Date: 19990831
Docket: 97-3845-GST-G
BETWEEN:
SASKATCHEWAN TELECOMMUNICATIONS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the General Procedure was heard at
Saskatoon, Saskatchewan on August 12, 1999. The Appellant called
Michael Unick, C.A., Manager, Disbursements and Taxation for the
Appellant; Gregory Kuse, LLB; and Barbara Carriere. The
Respondent called Larry Gruber, auditor on the file.
[2] The Notice of Appeal described the issues as follows:
2.1 SaskTel submits that the issues to be determined include,
inter alia, the following:
(a) Whether any portion of the parking provided to the
employees of SaskTel in the relevant periods is a "benefit
amount" which is required under paragraph 6(1)(a) of the
Income Tax Act to be included in computing such
employee's income for a taxation year. In determining whether
the parking provided to the employees is a "benefit
amount", various sub-issues arise, including the
following:
(i) whether the parking provided to the SaskTel employees is a
supply of a property or service;
(ii) whether an amount in respect of the parking provided to
the SaskTel employees is a "benefit", for the purposes
of section 6(1)(a) of the Income Tax Act;
(iii) in the event an amount in respect of the parking
provided to the SaskTel employees is a "benefit" what
the value of such "benefit" is to the employee is for
the purposes of section 6(1)(a) of the Income Tax Act;
(b) Whether SaskTel is entitled to the full input tax credit
claimed with respect to food, beverages and entertainment or
whether 50% of such input tax credits are required to be included
in the determination of net tax of SaskTel for the relevant
periods.
(c) Whether SaskTel, being an agent of the Provincial
Government of the Province of Saskatchewan, can be assessed
penalties pursuant to the Excise Tax Act.
(d) Whether any portion of the Minister's assessment is
statute barred.
[3] The Assessment Period is September 1, 1992 to December 31,
1995. At the opening of Hearing the Appellant conceded issue (d)
and the Respondent conceded issue (c).
[4] Issue (b) must be determined on the basis of Exhibit A-R1,
25, an agreement between the Ministers of Finance of Canada and
Saskatchewan which defines GST to be the tax imposed under Part
IX of the Excise Tax Act ("Act"), and its
regulations as amended. The question then is whether subsection
236(1) of Part IX imposes a tax. It reads:
(1) Where a registrant is the recipient of, or pays an
allowance in respect of, a supply of food, beverages or
entertainment and subsection 67.1(1) of the Income Tax Act
applies, or would apply if the registrant were a taxpayer under
that Act, in respect of the supply or allowance, 50% of the total
of all amounts, each of which is an input tax credit claimed in a
return for a reporting period in a fiscal year of the registrant
in respect of the supply or allowance, shall be added in
determining the net tax
(a) where the registrant ceases in or at the end of that
fiscal year to be registered under Subdivision d, for the last
reporting period of the registrant in that fiscal year;
(b) where the reporting period of the registrant in that
fiscal year is that fiscal year, for that reporting period;
and
(c) in any other case, for the reporting period of the
registrant that begins immediately after the end of that fiscal
year.
Section 236 was renumbered as subsection 236(1) by S.C. 1994,
c. 9, s. 14(1). The portion of subsection 236 preceding paragraph
(a) was amended by S.C. 1993, c. 27, s. 97(1), effective
December 17, 1990, and formerly read:
“236. (1) Where a registrant is the recipient of, or
pays an allowance in respect of, a supply of food, beverages or
entertainment and subsection 67.1(1) of the Income Tax Act
applies, or would apply if the registrant were a taxpayer under
that Act, in respect of the supply or allowance, 20% of the total
of all amounts, each of which is an input tax credit claimed in a
return for a reporting period in a fiscal year of the registrant
in respect of the supply or allowance, shall be added in
determining the net tax
[5] The Appellant argues that this does not impose a tax. In
this case the Appellant is a recipient of food and beverages of
which 20% of the amounts, and after February, 1994, 50% of the
amounts are added in determining the net tax. In the Court's
view, subsection 236(1) describes the calculations which precede
the imposition of the Part IX tax and on this basis the GST is
properly imposed. This appeal is dismissed.
