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Lethbridge Herald, The (Newspaper) - May 12, 1973, Lethbridge, Alberta May 1973 THE IETHBR1DGE HERAID If Tax Column Should hobby profits be taxed? L H. ASPER Despite the tenacity with which we've approached tax re- form in Canada over the past decade, many areas of the tax law still remain confused, while In other areas long-standing in- equities remain. Some of the in- equities work against the tax- payer, while others work against the revenue depart- ment. Steel firm increases its prices PITTSBURGH (AP) U.S. Steel Corp., the largest United States producer, announced Thursday price hikes averaging 4.8 per cent on sheet and strip steel, the most widely used steel products. A spokesman said the new prices will take effect June 15. The increases were the first for sheet and strip products in 17 months and ended the steel industry's self-imposed price ceiling on those items. Flat roEed steel products ac- count for nearly 40 per cent of the industry's shipments and are used extensively in the manufacture of automobiles and home appEances. The spokesman said the cost of hot roEed steel would be in- creased by a ton and the cost of cold rolled steel by a ton. MEALS ON WHEELS AT NOMINAL COST For Further Information Phone 327-7990 One of the areas still In need of clarification is the tax treat- ment of profits or losses that arise from carrying out a hobby. There is a certain lack of consistency in the tax law here. For example, under the tax reform law, if one meticu- lous V builds up a stamp collec- tion, or a collection of antiques, as a hobby, and then loses in- terest in the hobby and sells his collection, making a substantial gain over his original cost, he faces a capital gains tax. On the other hand, it appears that one can still buy a ticket on a sweepstake, or make a huge gambling profit without facing the risk of a capital gains tax. The employee who wins a prize from his employer for submitting the best idea in a contest for improving company efficiency, will likely have the value of the prize added to his income. Yet if he wins the of- fice pool on the Grey Cup game, making an equal amount, he won't pay tax. The problem of taxing or not taxing casual or incidental prof- its has always been with us, and probably always will be a cloudy area for tax authorities. Consider a recent case decided a few weeks ago by the tax re- view board, dealing with profits from racing one's own horse, as a hobby. Canadian taxpayers who make profits racing their cars, showing their antique tractor collection, or otherwise indulging in hobby sidelines which make them extra money, will take great comfort from this decision. The facts of the case were not in dispute between the taxpayer and the tax collector, but only the tax result that flowed f.-om those facts. And the principle decided by the case would pe- sumably apply to similar kinds of cases Which occur by the thousands each year in Canada. The taxpayer in this case was a woman married to a farmer. Her parents had farmed, and al the age of 20 she married her childhood sweetheart who lived on a nearby farm. Her husband eventually bought out his fa- ther's farm and they settled into the business of fanning, raising 10 children besides their crops. In 1959, her father died, leav ing her an inheritance of JOHN CAMPBELL RANCH MACHINERY and LIVESTOCK AUCTION SALE 14 miles south of Pincher Creek to Waterton Dam Road, 1 mile east, 1 mile north FRIDAY, MAY 18, 1973 A.M. TERMS CASH NO RESERVE IUNCH AVAILABLE TRUCKS 4 wheel drive, 318, 4 speed, 2 speed transfer case; 1964 Chev. 1 ton, Cascade steel grain box, racks, hoist, only miles; 1951-Dodga 1 ton, comes with propane heated water tank, 'dual wheels, P.T.O. TRACTORS Ford 5000 disel tractor with H.D. Ford front end loader, manure bucket, hay forks, rock picker, 3 pt. hitch; Oliver 1900 105 H.P. diesel tractor, live P.T.O., hyd.; Ford 8N tractor comes with 3 pt. hitch cement John Deera tractor, good for parts; D-4 Cat with dozer blade. HAYING EQUIPMENT AND MACHINERY Heston slalk hand No. 30 used one season; Heston hay binder; New Holland No. 516, 205 bushel manure spreader, 2 yr. old, like new; J.D. No. 39 7' 3 pt. hitch mower; New Holland No. 280 P.TO baler; Bear Cat hammer- mill) IHC 12' high wheel DD. drill; Robin P.T.O. post hole auger; 3 sec. flex harrows; Rome disc harrows; straw bunch- er; grain auger comes with gas engine and trsp.; Roloflex 15' cultivator; Roloflex 10' cultivator; 2 New Holland S.D. rakes with tandem hitch; Alteen 15' double disc; J.D. ferti- lizer spreader; Bale elevator; Linden post driver; 2 4 farm wagons; 12' 7 ton land roller; Hay forkt for 3 pt. hitch and F.E. loader. SHOP AND MISC. EQUIPMENT Miller 225 amp. arc welder; acetylene welder end cutter; 90 Ib. propane bottle, pig bottle and torch; John Deere chain saw, new; 2 chain air compressor; bench cattle squeeze; elect fencer; fence posts; barb wire, no. 9 wire; hand post feed bunks; 2 barrels roofing far; 500 gal. 2 compt. fuel tank, complete; 300 gal. 1 compt. fuel tank, complete; various lengths lamb portable corrals; logging chains; socket sets; wrenches; hammers; shovels; forks; aluminum extension ladder. SPECIAL 1971 Vamoome A.T.V. 6 wheel drive, fibreglass body; 2 stock saddles; 4 sets harness, some with brass knobs, horse collars; bridles, halters; horse