The taxpayer operated an erotic website for which she was the model and her husband took care of the technical side, with profits split equally. It was assumed that they were not in partnership. The Directorate stated:
[T]he costs of clothing, costumes and fine lingerie of a self-employed person who carries on a business in the form of an erotic website are personal expenses that are not deductible against the business income of the taxpayer where such clothing could be used other than in the course of carrying on the business. Those expenses also cannot qualify for capital cost allowance.
The CRA summary stated: “the expenses appear to be of a personal nature.”