[6] The majority of the evidence concerns issue (a). The
parties filed a Partial Agreed Statement of Facts, which
reads:
The parties to the within action agree, through their
respective counsel, to the following facts:
1. Saskatchewan Telecommunications ("SaskTel") is a
corporation created pursuant to The Saskatchewan
Telecommunications Act, RSS 1978, c.S-34.
2. At all relevant times, SaskTel was registered under
subdivision d of Division V of the Excise Tax Act, RSC
1985, c.E-13, as amended (the "Excise Tax Act")
and was assigned GST registration number 119452795.
3. During the period from September 1, 1992 to
December 31, 1995 "the "Relevant Period"),
SaskTel owned parking facilities at the following locations:
(a) 1740 Lorne Street, Regina, Saskatchewan being the Parkade
referred to in subparagraph 16(g) of the Minister of National
Revenue's (the "Minister") Reply to Notice of
Appeal;
(b) 1825 Lorne Street, Regina, Saskatchewan being a Parking
Lot referred to in subparagraph 16(k) of the Minister's Reply
to Notice of Appeal; and
(c) 140 1st Avenue South, Saskatoon, Saskatchewan
being a Parking Lot referred to in subparagraph 16(k) of the
Minister's Reply to Notice of Appeal.
4. During the Relevant Period, SaskTel leased parking spaces
from the owners of certain parking facilities located in the
cities of Saskatoon and Regina as follows:
Location Parkade/Parking Lot
Cornwall Centre Parkade
2114 11th Avenue, Regina
Saskatoon Tower Parkade
125 5th Avenue N. Saskatoon
Sturdy Stone Parkade
124 3rd Avenue N., Saskatoon
Princeton Towers Parkade
123 2nd Avenue S., Saskatoon
Midtown Plaza Parking Lot
122 1st Avenue S., Saskatoon
being parking facilities referred to in subparagraph 16(k) of
the Minister's Reply to Notice of Appeal.
5. During the Relevant Period, access to parking spaces in
parking facilities either owned by SaskTel or leased by SaskTel
from third parties were made available by SaskTel to certain
officers and employees. The officers and employees of SaskTel who
had access to such parking facilities were:
(a) employees who were employed as either a general manager or
a manager who participated in the Management Vehicle
Reimbursement Program (the "Management Program
Employees");
(b) officers and employees who were not Management Program
Employees, namely:
(i) 10 persons employed as executives, holding the offices of
president and vice-presidents of the Appellant
("Executives");
(ii) 20 persons employed as general managers who were not
Management Program Employees ("General Managers");
(iii) 250 persons employed as managers who were not Management
Program Employees ("Out of Scope Managers"); and
(iv) 260 persons employed in a position other than as an
Executive, General Manager or an Out of Scope Manger ("In
Scope Employees");
collectively referred to as the "Subject
Employees".
6. The Subject Employees are the officers and employees which
form the basis for the Minister's assessment in the within
appeal.
7. The Subject Employees are required to travel away from
their regular office in the performance of their duties an
average of 78 days per calendar year.
8. During the Relevant Period, the Subject Employees,
excepting the Executives and General Managers, were charged by
SaskTel the sum of $16.00 per month, plus $1.12 of GST, for
parking provided by SaskTel during the months of April to October
and the sum of $20.00 per month, plus $1.40 of GST, for parking
provided by SaskTel during the months of November to March.
9. During the Relevant Period, SaskTel did not charge the
Executives and General Managers for parking in the parking
facilities to which the Executives and General Managers had
access.
10. During the Relevant Period, the parking facilities in
which the Subject Employees were allowed to park were as
follows:
|
Location
|
Parkade/Parking Lot
|
# of Subject Employees
|
|
|
|
|
|
Cornwall Centre
2114 11th Avenue, Regina
|
Parkade
|
22
|
|
|
|
|
|
1825 Lorne Street, Regina
|
Parking Lot
|
7
|
|
|
|
|
|
Saskatoon Tower
125 5thAvenue.N., Saskatoon
|
Parkade
|
19
|
|
|
|
|
|
Sturdy Stone
124 3rd Avenue N., Saskatoon
|
Parkade
|
68
|
|
|
|
|
|
Princeton Towers
123 2nd Avenue S., Saskatoon
|
Parkade
|
43
|
|
|
|
|
|
Midtown Plaza
122 1st Avenue S., Saskatoon
|
Parking Lot
|
13
|
|
|
|
|
|
140 1st Avenue S., Saskatoon
|
Parking Lot
|
15
|
|
|
|
|
|
1740 Lorne St., Regina
|
Parkade
|
353
|
|
|
|
|
|
TOTAL
|
|
540
|
11. The SaskTel-owned parking facility located at 1740 Lorne
Street, Regina, Saskatchewan has 383 individual parking stalls.
