Roland St-Onge (orally April 24, 1978) [TRANSLATION]:—The appeal of Mr Yvon L’Heureux came before me on April 24, 1978 in Montreal, Quebec. The issue is whether an amount of $1,000 is deductible from the appellant’s income for his 1974 taxation year.
The appellant alleges that in 1971 he made a loan of $2,000 at 8% interest to his son-in-law, Mr T Jacobson, and that he never recovered his loan owing to Mr Jacobson’s insolvency. The respondent disallowed this deduction of $1,000 as a capital loss because the appellant
(1) never required his son-in-law to pay interest;
(2) did not make this loan in the normal course of his business;
(3) was not able to prove to the respondent that this loan had never been reimbursed between 1971 and 1974.
In heading 4, under item B, Statutory Provisions and Supporting Reasons, in his reply to the Notice of Appeal, the respondent maintained:
The respondent submits that the loss suffered by the appellant does not constitute a capital loss deductible within the meaning of the Act since this loss does not result from a disposition of his debt, as required by and in accordance with paragraph 38(b) and 54(c) of the new Act.
In fact, there is no evidence that the appellant attempted to collect this amount. In 1974, this debt was not statute-barred. Counsel for the respondent referred the Board to paragraphs 38(b) and 54(c) of the new Act. Counsel gave a definition of what may be understood by ‘‘disposition of property”. On the basis of the evidence presented, the Board has come to the conclusion that a disposition of property cannot exist in this case because the following year, 1975, the taxpayer could have proceeded against the debtor, his son-in-law, obtained a judgment and effected a seizure.
For these reasons there is no evidence that during the 1974 taxation year this debt was paid or cancelled.
The appeal is dismissed.
Appeal dismissed.