Canada v. Twigg
T-2051-91
Wetston J.
22/4/96
9 pp.
Appeal by way of trial de novo from Tax Court decision allowing defendant's appeal from reassessments for taxation years 1980, 1981, 1982, 1983, 1984 and 1985-Defendant accountant by profession, seeking to deduct full losses from horse racing operation-MNR restricting to $5,000 per year defendant's losses from farming under Income Tax Act, s. 31(1)-Appeal allowed-On authority of Moldowan v. The Queen, [1978] 1 S.C.R., 480 taxpayer's chief source of income to be determined on relative and objective basis-Must consider ordinary mode and habit of work and reasonable expectation of income from among various sources-Must consider time spent, capital committed and actual and potential profitability-No requirement for "connection" between two revenue sources for combination to exist within meaning of Act, s. 31(1)-Despite evidence of 60:40 ratio of time spent in favour of farming and defendant's capital investment in accounting considerably less than farming operation, combination of farming and accountancy not constituting defendant's chief source of income for taxation years in question-Horse racing risky venture while accountancy steadily profitable-Accountancy therefore not sideline business-Income Tax Act, S.C. 1970-71-72, c. 63, s. 31(1).