Subsection 31(1) - Loss from farming where chief source of income not farming
Cases
Canada v. Craig, 2012 SCC 43, [2012] 2 S.C.R. 489
The taxpayer, who earned approximately $700,000 per year from his law practice in addition to realizing substantial stock option benefits from...
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| Tax Topics - General Concepts - Stare Decisis | previous SCC decision overruled - but FCA should have followed | 154 |
Gunn v. Canada, 2006 DTC 6544, 2006 FCA 281
The trial judge had erred in rejecting a submission that the taxpayer's cattle farm in "combination" with his law practice was his chief source of...
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| Tax Topics - Statutory Interpretation - Resolving Ambiguity | uncertainty from lack of explicitness resolved in taxpayer's favour | 127 |
Grenier v. Canada, 2005 DTC 5104, 2004 FCA 148
The Tax Court had correctly concluded that the taxpayer, who was a practising dermatologist and who was pursuing a strategy of planting the...
Taylor v. Canada, 2002 DTC 7596, 2002 FCA 425
Although the taxpayer was part of a traditional farming family, had a deep commitment to the land, invested substantial capital in his farm and...
Kroeker v. R., 2002 DTC 7436, 2002 FCA 392
The taxpayer, who together with her husband had a farming background and who in partnership with him operated a mixed farming business (both grain...
Watt v. Canada, 2001 DTC 5237, 2001 FCA 72
The Court deferred to the finding of the Tax Court Judge that the taxpayer's dental practice remained the focus of his occupational life and his...
Dorfman v. M.N.R., 72 DTC 6231, [1972] CTC 264 (FCTD)
Before going on to find that substantial losses from a mink ranch were not limited by s. 13(1) of the pre-1972 Act, Collier J. indicated (at p....
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| Tax Topics - Income Tax Act - Section 3 | 43 |
The Queen v. Donnelly, 96 DTC 5499 (FCA)
A urologist was unable to deduct losses from his operation of breeding and racing horses without limitation given that his medical practice...
Phillips v. Canada, [1997] 1 CTC 59, 96 DTC 6581
A full-time teacher was entitled to unrestricted deductions not withstanding that his teaching income was far greater than his income from a...
The Queen v. Twigg, 96 DTC 6297, [1996] 3 CTC 135 (FCTD)
The taxpayer was unsuccessful in his contention that his chief source of income was a combination of farming and accountancy. Although he spent...
R & W Such Holdings Ltd. v. The Queen, 96 DTC 6455, [1996] 3 CTC 221 (FCTD)
The taxpayer, which also operated a building rental business, was found to have farming as its chief source of income given that its major...
The Queen v. ICHI Canada Ltd., 95 DTC 5384 (FCTD)
The taxpayer, which had acted as a Canadian distributor for the paper-roll covering fabrics of a Japanese company, commenced operating a horse...
Stecko v. The Queen, 95 DTC 5215, [1995] 1 CTC 269 (FCTD)
An orthopaedic surgeon who devoted approximately 60 to 80 hours per week to his medical practice, and 20 hours per week to his vineyard operation...
Rothgeb v. The Queen, 94 DTC 6703, [1995] 1 CTC 260 (FCTD)
Although the taxpayer spent at least as much time on his equestrian horse farm as on his consulting practice and committed all of his capital and...
Wilson v. The Queen, 94 DTC 6645, [1994] 2 CTC 393 (FCTD)
A full-time teacher was not able to deduct his losses from his cattle farm without limit for his 1978 to 1981 taxation years given that: his farm...
Noel v. The Queen, 94 DTC 6606, [1994] 2 CTC 357 (FCTD)
The horse farm of a practising lawyer was found not to be her chief source of income, given her admission that in the taxation years in question...
Mackenzie v. The Queen, 93 DTC 5291 (FCTD)
Although the taxpayer spent more time on his farming business (which entailed the purchase of mature horses and their training for equestrian...
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| Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) | 21 |
The Queen v. Timpson, 93 DTC 5281, [1993] 2 CTC 55 (FCA)
A full-time doctor who also devoted about 35 to 40 hours per week to the business of raising purebred cattle for breeding purposes was not able to...
The Queen v. Poirier, 92 DTC 6335, [1992] 2 CTC 9 (FCA)
In finding that an operation of raising Charolais cattle was not the taxpayer's chief source of income, MacGuigan J.A. stated:
"... it is patent...
The Queen v. Wylie, 92 DTC 6294, [1992] 1 CTC 236 (FCTD)
A full-time farmer was able to deduct his farming losses without limit given the "enormous" commitment of time made by him and his family and the...
White v. The Queen, 91 DTC 5598, [1991] 2 CTC 331 (FCTD)
The taxpayer, who devoted more time to his full-blood simmental cattle breeding farm than to his medical practice, had more capital invested in...
Robinson v. The Queen, 91 DTC 5302 (FCTD)
The evidence did not support a finding that there was a reasonable expectation that the farming operations of the taxpayer, who had a good...
