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Exercise 1 ITA: 1247) The taxpayer company carried on the business on a comparatively small scale of lending money on mortgages, The company was operated

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Exercise 1 ITA: 1247) The taxpayer company carried on the business on a comparatively small scale of lending money on mortgages, The company was operated by two individuals who also owned and managed a number of other companies. All the companies operated out of the same office premises and used more or less the same office staff and equipment. The taxpayer company had no full-time employees. It was listed in the telephone directory but did no direct advertising. No attempt was made to keep track of the amount of time spent by the office staff on the work of each company and no specific charge was made for office space, use of telephones and equipment or staff. The company made loans to potential borrowers referred to it by independent agents. Its clientele came mainly from those who found it difficult to obtain loans through the normal commercial channels. The agents had a general idea of the sort of loans which might be acceptable, but because those were relatively high-risk loans, the company had to examine them very carefully. Occasionally, an outside appraisal was made, but normally someone from the company would visit the property to examine it. Often considerable negotiations as to terms were involved. Post-dated cheques for five years would be obtained from borrowers and turned over to the bank as collateral for the company's line of credit. For the year in question, the company held three mortgages involving $11.084, The sale of a small property, interest and other income resulted in total income of $4,609. Net income before taxes was shown as $3,479. The mortgages outstanding and net income of the company increased continuously from the year in question to the present time. During the year in question, the company's line of credit at the bank was estimated at $7,500 to $15,000, but it is now $25,000. - REQUIRED From the facts provided in the case, determine the type of business that is carried on by the company under the current legislation

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