Judge’s rejection of CRA’s expense denial is sweet music to taxpayer’s ears

financialpost.com:

Many parents encourage their kids to pursue their passion, especially if they show talent at a young age towards a particular endeavour, but other parents may go way beyond mere encouragement and dig deep into their own pockets to financially support a child as they launch their career.

This begs a question: Can a parent’s expenses to help their child’s career ever be tax deductible? A recent tax case dealt with precisely this issue.

The case involved a taxpayer who has a “musically talented daughter.” The taxpayer chose to use both his business management and contract negotiation skills to help manage his daughter’s artistic career. The two of them entered a “personal management contract” in which the father would initially incur various expenses in return for receiving a commission if his daughter ended up signing with a major record label.

In 2017, the taxpayer claimed $52,046 in “business expenses” relating to managing his daughter’s career. The Canada Revenue Agency, however, wasn’t convinced the taxpayer was truly in the business of artist management, so it disallowed his expense deductions. The taxpayer appealed the matter to the Tax Court, which released its decision earlier this month.

By way of background, the taxpayer began working in sales after high school and was employed for several years as an account manager at an international money transfer company. That job led to a senior opportunity with a cheque-cashing firm that, at the time, had three retail locations. He became a shareholder and director of the business, and helped it grow until it was sold to a publicly traded U.S. company. He has been with that company for 22 years, and is currently the vice-president of real estate, a role that requires him