The Queen v. Service d'administration Champlain Inc., 91 DTC 5200 (FCTD), aff'd 94 DTC 6604 (FCA)
The taxpayer's chief source of income was not farming in light of the fact that most of its employees and most of the time of its principal...
The Queen v. Roney, 91 DTC 5148 (FCA)
The president and part-owner of a very successful security services firm, who spent 30 hours per week working with that firm and 15 hours per week...
Dand Auto Parts Ltd. v. The Queen, 90 DTC 6533, [1990] 2 CTC 385 (FCTD)
S.31(1) restricted the deduction by a corporation and its successor ("AJDL" and "DAPL") which operated a Canadian Tire associate store generating...
Levy v. The Queen, 90 DTC 6346, [1990] 2 CTC 83 (FCTD)
In rejecting a submission that the taxpayer's involvement in a race horse syndicate was passive and that the farming business therefore was not...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business | "investment" in racing horses was a business source | 89 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Farming | included breeding | 71 |
| Tax Topics - Income Tax Act - Section 96 | 130 |
Nijjar v. The Queen, 90 DTC 6092, [1990] 1 CTC 147 (FCTD)
In 1978, the taxpayer disposed of his city homes, changed his lifestyle and commenced spending 60 hours a week working farmland which initially...
Glass v. The Queen, 89 DTC 5497, [1989] 2 CTC 314 (FCTD)
The taxpayer, who left a secure position with the Saskatchewan Wheat Pool to work 30-hours per week on flexible hours as the Manager of the Canada...
Pavlakovich v. The Queen, 89 DTC 5432 (FCTD)
A full-time miner was able to deduct losses from his farm without limit (with the exception of 1977, when he first acquired the farm in run-down...
Mohl v. The Queen, 89 DTC 5236, [1989] 1 CTC 425 (FCTD)
A retired businessman with significant income from other sources could not demonstrate that he had a reasonable expectation of a horse breeding...
The Queen v. Hoeft, 89 DTC 5144, [1989] 1 CTC 350 (FCTD)
An RCMP officer, who had been carrying on a farming operation since 1973 without making a profit in any year, was unable to bring himself within...
The Queen v. Morrissey, 89 DTC 5080, [1989] 1 CTC 235 (FCA)
A freighter engineer who devoted almost all his employment income to a cow-calf operation that generated revenues equal to about 1/4 of expenses...
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| Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. | 83 | |
| Tax Topics - Statutory Interpretation - Ordinary Meaning | 46 |
Richardson v. The Queen, 89 DTC 5001, [1989] 1 CTC 10 (FCTD)
A practising accountant, whose billable hours were reduced from 1645 hours in 1977 to 1270 in 1978 when in the summer of 1978 he and a partner...
MacRae v. The Queen, 88 DTC 6454, [1988] 2 CTC 233 (FCTD), aff'd 89 DTC 5526 (FCA)
The taxpayer who operated a highly successfully dental practice at which he worked four and a half days a week, was subject to the numerical limit...
Wilson v. The Queen, 88 DTC 6430, [1988] 2 CTC 222 (FCTD)
The taxpayer, who was the president and sole shareholder of an automotive tubing manufacturer was able to deduct 1976 and 1977 losses of $136,415...
Gagné v. The Queen, 88 DTC 6401, [1988] 2 CTC 332 (FCTD)
A full-time school teacher who suffered continued losses during the 1978 to 1981 taxation years and thereafter from the cultivation of...
Mott v. The Queen, 88 DTC 6359, [1988] 2 CTC 127 (FCTD)
On a realistic analysis, the income-producing potential of the taxpayer's orchard was about $40,000 to $50,000 per annum even without taking full...
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| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | 96 |
The Queen v. Connell, 88 DTC 6166, [1988] 1 CTC 247 (FCTD), aff'd 92 DTC 6134 (FCA)
The Deputy Minister of National Revenue (Customs and Excise), who operated a cattle farm for the period from 1972 to date, had consistently...
Gray v. The Queen, 86 DTC 6504, [1986] 2 CTC 382 (FCTD)
The taxpayer, who devoted approximately equal time to his farm and his service station business, was held to be entitled to deduct losses from the...
Gordon v. The Queen, 86 DTC 6426, [1986] 2 CTC 280 (FCTD), aff'd 89 DTC 5481 (FCA)
Farm losses from a cow-calf operation ranging from $45,286 to $87,273 per year over a 4 year period, that were sustained by a construction...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Taxpayer | 57 |
Buchanan Forest Products Ltd. v. The Queen, 86 DTC 6282, [1986] 2 CTC 7 (FCTD)
A corporation which had a relatively successful logging business whose gross revenues rose from $1.2 million in 1972 to $9.2 million in 1977,...
Clarkson Co. Ltd., Trustee of Poirier v. The Queen, 86 DTC 6124, [1986] 1 CTC 308 (FCTD)
Between 1976 and 1980 the taxpayer, who had substantial investments in other businesses which he helped manage from an office on his cattle farm,...
