A J Frost:—This is an appeal from income tax assessments with respect to the appellant’s 1967 and 1968 taxation years. Upon notices of objection, duly signed and filed, the Minister of National Revenue reconsidered the assessments and confirmed them on the ground that the deductions from income claimed by the appellant in respect of farm losses were personal or living expenses. The appeal was heard at Hamilton, Ontario, on November 22, 1971 by the Tax Appeal Board as it was then constituted.
The appellant is employed on a full-time basis with Ford Motor Company of Canada. In 1966 he purchased a house and two acres of land and decided to breed and grow chinchillas, housing them in the basement of his home where pens were constructed to accommodate the animals. He initially purchased 10 animals at a cost of $1,048 as breeder stock. At the end of 1968 there were approximately 75 chinchillas in the breeder stock but no sales took place until 1969.
Counsel for the respondent contended that the appellant raised chinchillas in his spare time as a hobby, and that the raising of chinchillas does not constitute farming within the meaning of paragraph 139(1 )(p) of the Income Tax Act.
Chinchillas are bred for their fur, and it is implicit in the language of the Act that breeding animals for their fur is “farming”. The sole question before the Board is: did the appellant have a reasonable expectation of profit so as to entitle him to claim the deduction of his farm losses in 1967 and 1968 from other income?
The appellant is an industrious man and no doubt expected to make a reasonable return on the raising of chinchillas. He might have done so had he invested more capital and been able to devote his full time to the task. Unfortunately, the chinchilla business is extremely hazardous and the appellant’s operation never achieved the status of a viable business. The few pelts he did sell in 1969 did not return a profit and the entire stock was barely sufficient to produce enough pelts to make a single fur coat. As objective criteria only can be used to determine whether the appellant had a reasonable expectation of profit, I can only conclude he lacked such expectation within the meaning of paragraph 139(1)(ae) of the Income Tax Act.
Appeal dismissed.