http://decision.tcc-cci.gc.ca/site/tcc-cci/decisions/en/item/65201/index.do 
Syed v. The Queen[1] (December 12, 2013) concerned the taxpayer’s claim for losses in his 2007 and 2008 taxation years arising out of what he claimed was a business involving the purchase, repair and sale of automobiles:
[1] Arif Syed appeals with respect to reassessments made under the Income Tax Act for the 2007 and 2008 taxation years. Mr. Syed disputes the disallowances of losses that he claimed from a business of buying, repairing and selling used automobiles.
[2] The Crown submits that the losses have been properly disallowed because Mr. Syed has not established that the automobile activity was a business or other source of income. Alternatively, the Crown submits that Mr. Syed has not established that the expenditures claimed were incurred for the purpose of earning income.
[3] The losses that were disallowed were $8,351 for the 2007 taxation year and $27,207 for the 2008 taxation year. At the hearing, Mr. Syed reduced his claim for losses to $6,000 for the 2007 taxation year and $10,000 for the 2008 taxation year.
[4] By way of background, Mr. Syed is engaged on a full-time basis as a financial consultant with a Canadian bank. According to his testimony, in 2007 he decided to commence a part-time business involving the purchase of automobiles that had been damaged in accidents. The plan, according to his testimony, was for the automobiles to be repaired and then sold.
[5] Mr. Syed testified that he purchased four vehicles in 2007 and ten in 2008 (excluding an automobile for his personal use). According to the documents he presented, the proceeds from the sale of vehicles were generally equal to or less than what he paid to acquire the vehicles. This would mean that Mr. Syed generally had no profit or incurred a loss even before taking into account the cost of repairs and other expenses.
The case essentially turned on credibility. The court rejected much of Mr. Syed’s evidence and preferred the evidence of the Crown’s witness:
[13] In respect of these conclusions, I would make the observations below.
(a) Mr. Syed’s claims for losses in his income tax returns included personal expenses for vehicles that he and his spouse used. This raises an initial concern about the reliability of Mr. Syed’s testimony.
(b) The appeals officer testified that Mr. Syed had told the auditor that he sold vehicles to a sister-in-law but this was denied at the hearing. I prefer the testimony of the appeals officer on this point, as opposed to Mr. Syed’s self-interested testimony.
(c) The sales receipts that Mr. Syed introduced to establish the proceeds of sale were hand-written and could easily have been fabricated after the fact. In addition, Ms. Brudnicki’s testimony that Mr. Syed was slow to provide documentation to the Canada Revenue Agency increases my concern about the bona fides of this documentation.
(d) According to the appeals officer, several of the expenditures claimed were clearly personal expenditures. In addition, Mr. Syed substantially reduced the amount of losses that were being claimed at the hearing. This also raises a concern about the reliability of Mr. Syed’s testimony.
(e) Overall, the testimony by Mr. Syed was not detailed enough to be persuasive. In order to be convincing, Mr. Syed’s testimony, especially about the sales activity, needed to be much more complete.
(f) Further, Mr. Syed’s testimony with respect to four exported vehicles was vague and unconvincing. The circumstances surrounding the acquisition and disposition of these vehicles are not at all clear from the evidence. It appears to be possible that Mr. Syed was merely acting as an agent and using his license to acquire vehicles on behalf of someone who wished to export them. In any event, the evidence regarding the exported vehicles is not sufficiently reliable and I am not satisfied that any loss was incurred with respect to these vehicles.
[14] Based on the evidence as a whole, I have concluded that Mr. Syed has not satisfied the burden imposed on him to establish a prima facie case that he operated a business as opposed to a personal endeavour of helping acquaintances and relatives with vehicles.
As a consequence the court dismissed the appeal.
[1] 2013 TCC 403.