In Canada v. Paletta, the Federal Court of Appeal clarified that, in order for a business to exist, there must be an intention to earn a profit. Absent such intention, there is no business and therefore no “source of income”.
Existence of a Business
The appellant was a businessman who made his fortune in the oil and gas industry. In order to fructify his capital, he decided to lend money to third parties. When two companies to which he lent money went bankrupt, he claimed business losses in relation to the loans he made to these two companies.