Taxpayer did not demonstrate that predominant intent in carrying out practice of law was to profit

Taxpayer was lawyer employed with government, who provided legal services to clients outside of her regular hours of work. Taxpayer spent five to 15 hours per week on her law practice and billed clients according to their ability to pay. Taxpayer claimed more business expenses than gross professional income from her law practice on income tax returns. Minister of National Revenue denied taxpayer’s business losses because her practice of law did not constitute source of income. Tax Court judge dismissed taxpayer’s appeal. Judge held that taxpayer’s private practice had personal element and that it was not exercised in order to make profit. Judge found that, in light of taxpayer’s gross earnings and hours of work, taxpayer worked for less than minimum wage. Taxpayer appealed. Appeal dismissed. Judge did not err in concluding that taxpayer’s law practice did not constitute source of income. Judge did not err in asking whether there was personal element to taxpayer’s law practice in considering whether taxpayer’s activities were clearly commercial in nature. Judge did not err in concluding that taxpayer’s activities were of personal nature or in concluding that taxpayer’s law practice was not exercised in order to make profit. Taxpayer did not demonstrate that her predominant intent in carrying out practice of law was to profit from it.

Renaud c. Canada (2019), 2019 CarswellNat 2031, 2019 CAF 154, M. Nadon J.A., Yves de Montigny J.A., and Mary J.L. Gleason J.A. (F.C.A.); affirmed (2017), 2017 CarswellNat 2648, 2017 CarswellNat 3975, 2017 TCC 88, 2017 CCI 88, Gaston Jorré J. (T.C.C. [Informal Procedure]).

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