The respondents were limited partners in a partnership that purchased a mini-warehouse.
The partnership generated losses, which the respondents deducted for income tax purposes.
The Minister reassessed the respondents, disallowing the losses on the basis that the partnership did not carry on business with a reasonable expectation of profit.
The Supreme Court of Canada, applying the test from the companion case of Stewart v. Canada, held that the storage park operation was commercial in nature and lacked any personal element.
Therefore, the reasonable expectation of profit test did not apply, and the operation constituted a source of income under s. 9 of the Income Tax Act.
The Crown's appeal was dismissed.
