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Published: April 13, 2020

Last Updated: April 13, 2020

Canadian tax lawyer case comment- loss claim from blogging: Berger v The Queen, 2015 TCC 153


Berger v The Queen [Berger], involved a sports news blogger successfully appealing a denial of business expenses and business losses by Canada Revenue Agency. The appellant, Mr. Howard Berger, successfully argued that, despite the judge’s fact finding of his passion for sports news blog-writing, the activities were sufficiently commercial in nature such that they should be recognized as business activities and the expenses incurred to generate the associated income should be deductible. This case applied a rather lenient application of the principles in the seminal 2003 R v Stewart case. The test in Stewart asks two questions: 1) whether the activities are clearly commercial and 2), if not clearly commercial, whether the activities are sufficiently commercial as to constitute a source of income. The Stewart test provides for the possibility that activities with elements of personal enjoyment can still be characterized as business activities for which business expenses can be deducted, and business losses claimed.


The facts of this case are straightforward. Howard Berger is a journalist and writer. Employed as a sports news reporter since 1988 at the radio station FAN 590, since 2006 part of his job with FAN 590 was to write 3 or 4 blogs a week for the FAN 590 website. When Mr. Berger’s employment FAN 590 was terminated in 2011, he decided that he would begin to “write a quality hockey blog that would attract sufficient readership that sponsors would want to advertise on his site.” In order to produce quality writing on his blog, he incurred significant travel expenses following the Toronto Maple Leafs hockey team; these travel expenses were the largest portion of Mr. Berger’s costs.

Mr. Berger was not selling subscriptions and revenue was going to come from potential sponsors and advertisers. At that time he only had one sponsor, whom he did not seek out, and, rather, just ‘fell into his lap.’ Although he did not prepare a formal business plan, a formal budget nor any financial projections, he used all his efforts to develop quality content for the blog website.

The Law

The court in Stewart pronounced a 2- stage test for determining whether activities have sufficient badges of commerciality that can outweigh the personal element and still lead to a finding of a source of income.

The first inquiry is whether the nature of the activity is clearly commercial, in which case there is no need to analyse the taxpayer’s business decision. If the activities have personal elements, then several factors must be considered when determining whether the activities are sufficiently commercial as to constitute a source of income. The factors are:

  • The profit and loss experience in past years;
  • The taxpayer’s training;
  • The taxpayer’s intended course of action;
  • The capability of the venture to show a profit;
  • Any other factors.

The Positions of the Parties – Stewart Applies

Both parties agreed that the correct legal principles to be applied to the facts of this case are the principles outlined by the Supreme Court of Canada in Stewart.

Berger’s position – Clearly Commercial

Mr. Berger argued that his activities and venture were clearly commercial and that there was no personal element. Mr. Berger also argued that even if it was not clearly commercial, “making bad business decisions did not mean one was not in business.”

Crown’s position – Personal Elements

The Crown argued that a sports fan such as Mr. Berger travelling across North America to follow a hockey team is indicative of a strong personal element. Mr. Berger was not selling his sports writings, and there were no subscriptions; in addition, he had no experience running an advertising or media business. Hence, Mr. Berger’s venture should not be considered as a business source of income, and therefore the expenses associated with travelling to follow a hockey team should not be deductible.

The Tax Court of Canada’s findings

The Tax Court of Canada judge applied the Stewart test and found that there was a personal element to Mr. Berger’s activities: they were not clearly commercial as defined by the reasoning in Stewart.

Specifically, for a sports fan like Mr. Berger travelling to watch the Maple Leafs play had a personal element, as did the blogging itself. In addition, using common sense, the judge found that “blogging” was by its nature a recreational pastime and, possibly, a commercial practice.

The judge then moved on to the second stage of the test, and considered the five objective factors outlined above.

  • The profit and loss experience in past years:

The years at issue were the first few years Mr. Berger had started to blog about the hockey team as a freelance blogger; there was no previous business profit or loss for this venture.

  • The taxpayer’s training:

The judge found that Mr. Berger was a journalist by training and a reporter of more than 20 years of experience. Mr. Berger had been getting paid to write about sports for 20 years, and he attempted to keep on getting paid by writing about sports even after his employment was terminated.

  • The taxpayer’s intended course of action;

The judge found that for the years at issue, “Mr. Berger did intend to pursue profit and did take, in those 18 months, commercial steps to do so”; even if he did not exercise keen business acumen or have a concrete business plan, he still managed to gain one sponsor by writing quality blogs about hockey. Also, he emailed about 500 contacts to advertise his blog to them. However, the judge noted that there may come a time in the future when Mr. Berger’s commercial activities would be overtaken by personal dreams, such that the lack of concrete business plan will indicate that the activities are purely personal.

  • The capability of the venture to show a profit:

Noting that Mr. Berger did not have any concrete financial numbers or projections of profit, the judge concluded that the “lack of evidence on this aspect, while not helpful to Mr. Berger, is also not fatal.”

  • Any other factors:

The judge did not provide any analysis about other factors.

On balance, the judge concluded that Mr. Berger’s blog writing activities were a source of business income, from which travel expenses could be deducted and business losses could be recognized.


It seems that the judge, having noted multiple times that Mr. Berger’s venture was only at the very early stage, applied a very lenient and relaxed examination of the business/commercial nature of Mr. Berger’s blog writing venture. This lenient approach can be contrasted with the court’s approach in Cohen v Queen, 2011 TCC 262, [Cohen]. In Cohen, the lawyer Mr. Cohen engaged in gambling activities and had been playing poker since he was 21 years old. With no past experience in business, he started playing poker full time in 2006, competed in many tournaments, and gained a five-figure gambling income for year 2006; but he also incurred expenses in excess of the income. The objective factors indicating the level of commerciality and business-like nature of the activities were similar to Mr. Berger’s case. More significantly, Mr. Cohen had a more detailed business plan, provided his strategies and some financial projections for winning poker prizes in the future. However, after scrutinizing Mr. Cohen’s plans, they were not accepted by the court as sufficient to demonstrate the commerciality of his venture, partly due to a credibility issue. Perhaps the fact that Mr. Cohen was a lawyer, but wanted run a poker ‘business’ as a professional poker player, weakened his credibility as well. However, it is evident in Cohen that the court did not take into account the early stage of Mr. Cohen’s poker venture in 2006. The fact that the judge in Cohen was skeptical and had concerns for the taxpayer’s credibility showed that the judge took more strict approach towards scrutinizing the taxpayer’s proclaimed financial projections and business plans.

In Berger, the judge left open the possibility that in the future taxation years, Mr. Berger’s activities may not be considered to be sufficiently commercial. As demonstrated above, the Stewart test is largely fact driven, and its application also depends on the stage of the business, as well as subjective and objective evidence of the taxpayer’s intention. If the objective factors and evidence indicating a clearly or sufficiently commercial venture are weak, then, to increase the chances of a favourable finding, the taxpayer needs to convincingly detail his or her subjective intention to build a profitable business. At trial, effectively adducing evidence of objective and subjective intention is important; therefore it is crucial to hire experience litigators if going to trial is a real possibility.

Canadian Tax Lawyer Assistance for CRA audit Tax Disputes

If you are considering engaging in a tax dispute or litigation with the Canada Revenue Agency because they have denied your business expense because they think your activities have no reasonable expectation of profit, get in touch with our experienced Canadian Income Tax Litigators. Effective planning and strategy is necessary at all stages of the tax dispute process. Our Canadian tax law firm can give you the counsel and representation that you need to be successful in your dispute with the Canadian Revenue Agency at each stage of the process.



"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

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