Glenn Stephen Ernst

The respondent brought a motion to compel the appellant to provide further and better answers to written examination for discovery questions.

The underlying appeal concerned whether the appellant's services constituted an exempt supply of a financial service or a taxable supply for GST/HST purposes.

The Tax Court of Canada granted the motion in part, ordering the appellant to provide factual bases for its legal positions and to make further inquiries of former employees regarding the services provided, while finding certain repetitive questions did not require further answers.

The appellant appealed a reassessment disallowing the deduction of $26,510,522 in non-capital losses for its 2014 taxation year.

The losses arose from a payment made by a subsidiary to a related corporation to assume lease obligations for discontinued theatres prior to the appellant acquiring the subsidiary.

The Tax Court of Canada allowed the appeal, finding that the payment was a deductible current expense incurred to terminate unprofitable business operations, not a capital outlay or negative proceeds of disposition.

The Court considered whether farming losses were fully deductible where a taxpayer's law practice and horse-racing farming business together formed a chief source of income under s. 31(1) of the Income Tax Act.

It held that prior precedent had improperly narrowed the statutory combination test, overruled that aspect of Moldowan, and confirmed a contextual approach examining capital, income, time, and the taxpayer's mode of living.

Applying that approach, the Court found no basis to disturb the trial findings that the taxpayer significantly emphasized both activities, so the farm-loss limitation did not apply.

The Crown's appeal was dismissed with costs.