Farm losses from a cow-calf operation ranging from $45,286 to $87,273 per year over a 4 year period, that were sustained by a construction superintendent earning from $67,479 to $169,560 per year in employment income, were subject to the $5,000 limitation. Although he devoted approximately equal time to the cow-calf operation and earning employment income, he was unable to establish that the farm would become highly profitable relative to his employment earnings, and that his acquisition and development of the farm entailed a fundamental shift rather than merely creating an option for his future.
It was found respecting some losses from a partnership engaged in the breeding and racing of horses that s. 31(1) applies at the level of the individual partners to whom the farming losses have been flowed through rather than at the partnership level, i.e., a partnership is not the "taxpayer" for the purposes of s. 31(1).