,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act--,f>m ,losses
,numb]3 ,,it-#cbb;,r
,date3 ,octob] #be1 #aigh
,ref];e3 ,sec;n #ca 7al p>agraph
  #ah7#a77h71 sec;n #aaa & subsec;n
  #bdh7#a774

  ,? bullet9 replaces & c.els ,9t]pret,n
,bullet9 ,,it-#cbb dat$ ,may #bj1 #aigf4
,curr5t revi.ns >e designat$ 0v]tical
l9es4

#a4 ,? bullet9 d1ls )! deductibil;y (
  f>m losses &! applic,n (! ,sec;n #ca
  loss re/ric;n4 ,! ,9come ,tax ,act
  5visages ?ree classes ( taxpay]s :o
  f>m4 ,! foll[+ >e ! classes tgr )! tax
  tr1t;t ( any losses t may 2 9curr$3
  7a7 a taxpay] ^: *ief s\rce ( 9come is
    f>m+ or a -b9,n ( f>m+ & "s o!r   #a
              ,,it-#cbb;,r           a#a
    s\rce ( 9come4 ,s* a taxpay]'s f>m+
    op],ns may r1sonably 2 expect$
    6provide ! bulk ( 9come or ! c5tre (
    "w r\t9e & >e ! taxpay]'s major
    preo3up,n4 ,s* a f>m] may deduct !
    full am.t (! f>m+ loss f o!r 9come 9
    ! ye> (! loss4 ,! phrase 8a -b9,n (
    f>m+ & "s o!r s\rce ( 9come0 m1ns t
    :ile ! *ief s\rce ( 9come is f>m+ "!
    >e al subord9ate s\rces ( 9come s* z
    employ;t1 busi;s or prop]ty t may 2
    unrelat$ 6! f>m+ op],ns4
  7b7 a taxpay] ^: *ief s\rce ( 9come is
    n f>m+ or a -b9,n ( f>m+ & "s o!r
    s\rce ( 9come b :o / c>ries on a
    f>m+ busi;s4 ,s* a taxpay] m/ op]ate
    ! f>m )a r1sona# expect,n ( pr(it b
    devotes ! major "p ( 8 or h] "t &
    ef=t 6o!r busi;s or employ;t4 ,!
    am.t (! f>m+ loss deducti# 9 ! ye>
    0s* a taxpay] is re/rict$ 0sec;n
    #ca4
  7c7 a taxpay]1 ^: *ief s\rce ( 9come
    is n f>m+ or a -b9,n ( f>m+ &     #b
              ,,it-#cbb;,r           b#a
    "s o!r s\rce ( 9come1 & :o c>ries on
    "s f>m+ activities b ) no r1sona#
    expect,n ( pr(it4 ,! :ole am.t ( s*
    losses w 2 4all[$ z p]sonal or liv+
    exp5ses 7p>agraph #ah7#a77h77 : >e
    def9$ 9 subsec;n #bdh7#a7 z 9clud+ !
    exp5ses ( prop]ties ma9ta9$ 0!
    taxpay] = 8 or h] use or b5efit or =
    t ( relat$ p]sons & n ma9ta9$ 9
    3nec;n )a busi;s c>ri$ on = pr(it or
    )a r1sona# expect,n ( pr(it4
--------------------------------------#b
            ,s\rce ( ,9come
            7p>agraph #b-c7
    