During the Relevant Period, the number of employees of SaskTel
who had access to this parking facility fluctuated up and down,
however, at one point during the Relevant Period, 497 employees
of SaskTel had access to this parking facility including 353
Subject Employees.
12. The SaskTel-owned parking facility located at 1825 Lorne
Street, Regina, Saskatchewan has 7 individual parking stalls.
During the Relevant Period, 7 Subject Employees were assigned
these parking stalls.
13. The SaskTel-owned parking facility located at 140
1st Avenue South, Saskatoon, Saskatchewan has 69
individual parking stalls. During the Relevant Period, 15 Subject
Employees were assigned 15 of the stalls and the remaining stalls
were assigned to other employees of SaskTel.
14. During the Relevant Period, SaskTel leased 22 parking
spaces from the owners of Cornwall Centre parkade located at 2114
11th Avenue, Regina which were reserved for use by the
Executives and certain General Managers. SaskTel paid nothing to
the owner of this facility for the parking spaces. The owner of
Cornwall Centre parkade during the Relevant Period charged its
other parking customers the amount of $85.00 (exclusive of GST)
per month or $3.50 per day for a parking space.
15. During the Relevant Period, SaskTel leased 66 parking
spaces from the owners of Saskatoon Tower parkade located at 125
5th Avenue North, Saskatoon and assigned 19 of these
parking spaces to the Subject Employees. SaskTel paid the
following amounts to the owner of this facility for the parking
spaces:
(i) 9 stalls @ $85.00 (exclusive of GST);
(ii) 2 stalls @ $65.00 (exclusive of GST);
(iii) 55 stalls @ nil.
The owner of Saskatoon Tower parkade during the Relevant
Period charged its other parking customers the amount of $85.00
(exclusive of GST) per month for lower level parking spaces and
the amount of $65.00 (exclusive of GST) per month for upper level
parking spaces.
16. During the Relevant Period, SaskTel leased 81 parking
spaces from the owners of the Sturdy Stone parking lot located at
124 3rd Avenue North, Saskatoon, and assigned 68 of
those parking spaces to the Subject Employees. SaskTel paid the
following to the owner of this facility for the parking
spaces.
(i) 43 stalls @ $60.00 (exclusive of GST);
(ii) 38 stalls @ $55.00 (exclusive of GST).
The owner of the Sturdy Stone parkade during the Relevant
Period charged its other parking customers the amount of $5.00
per day for a parking space.
17. During the Relevant Period, SaskTel leased 13 parking
spaces from the owners of Midtown Plaza parkade located at 122
1st Avenue South, Saskatoon which were assigned to the
Subject Employees. SaskTel paid the following to the owner of
this facility for the parking spaces:
(i) 13 stalls @ $45.00 (exclusive of GST) (September 1992 to
July 1995)
(ii) 13 stalls @ $50.00 (exclusive of GST) (commencing July
1995)
The owner of Midtown Plaza during the relevant period charged
other parking customers the amount of $80.00 (exclusive of GST)
per month for an underground parking space and $45.00 (exclusive
of GST) per month for an outdoor parking space at its
"Blue" lot.
18. During the relevant period, SaskTel leased 44 parking
spaces from the owners of the Princeton Towers parkade located at
123 2nd Avenue South, Saskatoon, which were assigned
to the Subject Employees. SaskTel paid the following to the owner
of this facility for the parking spaces:
(i) 35 stalls @ $60.00 (exclusive of GST);
(ii) 2 stalls @ $85.00 (exclusive of GST);
(iii) 6 stalls @ $20.00 (exclusive of GST).
