Search - connection

MacKay and Keith Eaman were heard on common evidence on May 26, 1989, in the City of Ottawa, Ontario, and the issue is whether the appellants are allowed to deduct capital cost allowance in connection with a yacht in their 1982, 1983 and 1984 taxation years. ... In reassessing the Appellant for the 1982, 1983 and 1984 taxation years, the Respondent disallowed deductions for capital cost allowance in connection with the yacht in the amounts of $21,120.46, $17,465.96 and $19,253.09 respectively. 4. ...

Analysis The pertinent provisions of the Income Tax Act are found in paragraphs 18(1)(a) and (h): 18.(1) In computing the income of a taxpayer from a business or property no deduction shall be made in respect of (a) an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property; (h) personal or living expenses of the taxpayer except travelling expenses (including the entire amount expended for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on his business; The definition of “personal or living expenses" is provided in section 248(1) of the Act: 248.(1) In this Act, "Personal or living expenses" includes (a) the expenses of properties maintained by any person for the use or benefit of the taxpayer or any person connected with the taxpayer by blood relationship, marriage or adoption, and not maintained in connection with a business carried on for profit or with a reasonable expectation of profit, (b) the expenses, premiums or other costs of a policy of insurance, annuity contract or other like contract if the proceeds of the policy or contract are payable to or for the benefit of the taxpayer or a person connected with him by blood relationship, marriage or adoption, and (c) expenses of properties maintained by an estate or trust for the benefit of the taxpayer as one of the beneficiaries; During most of the years of operation, the appellant's activities have been carried on from his home where the basement and garage have been converted to provide space for storage, refinishing, office and display. ... Connections and contacts are essential to ensure a steady supply of inventory. ...

Simon's Income Tax 1964-65, vol. 1, has this to say at page 59 in connection with the case of C./.R. v. ... In connection with his negotiations with his former associates as to the details of his departure, I cite from his testimony: Like a good boy, I decided to accept what Bélanger, Hébert offered me on my departure, and I told them: Listen, I’m going to settle every thing; give me the equivalent of about one year of retirement, keep all the files, and I'll go. ...

In assessing the appellant for his 1980, 1981 and 1982 taxation years, the respondent, the Minister of National Revenue, relied on the following presumptions of fact, inter alia: (a) In 1977, the appellant purchased a mare with foal for the purpose, he says, of breeding foals and possibly making a profit on their sale; [admitted] (b) Apart from the mare with foal, the appellant did not own a farm or any equipment; the said mare being boarded with his father-in-law, a professional breeder; [admitted] (c) Unlike farmers, the appellant never increased the number of mares he owned; he acquired only one mare in 1977 [admitted], which is not sufficient to be able to claim to operate a business; (d) The appellant kept the mare from 1977 to 1982; during that period the mare gave birth to five foals, two of which were stillborn; [admitted] (e) None of the foals, when sold at the breeders' auction, allowed the appellant to make a profit; on the contrary, the balance sheet for the appellant’s farming activities has shown only losses since 1977: Farm losses claimed incurred by the appellant since 1977 1977 $2,433.00 1978 $2,012.00 1979 $ 905.00 1980 $ 991.00 1981 $3,764.00 1982 $1,039.00 [admitted] (f) The appellant did not use the means and did not devote the necessary time to be able to claim that he was breeding foals with a reasonable expectation of profit but was rather carrying on these activities as a pastime and hobby; [denied] (g) Thé expenses the appellant incurred in connection with breeding foals were personal or living expenses within the meaning of subsection 248(1) of the Income Tax Act; [denied] 3. ... Act, Case Law, Analysis 4.01 Act The principal provisions of the Income Tax Act involved in this appeal are paragraph 18(1)(h), subsection 31(1) and the definition of “personal or living expenses'" in section 248, the relevant parts of which read as follows: 18. (1) In computing the income of a taxpayer from a business or property no deduction shall be made in respect of (h) Personal or living expenses of the taxpayer except travelling expenses (including the entire amount spent for meals and lodging) incurred by the taxpayer while away from home in the course of carrying on his business; 31. (1) Where a taxpayer’s chief source of income for a taxation year is neither farming nor a combination of farming and some other source of income, for the purposes of sections 3 and 111 his loss, if any, for the year from all farming businesses carried on by him shall be deemed to be the aggregate of 248. (1) In this Act, “personal or living expenses” includes (a) the expenses of properties maintained by any person for the use or benefit of the taxpayer or any person connected with the taxpayer by blood relationship, marriage or adoption, and not maintained in connection with a business carried on for profit or with a reasonable expectation of profit. 4.02 Case law The parties referred to the following cases: 1. ...

They import such meanings as “in relation to”, “with reference to” or “in connection with”. The phrase “in respect of” is probably the widest of any expression intended to convey some connection between two related subject matters. ...

