities of the sole proprietorship.
— In order to carry out her plan, the Appellant hired Ray Giles, her fiancé. Pursuant to the agreement between the Appellant and Mr. Giles, it was Mr. Giles' task to establish and operate a business in order that a commercially viable alternative would exist for the Appellant during her self-funded leave of absence. The Appellant intended to leave the education profession if the new business could satisfactorily replace the level of income she enjoyed in her present profession.
3 Some further illumination regarding the basic structure and performance underlying this appeal was included in the Respondent's Reply to the Notice of Appeal:
...on or about January 21, 1993, an amount of $20,000.00 was transferred from the Spouse's bank account to the Appellant's bank account and then the amount was paid back to the spouse as management fees in the following manner:
| January 25, 1993 | $ 9,000.00 |
| January 29, 1993 | 2,000.00 |
| May 12, 1993 | 4,000.00 |
| October 8, 1993 | 5,000.00 |
| Total | $20,000.00 |
4 The evidence and testimony revealed that the total amount of $52,500 ($29,500 and $23,000) was supposed to have been paid to the Appellant's spouse at the rate of $1,000 per week; he was not regarded as an “employee” by the Appellant; he was also in some form of other business with a partner during this time, apparently consulting or management generally: and that the first two amounts from the listing immediately above $9,000 and $2,000 were applied to the 1992 taxation year.
Analysis and Conclusion
5 There is no useful purpose to be achieved in the provision of further detail regarding this matter, nor in a great examination and comparison of possibly relevant case law. There are several reasons which would support a dismissal of the appeal, and I simply comment briefly on some of these —(1) There is a serious question whether the $52,500 total funds called consulting and management fees were ever paid to Mr. Giles and certainly not at $1,000 per week as indicated;
(2) If paid, the funds may have been all or partly his own money — the term “loan” was used, but I am unable to verify its merit in these circumstances;
(3) The activity of Mr. Giles to warrant the $1,000 per week fee was explained and demonstrated to the Court in only the most limited and generalized terms;
(4) If paid (the $52,500) it would appear to have as close or a much closer relationship to capital invested than to operating expenses, particularly viewed from the “overarching” contention of the Appellant in researching and examining possible opportunities. Whether the Appellant would have any claim to capital or non-capital losses, as these are portrayed for deduction purposes in the Act, was not examined at the trial.
(5) There is little to support a conclusion that the business — as described by the Appellant — ever got off the ground sufficiently to be termed a source of income for income tax purposes.
(6) The case law submitted at the trial by Counsel for the Respondent was directly on these points.
6 In summary there is no basis in law or in common sense, for this Court to overturn the assessments struck by the Respondent.
7 The appeal is dismissed.
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