[7] The assumptions in paragraph 16 of the Reply to the Notice
of Appeal read:
16. In so assessing the Appellant, the Minister relied on,
inter alia, the following assumptions:
a) the facts stated and admitted above;
b) the Appellant registered under subdivision d Division V of
the Excise Tax Act, R.S.C. 1985, c. E-15, as amended
(the "Act") and was assigned GST registration
number 119452795;
c) throughout the period September 1, 1992 to December 31,
1995 the reporting period of the Appellant was each fiscal month
in that period;
d) the appellant is a corporation involved in commercial
activities and at all material times was engaged in the
telecommunications service business;
e) the Appellant had offices located in both the Saskatchewan
cities of Saskatoon and Regina;
f) the head office of the Appellant is located in Regina, at
2121 Saskatchewan Drive;
g) the appellant owned a multi-level parking facility located
in the core downtown area of Regina on property adjacent to
it's head office ("the Appellant's
Parkade");
h) the Appellant's Parkade has at least 400 parking spaces
in which an automobile could be parked;
i) during the relevant period approximately 353 of the parking
spaces located in the Appellant's Parkade were supplied by
the Appellant to certain of it's employees;
j) access to parking spaces at the Appellant's Parkade is
controlled 24 hours of each day by security personnel employed by
the Appellant;
k) the Appellant rented additional parking spaces from the
owners of certain multi-level parking facilities and parking lots
all located in the core downtown areas of Regina and Saskatoon as
follows, namely:
|
Location
|
Parkade
|
# of parking
spaces rented
|
|
|
|
|
|
Cornwall Centre Parkade
2114 11th Ave., Regina
|
Parkade
|
22
|
|
|
|
|
|
1825 Lorne St., Regina
|
Parking Lot
|
7
|
|
|
|
|
|
Saskatoon Tower Parkade
125 5th Ave. N., Saskatoon
|
Parkade
|
28
|
|
|
|
|
|
Sturdy Stone Centre
124 3rd Ave. N., Saskatoon
|
Parkade
|
68
|
|
|
|
|
|
Princeton Towers
123 2nd Ave S., Saskatoon
|
Parkade
|
44
|
|
|
|
|
|
Midtown Plaza
122 1st Ave. S., Saskatoon
|
Parking Lot
|
17
|
|
|
|
|
|
140 1st Ave S., Saskatoon
|
Parking Lot
|
12
|
|
|
|
|
|
Total
|
|
198
|
l) each parking space within the Appellant's Parkade and
each parking space within a Parkade rented by the Appellant is
supplied with a power outlet that can be used to power a block
heater or car heater during cold days;
m) each parking space within a Parking Lot rented by the
Appellant is not sheltered;
n) each parking space rented by the Appellant has a sign
posted thereto that states the space is reserved for use by
employees of the Appellant;
o) access to parking spaces in the Appellant's Parkade and
parking spaces rented by the Appellant was made available by the
Appellant to employees and other persons the Appellant permitted
to use a parking space;
p) during the relevant period the Appellant granted permission
to make use of and have access to parking in the Appellant's
Parkade or in parking spaces rented by the Appellant to employees
who were employed as either a General Manager or a Manager who
participated in the Management Vehicle reimbursement Program (the
"Management Program employees");
q) in addition to the Management Program employees the
Appellant granted permission to the following employees to make
use of and have access to parking in the Appellant's Parkade
or in parking spaces rented by the Appellant, namely:
i) 10 persons employed as Executives, holding office as
President and Vice-President of the Appellant;
ii) 20 persons employed as a General Manager who were not
Management Program employees ("In-scope General
Managers");
iii) approximately 250 persons employed as a Manager who were
not Management Program employees ("In-scope
Managers");
iv) approximately 260 persons employed in a position other
than as an Executive, a General Manager or a Manager
("Out-of-scope Employees");
r) Management Program employees:
i) supervised staff that were located in a number of different
locations;
ii) were habitually required to travel away form their regular