Hadley v. The Queen, 85 DTC 5058, [1985] 1 CTC 62 (FCTD)
The taxpayer, who at all relevant times earned a substantial income from a car dealership and leasing business that was owned and supervised by...
Graham v. The Queen, 83 DTC 5399, [1983] CTC 370 (FCTD), aff'd 85 DTC 5256, [1985] 1 CTC 380 (FCA)
Notwithstanding that the taxpayer was a full-time employee of Ontario Hydro, his losses from a pig farm were deductible without numerical limit in...
Plante v. The Queen, 83 DTC 5378, [1983] CTC 341 (FCTD)
A taxpayer who devoted about 40 hours a week to his accounting practice and between 25 and 40 hours a week to a race horse business, and who had...
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| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(h) | 48 |
Kasper v. The Queen, 82 DTC 6148, [1982] CTC 178 (FCTD)
By the taxation years in question, the taxpayer had shifted most of her time and energy and, to a somewhat lesser extent, her capital, from a...
Klie v. The Queen, 81 DTC 5061, [1981] CTC 154 (FCTD)
"Mr. Klie obtained his income from his farm operations, by working during the days, on week-ends and holidays, and his income from Chrysler of...
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| Tax Topics - Income Tax Act - Section 4 - Subsection 4(1) - Paragraph 4(1)(a) | farming business included incidental rental income | 75 |
The Queen v. Zavitz, 81 DTC 5007, [1981] CTC 17 (FCTD)
The taxpayer's house was 300 yards from his 43 acre farm, and 16 miles from London where he worked five days a week as a Justice of the Peace....
H. Brown v. The Queen, 80 DTC 6341, [1980] CTC 413 (FCTD)
The taxpayer sold most of his dairy farm to a developer for $517,655, then sustained substantial losses in the ensuing taxation years while he...
Moldowan v. The Queen, 77 DTC 5213, [1977] CTC 310, [1978] 1 S.C.R. 480
Farming constitutes a taxpayer's chief source of income if it may reasonably be expected to provide the bulk of income or the centre of work...
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| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Reasonable Expectation of Profit | no entitlement to deductions if no reasonable expectation of profit | 100 |
| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit | hobby with no reasonable expectation of profit is not a business | 166 |
See Also
Stackhouse v. The King, 2023 TCC 156
The taxpayer, who had grown up in a farming family, was a full-time medical doctor (working approximately 1,900 hours a year) who devoted almost...
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| Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit | no evidence to call into question the underlying assumption in Stewart that the taxpayer pursued her clearly-commercial farming venture for profit | 296 |
Crichton v. The Queen, 2013 DTC 1104 [at 566], 2013 TCC 96 (Informal Procedure)
The taxpayer ran an amusement business in which ponies were harnessed on spokes so that they would move about an axis - essentially a...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Farming | 115 |
Curtis v. The Queen, 2012 DTC 1212 [at 3575], 2012 TCC 248 (Informal Procedure)
The taxpayer's farming losses were not deductible given that the farm lacked the potential for profit. Boyle J. stated that in the taxpayer's...
Turbide v. The Queen, 2011 DTC 1347 [at 1941], 2011 TCC 371
The Minister was incorrect in finding that the taxpayer's race-horse business was not a chief source of income for the purposes of s. 31. The...
Falkener v. The Queen, 2007 DTC 1470, 2007 TCC 514 (Informal Procedure)
The taxpayer, who maintained a herd of approximately 15 llamas and who also (after initially relinquishing his licence as an insurance adjuster...
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| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose | 111 |
Stackhouse v. The Queen, 2007 DTC 620, 2007 TCC 146
A medical doctor who spent four days week on a medical practice and the balance of her working hours on the operation of the largest organic farm...
Granger v. The Queen, 2001 DTC 386 (TCC)
In his 1994 and 1995 taxation years, the taxpayer, who had over $300,000 per annum in net revenue from his legal practice and $31,000 or $15,000...
Miller v. The Queen, 2000 DTC 1502 (TCC)
The taxpayer who had farmed all his life, but taught in order to generate cash to maintain and expand the farming operation, was found to be a...
Administrative Policy
21 January 2016 Roundtable, 2016-0625131C6 F - Farming losses
An individual carried on a farming business, but with a full-time job as his main source of income, retires (so that he receives full pension...
21 June 1989 Memorandum (July 1990 Access Letter, ¶1312)
The Morrissey case supports the position that unless it can be shown that the farm operation is advancing towards a profit position, a claim for...
85 C.R. - Q.17
The Graham decision does not provide any additional guidelines to those set out in IT-322R; factors considered in applying s. 31 are listed.
Subsection 31(2) - Determination by Minister
Cases
Vincent v. Minister of National Revenue, 66 DTC 5123, [1966] CTC 147, [1966] S.C.R. 374
The Exchequer Court had the jurisdiction to determine the question whether the taxpayer's chief source of income for the taxation years in...