Docket: 2009-1940(IT)I
BETWEEN:
TERAH-LEIGH DUIVENVOORDE,
appellant,
and
HER MAJESTY THE QUEEN,
respondent.
____________________________________________________________________
Appeal heard on May 6, 2010, at Nanaimo, British Columbia.
Before: The Honourable
Justice Gaston Jorré
Appearances:
|
For the appellant:
|
The
appellant herself
|
|
|
|
|
Counsel for the respondent:
|
Max Matas
|
____________________________________________________________________
JUDGMENT
In accordance with the attached reasons for
judgment, the appeal from the assessment made under the Income Tax Act
for the 2007 taxation year is dismissed without costs.
I note that the notice of appeal indicates
that the appellant is in difficult circumstances.
I wish to point out to the appellant that
she can apply to the Canada Revenue Agency (CRA) for interest relief and,
depending on the circumstances, the CRA may grant relief.
Information on the provisions can be found
in income tax information circular IC07-1, Taxpayer Relief Provisions. Form
RC4288, Request for Taxpayer Relief, can be used to make a request. The
circular, form and other information can be found at: http://www.cra-arc.gc.ca/gncy/prgrms_srvcs/txpyrrlf/menu-eng.html.
Signed at Ottawa, Ontario,
this 15th day of November 2011.
“Gaston Jorré”
Citation: 2011 TCC 525
Date: 20111115
Docket: 2009-1940(IT)I
BETWEEN:
TERAH-LEIGH DUIVENVOORDE,
appellant,
and
HER MAJESTY THE QUEEN,
respondent.
REASONS FOR JUDGMENT
Jorré J.
[1]
Originally, there was
an issue relating to the Canada Child Tax Benefit; however, at the beginning of
the hearing the appellant advised the Court that this issue had been resolved.
[2]
This appeal was heard
under the informal procedure. The original version of these reasons is in
English.
[3]
The remaining issue
relates to the amount of $18,052.06 in business income from a nursery/garden
centre in Qualicum Beach (garden centre) included by the Minister
of National Revenue (Minister) in the appellant’s income.
[4]
The appellant’s T1
income tax return for 2007 dated October 15, 2008 and received by the Minister
on October 20, 2008 shows the appellant as having received $18,052.06 in
business income from the garden centre. The Minister included that income in
the appellant’s initial notice of assessment dated November 10, 2008.
[5]
The appellant objected
to that initial assessment and the Minister confirmed that initial assessment.
[6]
I note that no one took
the position that the appellant was an employee of the garden centre.
[7]
The appellant and Erik
Duivenvoorde were married in June 2005. They separated in May 2008. Both
testified at the hearing.
[8]
At the beginning of
2007 the appellant was working as the manager of the flower department at Thrifty
Foods. She had worked previously in the flower business when she was younger.
She was knowledgeable of the flower business and knew who the suppliers were.
[9]
Mr. Duivenvoorde
had a horticultural certificate and was knowledgeable about gardening. He had
also previously had a flower business in Holland.
[10]
The garden centre
opened in March 2007 and closed down in its original location in December 2007.
It reopened in a new location around Mother’s Day of 2008.
[11]
Some time around the
opening of the garden centre the appellant gave up her job at Thrifty Foods and
started to work at the garden centre. Mr. Duivenvoorde also worked at the garden
centre.
[12]
The revenues and
expenses of the business all flowed through a joint bank account belonging to
the appellant and Mr. Duivenvoorde. Either of them could sign cheques.
[13]
Both of them
effectively shared the revenues from the business since they both drew money
from the joint account to pay family expenses.
[14]
Both the appellant and
Mr. Duivenvoorde reported half of the net business income in their tax
returns.
[15]
The appellant testified
that Mr. Duivenvoorde gave all the business information to the accountant
who prepared her return and she simply signed the return without reading.
[16]
She further testified
that she only became aware of the fact that half the business income was
included in her return after she got home from meeting the accountant.
[17]
At the time, the
appellant did not seek to amend her return as a result of this discovery.
[18]
However, she did testify
that when she asked Mr. Duivenvoorde about the difference in the amount of
tax they were paying he said that they would work it out. The testimony at
trial does not disclose when this conversation occurred.
[19]
Mr. Duivenvoorde
testified that he gave all the business information to the accountant, but gave
no instructions to the accountant as to how to split the income.
[20]
The testimony of the
appellant and Mr. Duivenvoorde was diametrically opposed as to what was
intended in terms of ownership of the business.
[21]
The appellant said that
Mr. Duivenvoorde was the sole proprietor.
[22]
Mr. Duivenvoorde’s
testimony was that the plan was for him to help her get the business
established, and then for her to take it over while he would go out and get
himself another job. He testified that they both made the decision to open the garden
centre.
[23]
Various elements in the
evidence were highlighted in regard to this issue.
[24]
Mr. Duivenvoorde
had become unemployed either in 2006 or early 2007 and, before the garden
centre opened, he attended a program called Community Futures. The program
appeared to be designed to help people put together a business plan and seek
funding in order to create their own business.
[25]
The appellant pointed to
the fact that a business plan prepared by Mr. Duivenvoorde as part of the Community
Futures program
did not in any way suggest that this was anything other than a proprietorship.
The plan makes no mention of any partnership.
[26]
Mr. Duivenvoorde’s
testimony was that everything was shown as a proprietorship because this was a
requirement of the Community Futures program.
[27]
The appellant also
testified that the loan made through Community Futures was only in Mr. Duivenvoorde’s
name; she did acknowledge she had had to sign some documents in respect of the
loan because it was guaranteed by a second mortgage against the family house
which was jointly owned.
[28]
Mr. Duivenvoorde
was unsure if both names were on the loan itself as opposed to documents
relating to the second mortgage, but conceded it might be in his name only.
[29]
I note that there was
no disagreement that it was intended that both the appellant and Mr. Duivenvoorde
would work in the business.
[30]
While there was
disagreement as to the exact nature of the role of both, there was no
disagreement that they both played a significant role in operating the business
during 2007. At the very least, the appellant ran the flower side of the
business.
[31]
In general, the
evidence regarding intentions as to whose business it was intended to be and
what the overall intentions were is contradictory and ambiguous.
[32]
The Minister alleges
that there was a partnership between the appellant and Mr. Duivenvoorde.
[33]
The British Columbia Partnership Act
states: “Partnership is the relation which subsists between persons carrying on
business in common with a view of profit.”
[34]
Whatever the intention,
what actually happened is clear and it is unnecessary for me to make findings
on the parties’ original intentions.
[35]
There was a business.
There was an intention to make a profit and it was carried out in common.
[36]
Both spouses made
contributions. The appellant gave up her existing job and worked at the garden
centre; the husband worked at the garden centre. Property belonging to both of
them was used to guarantee a loan. One or both took out the loan.
[37]
Both spouses could
write cheques, both had access to the business account and both used money from
the account to pay family expenses.
[38]
The appellant was not
an employee. In addition, the appellant’s role in the business was unrelated to
her contribution to the running of the household.
[39]
In the circumstances, I
do not see how I can reach any conclusion other than that there was a
partnership between the appellant and Mr. Duivenvoorde.
[40]
In her notice of appeal and at the
hearing the appellant sought to have the quantum reduced. At the hearing she
stated that she felt it was unfair that she wound up with a higher tax bill
than Mr. Duivenvoorde.
[41]
However, there is
nothing in the evidence that would suggest any basis for a split of the
partnership income other than on a fifty-fifty basis.
[42]
Accordingly, I must
dismiss the appeal.
Signed at Ottawa, Ontario, this 15th day of November 2011.
“Gaston Jorré”
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