Archambault v. Canada
T-1640-83
Tremblay-Lamer J.
12/5/98
16 pp.
Appeal by taxpayer against reassessments relating to 1977, 1978, 1979 and 1980 taxation years-Plaintiff lawyer practising law in own firm-On May 19, 1982, reassessments made against plaintiff informing latter had balance payable in respect of taxation years at issue-Plaintiff disputing reassessments and serving notice of objection on Minister-Counsel for plaintiff making number of admissions at examination for discovery-Plaintiff denying instructed counsel to make admissions-Asking Court to withdraw them, request denied-Party may not withdraw "formal admission" without first obtaining leave of Court or consent of adverse party-Admission made by counsel for party at examination for discovery formal admission which cannot be withdrawn without leave of Court-Withdrawal of admission within discretion of Court-Court must determine whether triable issue which ought to be tried in interests of justice and not left to admission of fact-Admissions by counsel for party cannot be withdrawn simply because party denies expressly authorizing representative to make them-Issue whether farm losses incurred by plaintiff during years 1977 to 1980 entirely deductible or whether deductibility subject to ceiling established by Income Tax Act, s. 31-Further issue whether farming, or combination of farming and some other source of income, comprising plaintiff's chief source of income-Farming must be compared to taxpayer's other activities, having regard to three factors (capital committed, time spent and profitability, actual or potential) in order to determine whether agriculture principal activity or not-What counts cumulative effect of three criteria-Test of investment in farming business met-With respect to second test, time invested, credibility of plaintiff's testimony doubtful-Plaintiff not satisfying Court spent more time on farming business than on law practice-Taxpayer's farming business not meeting third test of profitability either-In instant case, never was actual or potential profitability, since plaintiff never owning enough land to ensure profitable business-Chief source of taxpayer's income in years in question from profession, not farming business-Interest expense must be disallowed because of restriction set out in Act, s. 31-Reassessments against plaintiff upheld, except in respect of $5,000 added to plaintiff's professional income-Income Tax Act, S.C. 1970-71-72, c. 63, s. 31 (as am. by S.C. 1973, c. 14, s. 7; 1979, c. 5, s. 9).