A W Prociuk:—The appellant was disallowed farming losses incurred in the years 1967 and 1968 to be deducted from his other income and this is the subject matter of this appeal.
The case was heard on March 25, 1971 at a hearing held at the City of Kitchener, in the Province of Ontario, at which the presiding member was J O Weldon, Esq, QC, then a member of the Tax Appeal Board which, on December 15, 1971, became the Tax Review Board. However, judgment was reserved and no decision was rendered by him prior to his retirement from the Board in March of 1972. Accordingly, by consent of both parties, this Board has now been given jurisdiction to issue its decision and judgment on the basis of the transcript of the evidence and the argument taken before Mr Weldon, without further representation by counsel.
The appellant, age 34, is a farmer and construction worker and resides in the district of Guelph, Ontario. In 1965 he acquired the family farm consisting of 100 acres, the principal operation of which was livestock raising. In 1966 he operated the farm and also worked at other employments. Farm gross receipts for that year totalled $5,514.10 and after deducting all expenses relative thereto, the net income was $463.54. His other income was $3,333.81. In 1967 and 1968 the appellant was not as successful with the farm. He claims that market conditions were the main factor responsible for the losses he sustained. By the end of 1968 he concluded that he could not operate his farm profitably and in the ensuing year leased same to another party.
The question to determine here is whether or not the appellant in the years 1967 and 1968 engaged in farming with a reasonable expectation of profit. In 1967 the appellant sold his livestock with the expectation of purchasing feeders and to this end concentrated in acquiring feed for them. In 1968 the appellant states that he continued to raise grain and hay for feed but, because of market conditions, he decided not to buy any cattle and thereafter sold the feed he had raised.
The evidence of the appellant satisfies me that in both years he expected to make a profit and he expected to carry on in subsequent years on a profitable base. In 1969 he changed his mind and ceased farming entirely. The fact that a loss is incurred in any given year is not the criterion of determining whether or not there was a reasonable expectation of profit.
The appeal, accordingly, is allowed.
Appeal allowed.