office in the performance of their duties;
iii) did not pay anything for parking spaces the Appellant
supplied to them; and
iv) a taxable benefit did not arise from the parking spaces
the Appellant supplied to them;
s) the Executives, In-scope General Managers, In-scope
Managers and Out-of-scope Employees were rarely, if at all,
required to travel away from their regular office in the
performance of their duties;
t) each of the Appellant's employees who was a recipient
of a supply made by the Appellant of a parking space was assigned
a stall in which to park his or her automobile in the
Appellant's Parkade or in a Parking lot rented by the
Appellant;
u) during the relevant period the appellant granted permission
to Executives and General Managers to make use of and have access
to parking in the Appellant's Parkade;
v) during the relevant period the appellant granted permission
to employees applying for use and access to parking in the
Appellant's Parkade or in parking spaces rented by the
Appellant on the basis of the applicant's position and
seniority within the Appellant;
w) the Appellant did not realize any revenue or receive any
consideration from its employees for the use of parking spaces
situated within the Appellant's Parkade or rented by the
Appellant other than from the In-scope Managers and the
Out-of-scope Employees that the Appellant permitted to make use
of and have access to parking in the Appellant's Parkade or
in parking spaces rented by the Appellant;
x) the permission granted by the Appellant to employees
specified in subparagraph (n) above, was to make use of and have
access to parking at any time for the purpose of parking a
particular automobile as determined by the employee, including an
automobile owned by the employee;
y) the Appellant since 1991 charged In-scope Managers and
Out-of-scope Employees the sum of $16.00 per month, plus $1.12 as
GST for the use of a parking space during the months of April to
October, and the sum of $20.00 per month, plus $1.40 as GST for
the use of a parking space during the months of November to
March;
z) throughout the relevant period the Appellant received from
each of the In-scope Managers and Out-of-scope Employees the sum
of $16.00 per month, plus $1.12 as GST for the use of a parking
space during the months of April to October, and the sum of
$20.00 per month, plus $1.40 as GST for use of a parking space
during the months of November to March;
aa) the Appellant received payment by deduction from salary or
wages otherwise payable in the monthly amounts specified in
subparagraph (s) above, without regard to the employee's
actual usage of the parking space in the month;
bb) also located within the Regina downtown core area and
adjacent to the Appellant's Parkade was a parking facility
owned by third parties known as "the Cornwall Centre
Parkade";
cc) the operator of the Cornwall Centre Parkade was engaged in
the business of providing parking for profit to persons including
employees of other employers with offices in the Regina downtown
core area;
dd) the operator of the Cornwall Centre Parkade charged the
monthly sum of $85.00 per month plus GST for the right to park
one automobile therein at any time at a parking space supplied
with a power outlet that can be used to power a block heater or
car heater during cold days;
ee) also located within the Saskatoon downtown core area and
adjacent to the parking facility rented by the Appellant was a
parking facility owned by third parties that is known as
"the Midtown Plaza";
ff) the operator of the Midtown Plaza was engaged in the
business of providing underground and outdoor parking for profit
to persons including employees of other employers with offices in
the Saskatoon downtown core area;
gg) the operator of the Midtown Plaza charged the monthly sum
of $90.00 per month plus GST for the right to park one automobile
therein at any time at an underground parking space supplied with
a power outlet that can be used to power a block heater or car
heater during cold days, and $50.00 per month plus GST for access
