Date:
20020723
Docket:
2001-4454-GST-I
BETWEEN:
BRENDA DIANN
WARREN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for judgment
Little,
J.
A.
FACTS
[1]
The Appellant is the spouse of Dennis Michael Warren
("Dennis").
[2]
Dennis operated a trucking business as a proprietorship
("The Business"). Commencing in 1992 Dennis changed the
nature of his business from a trucking business to the business
of a logging contractor. Dennis operated as a logging contractor
from 1992 until serious financial problems forced him to
discontinue The Business in 1998.
[3]
Until August 1, 1998 the Appellant and Dennis owned, as joint
tenants, homes located at the following addresses:
-
1695 Pine Grove Street, Lillooet, B.C.
-
6490 Jones Road, Savona, B.C.
(the homes
noted above are referred to as "The
Properties").
[4]
The Appellant provided various services to The Business. The
Appellant operated the office, prepared the payroll, maintained
the books, picked-up parts required to repair the extensive
logging equipment, provided cooking and housekeeping to employees
of The Business and provided other assistance to The
Business.
[5]
The Appellant reported employment income from The Business as
follows:
1992
$32,000.00
1993
$7,500.00
1994
$7,500.00
1995
$15,000.00
1996
$10,000.00
1997
--
1998
$6,000.00
The
Appellant testified that after the tax was paid on this income,
the amount remaining was lent by the Appellant to Dennis for use
in The Business.
[6]
The Appellant testified that she also lent additional money from
her personal funds to The Business.
[7]
Dennis testified that on August 5, 1998 he repaid the loan that
he owed to the Appellant by transferring his equity in The
Properties to the Appellant.
[8]
As a result of a series of financial problems beyond the control
of Dennis, The Business was unable to pay the applicable Goods
and Service Tax ("GST").
[9]
On March 28, 2000, the Minister of National Revenue (the
"Minister") reassessed the Appellant to impose GST of
$85,669.83 pursuant to subsection 325(1) of the Excise
Tax Act (the "Act"). The GST imposed by the
Minister on the Appellant was later reduced to $71,500.00. In
issuing the Notice of Assessment the Minister determined that at
the time of the transfer by Dennis of his equity in The
Properties to the Appellant, the value of the equity owned by
Dennis in The Properties was not less than $71,500.00.
B.
ISSUE
[10] The issue
is whether the Appellant is jointly and severally liable with
Dennis pursuant to subsection 325(1) of the Act for the
GST in the amount of $71,500.00.
C.
ANALYSIS
[11] The sworn
testimony of the Appellant and Dennis supported by the testimony
of the accountant, Mr. Sellmer, C.A., establishes that in the
years indicated the Appellant made the following loans to Dennis
and received the indicated repayments from Dennis.
Loan
Year
Amount
Repayments
Amount Owing
1992
$28,166.34
$10,735.17
$17,431.17
1993
$
8,678.14
$15,120.51
< $6,442.37 >
1994
$24,465.03
$14,882.15
$ 9,582.88
1995
$38,806.80
$25,592.68
$13,214.12
1996
$11,800.00
$18,256.11
< $6,456.11 >
1997
$40,359.60
$
6,445.86
$33,913.74
1998*
$11,310.98
$34,337.51
< $23,026.53 >
Balance
$38,216.90
*to August
5th, 1998
[12] I have
carefully considered the testimony of the Appellant, the
testimony of Dennis, the testimony of Mr. Sellmer and the
supporting documents filed with the Court. I have concluded that
Dennis owed the Appellant at least $38,216.90 prior to the
transfer by Dennis of his equity in The Properties to the
Appellant.
[13] The appeal
is to be allowed and the Minister is instructed to reduce the
G.S.T. of $71,500.00 assessed against the Appellant by deducting
therefrom the amount of $38,216.90. There will be no further
adjustments to the Notice of Reassessment.
Signed at
Toronto, Ontario, this 23rd day of July 2002.
J.T.C.C.
COURT FILE
NO.:
2001-4454(GST)I
STYLE OF
CAUSE:
Brenda Diann Warren and
Her Majesty the Queen
PLACE OF
HEARING:
Kamloops, British Columbia
DATE OF
HEARING:
June 10, 2002
REASONS FOR
JUDGMENT BY: The Honourable Judge L.M.
Little
DATE OF
JUDGMENT:
July 23, 2002
APPEARANCES:
Counsel for
the Appellant: Kenneth R. Hauser
Counsel for
the
Respondent:
Michael Taylor
COUNSEL OF
RECORD:
For the
Appellant:
Name:
Kenneth R. Hauser
Firm:
Kenneth R. Hauser Law Corporation
Kamloops, British Columbia
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-4454(GST)I
BETWEEN:
BRENDA DIANN
WARREN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on June 10, 2002 at Kamloops, British Columbia, by
the
Honourable Judge L.M. Little
Appearances
Counsel for
the
Appellant:
Kenneth R. Hauser
Counsel for
the
Respondent:
Michael Taylor
JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated September 18, 2001
and bears number 76809, is allowed and the assessment is referred
back to the Minister of National Revenue for reconsideration and
reassessment in accordance with the attached Reasons for
Judgment.
Signed at
Toronto, Ontario, this 23rd day of July 2002.
J.T.C.C.
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