shoes, etc.; 2500 bus. self feed- er; 1000' of 6" steel pipe, 36" to 40" lengths; Franklin calf pullers plus other vet supplies; Winchester 12 gauge pump she? gun; semi auto. 22 rifle with scope; 303 Enfield rifle; 300 bales straw. HOUSEHOLD Zenith fridge; Tappan elec. RCA 21' color TV; Amana 21 cu. ft. upright deep freeze; kitchen table and chairs; chesterfield and chair; occasional chairs; radio record player combo; bedroom suites; 2 antique wood stoves; dishes, etc; set Encyclopedia Americana. LIYfSTOCK 110 Hereford ranch cows with calves at foot; 25 Char Hereford and Angus Hereford cross cows with calves at foot. The bulk of these females are second calf cows. They have been run under range conditions and are excellent replacements. CO head RWF and BWF 1st calf heifers bred to Shorthorn bulls to calve in Sept. and Oct. These are 2 year old heifers, showing good size and frame. 7 range bulls, 2 Char bloods, 3 Hereford, 3 Shorthorn Hereford; 7 aood ranch saddle horses, some mares with foals; 1 Hoi- stein milk 1 Angus cow with V4 blood Maine Anjou heifer calf; 1 Char cow with blood Chianina heifer calf. SALE MANAGED AND CONDUCTED BY CROSSROADS OF CANADA'S CATTLE COUNTRY 7itb that money, her husband jought her a race horse at an uction. The horse, called So _iong Prince, as a race horse idn't have an impressive ecord. He was already five ears old and had lost all of the races he had run. Never- heless, she decided to buy the lorse, train it and let her chil- ren ride the horse in the an- nual races which are part of ru- al Canadian life. Two of her sons took a real interest in the horse, and he be- e the family hobby, with the two boys riding him more and more for larger and larger jurses. Apparently the horse re- .ponded to the affection showed him by the family, and over the next nine years won a total of So Long Prince retired at the age of 14 and was stiE living as he pet when the case came to court. The department of national revenue took the position that with winnings of over n nine years, the taxpayer was not indulging a hobby, but rather was conducting a horse racing business, and therefore he profits from that business should be taxed. The taxpayer, on the other hand, argued that there was >recedent in the law which said hat casual profits gained from jursuing a hobby could not be ;axed, just as losses from in- dulging that hobby were not de- ductible expenses. The tax pro- josition is probably sound, be- cause it is Ekely that more money is lost indulging hobbies than is made, and therefore the ax officials are better off with that principle being in effect. BOX 690 FORT MACLEOD, ILBfltn Phone 403 234 33T5 AUCTION MARKET Chinese invited to visit Canada OTTAWA (CP) The ex- ternal affairs department saic Thursday a group of Chinese journalists have been invited to visit Canada after a tour of the United States that starts next week. A department spokesman said the invitation was sent to Pe- king Wednesday night. The government wiE be pay ing for the trip, expected to be- gin in early June and last two to three weeks. Pipeline transmission favored No interest in airlifting north gas However, the difficulty always arises in determining when a lobby is no longer a hobby but s actually a business venture. In this case, the trial judge, board member Roland Ste. Onge, was a considerably ex- jerienced tax judge. He carefully reviewed the en- ire course of conduct of the jaxpayer, including the reasons why the horse had been bought, the fact that it had only been raced by the sons of the tax- payer, that the taxpayer had mly toe one horse and had not tried to develop a stable of win- ners, as a prudent racehorse- tmsiness ve'nture might encour- age, that the horse was never sold, even though that is the pattern in the horse racing busi- ness, and that in fact, when the horse became too old to race, it was retained as a family pet. All of these circumstances lee Mr. Ste. Onge to the conclusion that the main purpose of racing the horse was to indulge a hobby, and that this would have taken place regardless o whether or not the horse won or lost. Thus, he concluded the profits were not profits from i business, but were casual and incidental gains made in pur- suing a hobby, and were not taxable. It is not known whether or not the tax department will appeal the case to a higher court. That isn't likely, inasmuch as only a little more than a year ago, the federal court, to which an ap- peal might be launched, made a decision in a similar horse rac- ing case, and ruled there, as well, that the profiis were prof- its from a hobby and were not taxable. The decision is probably sound in law, but still leaves a number of questions about our tax system. The university stu- dent who indulges his hobby, playing the guitar on weekends at school dances, is required to report and pay tax on that hobby income; the weekend prospector who makes a min- eral find while enjoying his hobby of communing with na- ture will likely pay tax on his prospecting hobby profits. The question is: Where does one draw the line? The line is difficult to see, and a lot of taxpayers would likely agree that is a lot of money to earn over a pe- riod of nine years without hav- ing to pay any tax on it. (Mr. Asper is a Winnipeg law- yer. CHURCHILL, Man. (CP) The chairman of the Great Plains Project said yesterday that