Tax Court of Canada


GOODS AND SERVICES TAX


Appellant did not have reasonable expectation of profit from commercial rental

Appellant wrote for local newspaper. Respondent denied appellant’s writing column was business. Appellant claimed losses of $33,165 in 2006 and $3,708 in 2007. Appellant rented tools and equipment. Appellant was disallowed maintenance and repair expenses with respect to rental property. Appellant appealed reassessment of goods and services tax (“GST”) by which Minister determined commercial portion of appellant’s property rental activity and tool rental activity were not commercial activities within meaning of s. 123(1) of Excise Tax Act (Can.). Appellant consolidated income and expenses from all appellant’s activities. Appeal was allowed in part. Appellant wrote for local newspaper as part of appellant’s political activities. Appellant did not make profit from columns appellant wrote for local newspaper. Appellant did not prove connection between legal fees claimed by appellant for lawsuit and columns written by appellant from specified date on. Appellant did not intend tool rental to be stand-alone business. Tool rental was incidental to operation of rental property. Incidental tool rental revenues should have been included in rental property revenues as part of rental property operation. No adjustment was made because it was not shown with certainty how much revenue was actually earned. Appellant’s commercial rental did not constitute commercial activity as defined under s. 123(1) of Act. Appellant did not have reasonable expectation of profit from commercial rental. Roof repair was to be allowed as current expense rather than on made on capital account.

Palangio v. Canada (Oct. 24, 2012, T.C.C., Paris J., File No. 2011-2064(IT)I; 2011-2065(GST)I) 223 A.C.W.S. (3d) 262.

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