#b4 ,9 ord] =a f>m+ activ;y 6be 3sid]$ a
  s\rce ( 9come x m/ 2 a busi;s c>ri$ on
  )a r1sona# expect,n ( pr(it4
#c4 ,=a s\rce ( 9come 6be a taxpay]'s
  *ief s\rce ( 9come 9 a "picul> tax,n
  ye> x is n nec t ! 9come produc$ f x 2
  grt] 9 t ye> ?an ! 9come f all !
  taxpay]'s o!r s\rces ( 9come nor1 9
  fact1 f any (! taxpay]'s o!r        #c
              ,,it-#cbb;,r           a#b
  s\rces ( 9come4 ,sec;n #ca 5visages t
  a taxpay] may h a f>m+ loss )\t
  prejudic+ ! /atus ( f>m+ z a *ief
  s\rce ( 9come 9 ! tax,n ye> 9 : ! loss
  o3urs4 ,acly1 ! te/ ( simply -p>+ net
  9come f ea* s\rce z ! te/ = det]m9+ !
  *ief s\rce ( 9come 9 a tax,n ye> is n
  valid4 ,gross 9come1 net 9come1
  capital 9ve/;t1 ca% fl[1 p]sonal
  9volve;t & all o!r factors may 2
  relevant 3sid],ns4 ,due wei<t m/ 2
  giv5 6! taxpay]'s plans = develop;t (!
  op],n & 8 activities 9 imple;t+ !
  plans4 ,! ,de"p;t takes ! view t ": a
  f>m+ busi;s 0 a *ief s\rce ( 9come 9
  previ\s ye>s & is 2+ c>ri$ on 9 ! same
  mann] 9 a loss ye>1 t ! limit,ns (
  sec;n #ca w n necess>ily apply &! f>m+
  busi;s w norm,y =m "p (a 3tribu;n (
  s\rces ( 9come t 3/itute ! *ief s\rce
  ( 9come 9 ! loss ye>4


                                      #d
             ,f>m+ ,busi;s           b#b
            7p>agraphs #d-e7
    
#d4 ,9 det]m9+ :e!r or n a f>m+ op],n is
  a busi;s1 ! foll[+ >e "s (! crit]ia :
  m/ 2 3sid]$3
  7a7 ! ext5t ( activ;y 9 rel,n 6t (
    busi;ses (a -p>a# nature & size 9 !
    same local;y4 ,! ma9 te/ is ! size
    (! prop]ty us$ = f>m+4 ,if x is m*
    too small 6give any hope ( pr(it1 !
    presump;n is t ! prop]ty is 2+ held
    = p]sonal use or 5joy;t (! taxpay]4
    ,on ! o!r h&1 ": ! l& is l>ge 5 6be
    pr(ita#1 x may al 2 non-busi;s1 b 9
    limit$ circum/.es4 ,": = example1 !
    taxpay] has made no attempt at f>m+
    or develop+ ! l& & has no via# plans
    6d s1 x is presum$ ! l& is held =
    p]sonal use or 5joy;t or = capital
    ga91 & exp5ses 7net ( 9cid5tal
    9come7 %d 2 4all[$4 ,? is "picul>ly
    s ": ! taxpay] has a m or less
    regul> job & devotes ll "t 6! f>m4
    ,? ( c\rse assumes t ! taxpay]    #e
              ,,it-#cbb;,r           c#b
    has n employ$ o!r p]sons 6c>ry on a
    f>m+ op],n4 ,! f>m may al 2 non-
    busi;s ": ! taxpay]1 ov] a numb] (
    ye>s1 has demon/rat$ t "! 0 no 9t5;n
    ( utiliz+ m ?an a frac;n (! l& 7e4g4
    ! taxpay] :o buys a f>m b uses only
    "o field z a pa4ock = "o or two
    horses72
--------------------------------------#c
  7b7 "t sp5t on ! f>m+ op],n 9 -p>ison
    6t sp5t 9 employ;t or o!r 9come-e>n+
    capac;y4 ,if ! taxpay] sp5ds mo/ ( 8
    or h] "t dur+ ! crop s1son att5d+ 6!
    f>m1 "! is a /r;g presump;n t he or
    %e is c>ry+ on a f>m+ busi;s4 ,? is
    "picul>ly s ": ! taxpay] has f>m+
    backgr.d or exp]i;e2
  7c7 ! develop;t (! f>m+ op],n &
    -mit;ts = future expan.n ac 6!
    taxpay]'s availa# res\rces4 ,? te/
    is bas$ on ! capital 9ve/;t (!
    taxpay] 9 ! op],n ov] a numb] ( ye>s
    & on ! acquisi;ns ( build+s1 ma*9]y1
    equip;t & 9v5tory 0! taxpay]2     #f
              ,,it-#cbb;,r           a#c
  7d7 qualific,n (! taxpay] = "s type (
    prov9cial f>m+ assi/.e4 ,! "picul>
    assi/.e program may 2 use;l 6det]m9e
    :e!r ! grant+ au?or;y requires or
    presumes ! recipi5t 6be 9 ! busi;s (
    f>m+4
#e4 ,! mo/ usual 9dic,n t a f>m+ op],n
  does n 3/itute a busi;s )a r1sona#
  expect,n ( pr(it is t x reports no1 or
  a v small am.t (1 gross 9come = s"eal
  ye>s4 ,h["e1 3sid],n m/ 2 giv5 6! fact
  t s* a situ,n may >ise 9 ! f/ ye>s (a
  f>m+ op],n or may 2 ! result (
  extremely adv]se w1!r 3di;ns s* z
  prol;g$ dr"\1 sev]e hail1 fro/ or
  flood4 ,":1 on ! o!r h&1 a taxpay] [ns
  a piece ( l& 9 3junc;n ) 8 or h] home
  & gr[s "!on a small quant;y ( fruit or
  vegeta#s or ma9ta9s "!on a few
  animals1 s* activities d n 3/itute !
  c>ry+ on (a busi;s4 ,ev5 ?\< ! taxpay]
  o3a.n,y may sell "s surplus produce or
  a small quant;y ( hay f ! piece ( l&1
  ? al"o w n qualify s* an op],n z    #g
              ,,it-#cbb;,r           b#c
  a busi;s4 ,! fact t a taxpay]1 9 a
  giv5 tax,n ye> or = ye>s 2f & af1 _h
  or appe>$ 6h no r1sona# expect,n (
  pr(it is "o (! facts 6be 3sid]$ 9
  det]m9+ :e!r or n ! taxpay] 0 9 !
  busi;s ( f>m+ 9 t ye>4 ,h["e1 x is n
  3clusive evid;e 9 xf t ! taxpay] 0 n
  5gag$ 9 ! busi;s ( f>m+ & o!r facts
  may support ! 3clu.n t he or %e 0 9
  fact 5gag$ 9 ! busi;s ( f>m+4