decision-makers apparently have determined that new gas finds in northern Canada gener- ally won't be transported in liq- uid form. Dr. V. H. Atrill of Toronto said a million decision evidently has been made by the natural gas industry, in con- junction with others, in favor of pipeline transmission, the only existing means of transport suitable for gas. Speaking to the closing ses- sion of the four-day think-tank on Arctic resources and their development. Dr. Atrill said the gas and oil industry has shown no enthusiasm for a giant air- plane that is one of the proj- ects' tentative proposals. The conference, which at- tracted 250 experts in gas, oil, mineral and transportation technologists, had presentations on a variety of transport forms ranging from ice-breaking tank- ers to railways to pipelines. Dr. Atrill said, however, the high state of marine technology raises the possibility that Arctic fossil fuels, both liquid and ;aseous, might not move over he mainland at all, if there is a strict adherance to economic considerations. He said there could a big struggle over marine proposals, under study by federal ministry of transport, because the sea approach would deny Canada a chance to make direct use of Arctic energy resources. In fact, Dr. Atrill said, the federal ministry is providing more leadership in studying un- conventional ways of trans- porting fossil fuels than the en- tire oil and gas industry. Technical coordinator Gordon Purdy of Toronto said the Great Plains Project, set up by the prime minister's office to offer some ideas on development of the north, likes to think of itself as a "think-and-do-tank, but all TRACTOR SPECIAL VERSATILE MODEL 118 4 wheel drive Fully equipped Top condition OUTSTANDING TRACTOR VALUE AT ONLY CONTACT PERLICH BROS. AUCTION MARKET LTD. PHONE 328-3951 LETHBRIDGE BEAT THE HEAT! Before warm weather arrives make sure your air con- ditioning unit is working at top performance and ef- ficiency with this beny AIR CONDITIONING SERVICE Here's what we check: Evaporator discharge temperature 0 Air conditioning system for leaks 0 Freon level, recharge If necessary drive belts 0 Cooling system and pressurization All hardware 0 Test magnetic clutch one of our courteous ex- perienced service advisors Andy or Jim will be plased to assist you. BENY CHEVROLET OLDSMOBILE SERVICE DEPARTMENT 2nd AVENUE and 8th STREET S. PHONE 328-1101 (FREON AND PARTS EXTRA) 1974 car sales drop confirmed DETROIT (AP) Henry Ford n said yesterday automo- bile sales, heading for a second straight record year, would de- cline in 1974, although not to the extent some analysts predict. The chairman of the board of Ford Motor Co., told the firm's annual shareholders meeting that prices of 1974 models would "have to be raised, both to re- cover the costs of safety, dam- ageabiEty and emissions im- provements required by govern- ment standards and because we have had no general price in- crease to cover rising costs ol labor and materials since January, 1972." Ford said some car buyers are "undoubtedly buying in an- ticipation of price increases' in 1974, but said such behavior was normal and 1974 sale should "be second only to thi years records." we can do is present facts and persuade." He said development should be the servant, not the master, of the north, and commercial interests must appreciate the concerns of native people. About 16 Metis left the confer- ence on its second day, com- plaining that their views were being ignored. Mr. Purdy said more consid- eration should be given to the worries of the Metis about pro- tecting their people from the bad effects of mixing with pet- roleum industry rough-neck crews. Ron McBryde, Manitoba min- ister of northern affairs, said the Metis walk-out iEustrated "the difficulties that must be overcome before there can be fuE participation by the native northerner In large-scale devel- opment." 1 He said it may be necessary to slow down the pace of devel- opment to allow native peopta to become involved. In the past, native northerners have not de- rived enough benefit from re- source development. Mr. McBryde said the good wiE needed to bring native people into resource develop- ment schemes won't conn about until the federal govern- ment settles the aboriginal rights and treaty claims issues. HAIR-FLAIR Beauty Salon 503 7th St. S. PHONE 328-0197 r A FUN MACHINE ATA For the young at heart, here's a great new Honda the CD175-T4___a rugged, light sports-tourer with firecracker gel- up-and-go! Totally new styling, with Honda's famous 4-stroke, smoke-free engine and, we best warranties in the business! It's beautifully packaged at an amazingly affordable price. And remember, when you buy Honda, there's nearby parts and service wherever you gol See it at your Honda dealer, now! Yes! You can handle a Honda! DISTRIBUTED BY: CLARKE SIMPKINS HONDA 760 Aider-bridge Way, Richmond, B.C. a; LETHBRIDGE HONDA CENTRE SALES SERVICE 1117 2nd Ave. S. Phone 327-8889 Southern largest and Most Progressive Motorcycle Dealer PANELLING CLEARANCE Full Sheets Various Colors Large Quantity .00 to T per SHEET NEW and USED FLOOR COVERINGS, FURNITURE, APPLIANCES BATHROOM FIXTURES SETS SA.OO A PAIR CAMPERETTES139-179 FvAM SHEETS- L STOCK RACKS BOATS "IF WE DON'T HAVE IT WE CAN GET IT" GERRY'S TRADING POST 227-11th St. FORT MACLEOD OPEN SUNDAY Phone 234-3036, 234-3166 ;