Pratte, J [ORALLY]:—We are all of opinion that the appeal must succeed.
In our opinion, an expense, within the meaning of paragraph 18(l)(a) of the Income Tax Act, is an obligation to pay a sum of money. An expense cannot be said to be incurred by a taxpayer who is under no obligation to pay money to anyone. Contrary to what was decided by the Trial Division, an obligation to do something which may in the future entail the necessity of paying money is not an expense.
The appeal will therefore be allowed, the judgment of the Trial Division will be set aside and the Minister’s assessment of the respondent’s income tax for his 1974 taxation year will be restored. As agreed between the parties, the appellant will be entitled to Her costs in the Trial Division but there will be no order as to the costs of the appeal.