http://decision.tcc-cci.gc.ca/site/tcc-cci/decisions/en/item/66430/index.do 
Prochuk v. The Queen[1] (January 16, 2014) involved a purported business loss of $250,000 on what turned out to be a fraudulent investment scheme:
[1] In 2005, Mr. Prochuk invested $250,000 in a foreign exchange currency fund with the Sabourin and Sun Group of Companies (“SSGC”).
[2] According to the parties, the SSGC investment fund turned out to be a fraudulent investment scheme.
[3] As a result, Mr. Prochuk claimed a business loss of $186,250 for his 2007 taxation year, namely the difference between the $250,000 he invested and the $63,750, he received from SSGC.
[4] The respondent’s position is that Mr. Prochuk is not entitled to claim a business loss since he was not in the business of trading and the SSGC investment was not an adventure or concern in the nature of trade. She submitted that the loss incurred by Mr. Prochuk was a capital loss.
The evidence disclosed that the facts were somewhat more convoluted:
[13] It was Zielke and Smith, who introduced Mr. Prochuk to SSGC. In his testimony, Mr. Prochuk, stated:
. . . the promoters of this were the same people who got me into some very bad tax avoidance deals, or I don’t know, “reduction strategies” they called them . . .
[14] In 2005, after having been introduced by Zielke and Smith to SSGC’s representatives and learning of the type of investment SSGC made, Mr. Prochuk decided to invest with SSGC. Accordingly, he withdrew $250,000 from his RRSP to invest.
[15] On January 6, 2005, Mr. Prochuk and his spouse, Mrs. Prochuk, signed an application for service with the Investment Management Division (British Virgin Islands) of SSGC. Under the application, the Prochuks agreed to invest $250,000 in a foreign exchange currency fund. The issue date was January 7, 2005 and the maturity date was May 7, 2007.
[16] By a letter dated January 31, 2005 to the Prochuks, SSGC confirmed that the principal amount of $250,000 and the return on investment (“ROI”)/Interest of 17.52 % per annum paid twice a year, were both guaranteed by SSGC.
[17] The Prochuks received three payments from SSGC totaling $63,750 namely, $18,750 on August 4, 2005 and $22,500 on both February 7, 2006 and September 13, 2006. The Prochuks did not receive any further payments from SSGC.
[18] Mr. Prochuk testified that he could not tell that the investment promoted by SSGC was fraudulent. The presentation to investors was slick and the list of clients allegedly dealing with them was quite impressive. He stated that he undertook a due diligence examination on them and was convinced that he was investing with a reputable Toronto firm.
[19] On February 10, 2011, the Prochuks received a letter from the Anti-Racket Division of the Ontario Provincial Police informing them that Sabourin was under criminal investigation regarding his investment practices. In fact, Sabourin and his associates failed to appear in various legal proceedings.
[20] In filing his 2007 income tax return, Mr. Prochuk claimed $186,250 as a capital loss. On April 10, 2010, Mr. Prochuk by way of Notice of Objection characterized his claim as a non-capital loss. Clearly, the Prochuks will never recover the balance of their investment with SSGC.
Mr. Prochuk argued that he was a trader because of his active trading within his RRSP. The court rejected this argument:
[40] Mr. Prochuk stated that he was an active trader within his RRSP. He pointed out that he made 512 trades within his RRSP in 2007.
[41] Counsel for the respondent argued that I could not take into account the trades Mr. Prochuk made within his RRSP since it is a unique vehicle under the
Income Tax Act (the “
Act”). I agree. A person trading within his RRSP cannot be considered to be operating a business. Therefore, the transactions within the RRSP cannot be taken into account. I will explain further later in my reasons why trading within an RRSP cannot be considered a business.
Nor did the court accept his alternative argument that the SSGC investment had been an adventure in the nature of trade:
[55] Taking into account the criteria cited in Canada Safeway Ltd for determining if a person is engaged in an adventure or concern in the nature of trade, I am of the view that:
(a) Mr. Prochuk did not act in the same manner as a person in the business of trading. He was a passive investor and at the time he acquired the SSGC investment, he intended to hold it on a long-term basis. He expected to receive a yield of 17.52% paid semi-annually. Clearly, his intention at the time he purchased the investment was not to resell it promptly for a profit. In any event, he could not sell the investment since it was locked in for 28 months;
(b) any eventual sale of the SSGC investment would have resulted in a capital gain. In a letter dated October 26, 2006, Mr. Prochuk wrote to CRA questioning the tax treatment if a gain were to occur, he stated at page 2 of his letter as follows:
. . .
2. If I receive all my capital back and some gain and this happens sometime in 2007, I/we should report the entire capital gain (all capital received over all years, minus my initial investment) on my/our 2007 tax return. Can either my wife or myself claim the capital gain, sharing it as we wish, or must we share it equally?
. . .
(c) Mr. Prochuk’s intention at the time of the purchase of the SSGC investment was to achieve a capital gain and to obtain a return on his investment. He testified that he would have renewed the investment had the terms of the investment contract been respected. In addition, in the same letter dated October 26, 2006 to CRA, he stated that SSGC was in the business of creating capital gains.
[56] After reviewing these factors and the jurisprudence submitted by the respondent on the concept of adventure or concern in the nature of trade, I am of the opinion that Mr. Prochuk was not engaged in an adventure or concern in the nature of trade.
As a result Mr. Prochuk’s appeal was dismissed.
[1] 2014 TCC 17.