to an outdoor parking space not sheltered and without a power
outlet;
hh) the Appellant rented 17 outdoor parking spaces situated
within the Midtown Plaza Parking Lot located as specified in
subparagraph (i) above;
ii) also located within the Saskatoon downtown core area and
adjacent to the parking facility rented by the Appellant was a
parking facility owned by third parties that is known as
"the Saskatoon Tower Parkade";
jj) the operator of the Saskatoon Tower Parkade was engaged in
the business of providing parking services for profit to the
persons including employees of other employers with offices in
the Saskatoon downtown core area;
kk) the operator of the Saskatoon Tower Parkade charged the
monthly sum of $85.00 per month plus GST for the right to park
one automobile therein at any time at a reserved parking space
supplied with a power outlet that can be used to power a block
heater or car heater during cold days, and $70.00 per month plus
GST for the right to park one automobile therein at any time at a
non-reserved parking space supplied with a power outlet that can
be used to power a block heater or car heater during cold
days;
ll) also located within the Saskatoon downtown core area and
adjacent to the parking facility rented by the Appellant was a
parking facility owned by third parties that is known as
"the Sturdy Stone Centre";
mm) the operator of the Sturdy Stone Centre was engaged in
commercial activities and charged the daily sum of $6.60 per day
inclusive of GST for the right to park one automobile therein at
any time at a non-reserved parking space supplied with a power
outlet that can be used to power a block heater or car heater
during cold days;
nn) the fair market value of the supply of a parking space in
the Appellant's Parkade or of a parking space rented by the
Appellant in a Parkade in the downtown core areas of Saskatoon
and Regina was throughout the relevant period $90.95 per month,
including GST;
oo) the fair market value of the supply of a parking space
rented by the Appellant in a Parking Lot in the downtown core
areas of Saskatoon and Regina was throughout the relevant period
$40.40 per month, including GST;
pp) except for the GST included in the monthly payments made
by the In-scope Managers and the Out-of-scope employees, the
Appellant did not include any amounts in respect of the supplies
of parking spaces it made to its employees in its calculation of
its net tax for the reporting periods ending during the relevant
period;
qq) the Appellant did not account for and remit the following
amounts of tax in respect of the supplies of parking spaces it
made to its employees during the period of September 1, 1992 to
December 31, 1992;
|
Category of
employee
|
Calculation
|
Parkade or
Parking Lot
|
Unreported
Tax
|
|
|
|
|
|
|
Executives &
General Managers
|
(30 x 4) x
(90.95 x 7/107)
|
Parkade
|
714.00
|
|
|
|
|
|
|
Managers &
Out-of-scope
Employees
|
(475 x 2) x
[(90.95-21.40) x 7/107]
|
Parkade
|
4,323.00
|
|
|
|
|
|
|
Managers &
Out-of-scope Employees
|
(475 x 2) x
[(90.95-17.12) x 7/107]
|
Parkade
|
4,588.00
|
|
|
|
|
|
|
Managers &
Out-of-scope
Employees
|
(35 x 2) x
[(40.00-21.40) x 7/107]
|
Outdoor
|
85.00
|
|
|
|
|
|
|
Managers &
Out-of-scope
Employees
|
(35 x 2) x
[(40.00-17.12) x 7/107]
|
Outdoor
|
105.00
|
|
|
|
|
|
|
Total
|
|
|
$9,815.00
|
rr) the Appellant did not account for and remit the following
amounts of tax in respect of the supplies of parking spaces it
made to its employees during the period of January 1, 1993 to
December 31, 1995;
|
Category of
employee
|
Calculation
|
Parkade or
Parking Lot
|
Unreported
Tax
|
|
|
|
|
|
|
Executives &
General Managers
|
(30 x 12) x
(90.95 x 7/107)
x 3
|
Parkade
|
6,426.00
|
|
|
|
|
|
|
Managers &
Out-of-scope
Employees
(Winter)
|
(475 x 5) x
(90.95-21.40) x 7/107 x 3
|
Parkade
|
32,419.00
|
|
|
|
|
|
|
Managers &
Out-of-scope Employees
(Summer)
|
(475 x 7) x
(90.95-17.12) x 7/107 x 3
|
Parkade
|
48,179.00
|
|
|
|
|
|
|
Managers &
Out-of-scope
Employees
(Winter)
|
(35 x 5) x
(40.00-21.40) x 7/107 x 3
|
Parking Lot
