The case was Renaud v. The Queen. The taxpayer was employed at the Canadian Transportation Agency. However, in the years in question, she also had a part-time law practice, which took up 5 to 10 hours a week. She also taught part time at a law school. The issue in the case was whether the part-time practice constituted a source of income, so that she could deduct the losses she incurred in those years.
As noted, her losses were not allowed. The Tax Court of Canada Judge held that in this “rather exceptional situation”, the taxpayer did not demonstrate that her activities were undertaken in the pursuit of profit.
Based on her low hours, billings, and choice of clients, the Judge stated that “what the appellant seeks in her private practice is to try to help people with modest incomes while working professionally and trying to somewhat reduce what it is costing her to carry out this activity. That is commendable, very, very commendable, but I fail to see how that can be clearly commercial.” As a result, she had no source of income and therefore no deductible losses.