      ,def9i;n ( ,f>m+ 7p>agraphs
                 #f-g7
    
#f4 ,= purposes (! ,act1 ! ^w 8f>m+0 is
  giv5 a wide def9i;n 0subsec;n
  #bdh7#a74 ,x 9cludes tillage (! soil1
  live/ock rais+ or exhibit+1 ma9ta9+ (
  horses = rac+1 rais+ ( p\ltry1 fur
  f>m+1 dairy f>m+1 fruit gr[+ &! keep+
  ( bees4 ,? li/ is n exhau/ive & x has
  be5 decid$ 0\r c\rts t ! ^w 8f>m+0 al
  9cludes tree f>m+ &! op],n (a wild
  game res]ve4 ,9 c]ta9 factual       #h
              ,,it-#cbb;,r           c#c
  circum/.es x is 3sid]$ t 8f>m+0
  9cludes rais+ fi%1 m>ket g>d5+1 !
  op],n ( nurs]ies &
--------------------------------------#d
  gre5h\ses1 &! op],n (a *ick hat*]y4
  ,h["e1 8f>m+0 does n 9clude trapp+ or
  an (fice or employ;t "u a p]son 5gag$
  9 ! busi;s ( f>m+4
#g4 ,= m 9=m,n 3c]n+ ! calcul,n &!
  deductibil;y (! re/rict$ f>m losses1
  ref] 6,,it-#bcb 5titl$ 8,losses--
  ,deductibil;y ( ,re/rict$ ,f>m
  ,losses1 ,non-,capital ,losses & ,net
  ,capital ,losses04









                                      #i