Allowable deductions for businesses in the "wind-up"
phase
Summary
The taxpayer practiced as a lawyer for 27 years before
ultimately retiring from the profession in 2013. In preparation for
retirement, the taxpayer moved the records of her client files from
her traditional business office into a storage facility and
incurred monthly storage fees. During the 2015 taxation year, the
taxpayer deducted storage fees as a business expense by virtue of
article 18(1)(a) of the Income Tax Act (Act). The Minister
of National Revenue (CRA) disallowed the deduction, claiming that
the taxpayer did not incur these expenses in the course of earning
business income.
Arguments
Only expenses incurred for the purposes of earning income are
deductible under the Act. Furthermore, the CRA states that
"being a lawyer is not, in and of itself, a
business"1 and that expenses incurred by a lawyer
not engaged in private practice, but rather as in-house corporate
counsel, are therefore
