Beaubier T.C.J.:
1 These appeals pursuant to the Informal Procedure were heard together on common evidence by consent of the parties at Edmonton, Alberta on February 23, 1998.
2 Trevor Midgley testified and called David Penton. The Respondent called Richard Trembath, an auditor for Revenue Canada.
3 The Appellants were audited for their 1993 and 1994 taxation years. The following claims relating to alleged businesses conducted from their Edmonton residence were disallowed for both years:
Losses claimed from an alleged room and board business and from “TLC”, an alleged accounting business, the expenses of which were not segregated, as follows:
| 1993 | Trevor | $3,925 | 73% |
| Carol | 1,425 | 27% | |
| Net Claim | $5,350 | | |
| 1994 | Trevor | $12,806.84 | 94% |
| Carol | 787.16 | 6% | |
| Net claimed | $13,594.00 | | |
4 Each Appellant was allowed 50% of the allowed partnership loss, consisting of
| 1993 | $994 each |
| 1994 | 1,894 each |
5 The Appellants did not file a partnership agreement. They are husband and wife. Therefore, based on subsection 103(1.1) of the Income Tax Act and on the law of partnership, the Minister's allocation of the partnership losses on the basis of 50% each is correct.
6 The reassessment of the “TLC” claims is based on the fact that there was no reasonable expectation of profit. Mr. Midgley refused to allocate the expenses of his house between TLC and the room and board business. The history of the alleged business is that there has been no profit since at least 1987. Since the years in assessment there appears to have been no accounting business for a year and then Mrs. Midgley has started again as a sole operator of the alleged accounting business. There is no evidence of any profit to date. The Appellants have failed to upset the finding that there was no reasonable expectation of profit from TLC especially on the basis of Mr. Midgley's refusal to allocate expenses.
7 The Minister of National Revenue denied the room and board losses claimed on the basis of finding that certain expenses claimed were capital or personal and on the basis that some expenses claimed were living expenses of the Appellants in their home. The Appellants' evidence did not refute these findings. In particular, there is no evidence that any of the house was used exclusively for either the room and board or for TLC for the entire period of either 1993 or 1994. The losses claimed in relation to the premise's room and board business which, again, were not allocated in evidence, are limited by subsection 18(12).
8 Finally, Mr. Midgley's tuition fees were deducted as a business expense. This deduction was correctly disallowed.
9 The appeals are dismissed in their entirety.
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