http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/181936/index.do#
Gibb v. The Queen (November 3, 2016 – 2016 TCC 249, C. Miller J.).
Précis: Ms. Gibb has a passionate interest in horses and ran a horse farm operation for 30 years. She showed losses in all of those years except in 2003 she reported net farming income of $1,250 and in 2008 she reported nil net farming income. In 2010 and 2011 CRA denied her GST Input Tax Credits on the basis that her horse operation had no reasonable expectation of profit. She appealed to the Tax Court. The Tax Court, while sympathetic to her position, dismissed her appeal. There was no order as to costs since this was an informal procedure appeal.
Decision: On the evidence the Court had no real choice but to dismiss Ms. Gibb’s appeal:
[13] The determination of a reasonable expectation of profit must be done objectively. Stepping back and appraising Ms. Gibb’s business dispassionately, rather than from Ms. Gibb’s clear passionate view of the business, I conclude that on balance there are not sufficient indicia supporting a reasonable expectation of profit. Ms. Gibb’s training and her intended course of actions do speak to the operation of a business, but frankly not a business with a reasonable expectation of profit. On balance, I do not weigh these other factors to overcome the stark reality of a business chronically losing money with no reasonable expectation of profit in the foreseeable future. Until Ms. Gibb comes up with a plan of how this operation, as capitalized, can ultimately turn the corner it is difficult to conclude that she was in a business with a reasonable expectation of profit. Therefore, for purposes of the ETA she cannot be considered to be in a commercial activity and consequently not entitled to ITC’s.
There was no order as to costs since this was an informal procedure appeal.