In assessing the appellant for the 1978, 1979 and 1980 taxation years, the respondent relied inter alia on the following assumptions of fact: (a) During the taxation years in question the appellant was a dentist and derived substantial income from his profession; (b) During 1977 the appellant formed a partnership with a horse trainer for breeding and racing horses; (c) During the years in question the appellant spent part of his leisure time taking care of his horses; (d) During the years in question there was no reasonable expectation of profit from these horses; (e) In his tax returns the appellant claimed the following amounts as farm losses: 1978 — $4,389.50 1979 — $5,000.00 1980 — $4,802.00 (f) The appellant reported the following income and expenses in connection with the race horse operation: 1978 1979 1980 Income $ 0 $ 350 $ 500 Expenses $11,779 $8,086 $4,584 3. ... Act — case law — analysis 4.01 Act The principal provisions of the Income Tax Act concerned in the case at bar are 18(1)(h), 31(1) and 248(1), namely the definition of “personal or living expenses". 18(1) In computing the income of a taxpayer from a business or property no deduction shall be made in respect of (h) personal or living expenses of the taxpayer except travelling expenses... 31(1) Where a taxpayer’s chief source of income for a taxation year is neither farming nor a combination of farming and some other source of income, for the purposes of sections 3 and 111 his loss, if any, for the year from all farming businesses carried on by him shall be deemed to be the aggregate of (a) the lesser of (i) the amount by which the aggregate of his losses for the year, determined without reference to this section and before making any deduction under section 37 or 37.1, from all farming businesses carried on by him exceeds the aggregate of his incomes for the year, so determined from all such businesses, and (ii) $2,500 plus the lesser of (A) /2 of the amount by which the amount determined under subparagraph (i) exceeds $2,500, and (B) $2,500, and (b) the amount, if any, by which (i) the amount that would be determined under subparagraph (a)(i) if it were read as though the words “and before making any deduction under section 37 or 37.1” were deleted, exceeds (ii) the amount determined under subparagraph (a)(i); and for the purposes of this Act the amount, if any, by which the amount determined under subparagraph (a)(i) exceeds the amount determined under subparagraph (a)(ii) is the taxpayer's “restricted farm loss” for the year. 248(1) In this Act, “personal or living expenses" includes (a) the expenses of properties maintained by any person for the use or benefit of the taxpayer or any person connected with the taxpayer by blood relationship, marriage or adoption, and not maintained in connection with a business carried on for profit or with a reasonable expectation of profit. ...

Income Tax implications — if known at all — had little or no effect on the decision to incorporate, nor to operate Installations. (7) After the incorporation of Installations, the practice of Savino selling the fences installed continued, and there was no indication in the office documentation that the customer had any direct connection with Installations. That company (Installations) acted as the sub-contractor for Savino in the installation work. (8) Mr Raymond Brosseau, chartered accountant, and Judge Yvon Ma- cerola (formerly a lawyer assisting the Cantatore family in business matters), testified that the subject of income taxes was not a prominent one, perhaps not even discussed, in connection with the incorporation of Installations. (9) Dr Nick Petrella, testified regarding the poor health condition of Savino Cantatore about the time of the incorporation of Installations. ...

Yours very truly, (signed) ROSE R GOLDHAR The critical assertions of the Minister in the reply to notice of appeal were: — the Appellant was at all material times employed by Del Realty Inc as a real estate agent; — the Appellant was employed in connection with the selling of property and was remunerated wholly by commission; — the Appellant was not required by her contract of employment to pay office rent; — the Appellant was not required by her contract of employment to have an office in her home and did not have an office in her home; — the Appellant did not pay any office rent for the purpose of earning income from employment. ... It is also possible that the reference to subparagraph 6(l)(b)(v) in paragraph 8(1)(h) of the Act, could indicate that taxpayers “employed in connection with selling of property or negotiating of contracts, subparagraph 6(l)(b)(v), remunerated by regular salary rather than commission income, must seek relief for expenses under the provisions of sections 8(l)(h) and 8(l)(i) of the Act, not under paragraph 8(l)(f). ...

Concurrently, Crown Cork sent a personal letter to the appellant dated November 29, 1974, (Exhibit A-3) confirming its intention to continue his employment in the event Crown Cork acquired International, on the following terms: In connection with our offer to purchase the outstanding shares of International Laboratories (1972) Ltd, it is our intention, if our offer is successful, to enter into an employment contract with you. ... The letter was clearly in response to a request for payment made by the appellant and stated that the payment was:... an advance on account of the amount due you from Crown in connection with the purchase of International Laboratories (1972) Ltd. ...

The appellant argued that this assessment was excessive and, inter alia, that trips he had to make to and from a summer cottage in connection with business matters should be allowed. ... In delivering the judgment of the Tax Appeal Board, W S Fisher, QC, said at 17 [366]: As to the appellant’s contention that the amounts arrived at as the value of the benefit conferred upon him by the company were excessive because they included, particularly in the 1950 and 1951 assessments, the fixed costs in connection with the planes such as insurance, certificates of airworthiness, storage and depreciation, I have come to the conclusion that this submission cannot be concurred in. ...