|
639.00
|
|
|
|
|
|
|
Managers &
Out-of-scope
Employees
(Summer)
|
(35 x 7) x
(40.00-17.12) x 7/107 x 3
|
Parking Lot
|
1,101.00
|
|
|
|
|
|
|
Total
|
|
|
$88,764.00
|
ss) the Appellant did not deduct or withhold any amounts
pursuant to the Income Tax Act in respect of parking
provided to it's employees;
tt) the Appellant in the course of it's operations was at
all relevant times the recipient of supplies of food, beverages
and entertainment;
uu) the Appellant was a recipient of supplies of food and
beverages from suppliers who received payment directly from the
Appellant in amounts inclusive of GST in the relevant years as
follows:
|
Supplier
|
1992
|
1993
|
1994
|
1995
|
|
|
|
|
|
|
|
Beaver foods
|
|
1,515
|
8,606
|
7,937
|
|
Canway foods
|
45,203
|
103,461
|
114,549
|
112,429
|
|
Nice Bunz
|
|
|
4,045
|
5,802
|
|
Riverside
|
|
|
2,070
|
2,342
|
|
Saskatoon Club
|
|
936
|
6,369
|
8,847
|
|
Chicken Delight
|
340
|
867
|
554
|
719
|
|
Total
|
45,544
|
106,779
|
136,193
|
138,076
|
vv) the Appellant claimed input tax credits in respect of the
supplies of food and beverages specified in subparagraph uu)
above in a return for a reporting period ending during the
relevant period in amounts as follows:
|
Year
|
Input Tax Credit claimed
|
|
1992
|
2,979.00
|
|
1993
|
6,986.00
|
|
1994
|
8,910.00
|
|
1995
|
9,033.00
|
ww) in addition to the input tax credits referred to in the
previous subparagraph the Appellant claimed input tax credits as
the recipient of supplies of food, beverages and entertainment
from suppliers who received payment in transactions recorded by
the Appellant in account #67321007 in amounts inclusive of GST in
a return for a reporting period ending during the relevant period
in amounts as follows:
|
Year
|
Input Tax Credit claimed
|
|
1992
|
6,792.00
|
|
1993
|
7,547.00
|
|
1994
|
8,385.00
|
|
1995
|
9,317.00
|
xx) in addition to the input tax credits referred to in the
previous subparagraph and in subparagraph vv) the Appellant
claimed input tax credits as the recipient of supplies of food,
beverages and entertainment from suppliers who received payment
in transactions recorded by the Appellant in accounts other than
#'s 67321007 in amounts inclusive of GST in a return for a
reporting period in fiscal years in amounts as follows:
|
Year
|
Input Tax Credit claimed
|
|
1992
|
2,453.00
|
|
1993
|
2,725.00
|
|
1994
|
3,028.00
|
|
1995
|
3,364.00
|
yy) the Appellant did not include 20% of the input tax credits
it claimed in respect of the supplies of food, beverages and
entertainment specified in subparagraphs vv) to xx) that it
received prior to March 1994 and did not include 50% of the input
tax credits it claimed in respect of the supplies of food,
beverages and entertainment specified in subparagraphs vv) to xx)
that it received after February 1994 when determining its net tax
and failed to report the following amounts of tax:
|
Fiscal Year
|
Amount
|
|
1992
|
1,475.00
|
|
1993
|
3,451.00
|
|
1994
|
9,145.00
|
|
1995
|
10,858.00
|
|
Total
|
$24,929.00
|
[8] With respect to the assumptions:
(b) Not refuted.
(c) Not refuted.
(d) Agreed to by Mr. Unick.
(e) Not refuted.
(f) Agreed to by Mr. Unick.
(g) Not refuted.
(h) There were 383 parking spaces in the parkade.
(i) Not refuted.
(j) Not refuted.
(k) Correct, but the number of spaces varied somewhat.
(l) Agreed to by Mr. Unick.
(m) Agreed to by Mr. Unick.
(n) Correct except that there were no signs in the Midtown
Plaza in Saskatoon.
(o) Agreed to by Mr. Unick.
(p) Not refuted.
(q) Agreed to by Mr. Unick.
(r) Agreed to by Mr. Unick. (But these employee parking
locations are not part of the appeal as of the Hearing date.)
(s) In the Partial Agreement Statement of Facts.
(t) Stalls were not assigned except in the Cornwall Centre.
Elsewhere the Parkade or Parking Lot was assigned, but not the
stall.
(u) Not refuted.
(v) Not refuted.
(w) Agreed to by Mr. Unick.
(x) Not refuted.
(y) Not refuted.
(z) Agreed to by Mr. Unick.
(aa) Agreed to by Mr. Unick, but the subparagraph was not
corrected to (z).
(bb) Agreed to by Mr. Unick.
(cc) Agreed to by Mr. Unick.
