Global

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  • Service: Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/10/2012

Canada - Lawyer allowed unrestricted losses from farm activities 

August 10:  The Supreme Court of Canada held that a taxpayer / lawyer could deduct losses from a horse-racing business without restriction against all sources of income, pursuant to a correct application of the restricted farm loss rules of section 31 of the Income Tax Act. 

The case is: The Queen v. John H. Craig, 2012 SCC 43 (1 August 2012)


In this unanimous decision, the Supreme Court of Canada overturned its position in Moldowan (a 1978 case) and essentially agreed with the prior decisions in this case from the Tax Court of Canada and the Federal Court of Appeal.


As a result, the taxpayer was able to deduct farming losses of approximately $428,000* against his law firm income in 2000 and 2001—rather than being restricted to losses of only $17,500 ($8,750 per year) under section 31.


*$=Canadian dollars


Read an August 2012 report prepared by the KPMG member firm in Canada: Craig - SCC Allows Lawyer Unrestricted Farm Loss Deduction




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