(dd) In the Partial Agreed Statement of Facts.
(ee) Agreed to by Mr. Unick.
(ff) Agreed to by Mr. Unick except that Mr. Unick did not know
if there was "parking for profit".
(gg) Agreed to by Mr. Unick, but the figure $90.00 should be
$80.00.
(hh) Agreed to by Mr. Unick.
(ii) Agreed to by Mr. Unick.
(jj) Agreed to by Mr. Unick except that Mr. Unick did not know
if the party services were for profit.
(kk) Agreed to by Mr. Unick, but the figure $70.00 should be
$65.00.
(ll) Agreed to by Mr. Unick.
(mm) Agreed to by Mr. Unick but the $6.60 figure should be
$5.00.
(nn) and (oo) are in dispute.
(pp) Agreed to by Mr. Unick, but he denied that the words
"of the supplies" were correct.
(qq) Not refuted.
(rr) Not refuted.
(ss) Agreed to by Mr. Unick.
(tt) Agreed to by Mr. Unick.
(uu) Agreed to by Mr. Unick.
(vv) Agreed to by Mr. Unick.
(ww) Agreed to by Mr. Unick.
(xx) Agreed to by Mr. Unick.
(yy) Agreed to by Mr. Unick on the basis that the Appellant
disputes that it owes any tax.
[9] The Respondent did not admit that the basis for the
assessment respecting parking was an allegation of employee
benefits pursuant to paragraph 6(1)(a) of the Income
Tax Act, with a resultant GST adjustment pursuant to Section
173 of the Excise Tax Act. (See paragraphs 1.17 of the
Notice of Appeal and 9 of the Reply.) Nor was there an assumption
of a benefit to the employees.
[10] Larry Gruber, the auditor, reviewed Exhibit A-R 1, Tab 2,
"Summary of Assessment" which states that parts of the
assessment are for employee parking benefits. He further
testified that the values assessed were based upon the difference
between what he calculated to be the fair market value of the
parking spaces and the amounts the employees paid. For parkades
he calculated the fair market value on the basis of the rates at
the Cornwall Parkade as described in assumption (nn). For parking
lots, he used the rentals paid by the appellant as described in
assumption (oo). Larry Gruber was not qualified as an expert
witness in parking lot rates.
[11] The Appellant's evidence is that the employees who
were provided parking stalls which remain subject to assessment
did not have the use of particular stalls. They were expected by
the Appellant to travel, from time to time, from their assigned
offices in the course of various duties assigned to them by the
Appellant in the course of their employment, which they did. On
average this travel occurred on more than 30% of their working
days. Their vehicles and they had access to that parking
24 hours a day, 7 days a week throughout the year. The
subject employees could use the parking facilities after office
hours for their personal use in their discretion. Their usage
during office hours was for the benefit of the Appellant. The
Appellant provided business parking and its employees used their
own vehicles located in that parking for the Appellant's
business from time to time as required by their duties. As a
result, business travel occurred more quickly and efficiently.
This benefited the Appellant, not the employees.
[12] However, each subject employee paid the Appellant the
rates described and these rates constituted reimbursement for the
personal aspect of their occasional use of the parking after
office hours. Thus, any personal benefit was paid for in the
rates levied on the employees by the Appellant.
[13] In the Court's view this is an evidentiary issue. The
Appellant proved its contention respecting the parking. The
Respondent did not prove that the employees received any personal
benefit from the parking or that the rates it calculated
represented either the correct value or the fair market value of
the portion of the parking which constituted personal benefit to
the employees. Rather, the Appellant and its employees were at
arm's length and they made mutual deals respecting the
parking in which each got consideration for what it gave.
[14] Thus, any value which an employee received was for that
employee's occasional use of the parking facilities for
shopping or entertainment similar to the personal use described
by Mr. Unick. The Appellant and its employees agreed on a rate of
payment by each employee that is commensurate with the personal
parking value that those employees received. For this reason,
this portion of the appeal is allowed.
[15] The assessments are referred back to the Minister
accordingly.
[16] The Appellant is awarded party and party costs.
Signed at Ottawa, Canada this 31st day of August,
1999.
"D.W. Beaubier"
J.T.C.C.
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