Docket: 2010-1902(IT)I
BETWEEN:
KISHANTHAN NITHYANANDAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard on January 25, 2011 at Toronto, Ontario
Before: The Honourable
Justice Wyman W. Webb
Appearances:
|
For the
Appellant:
|
The
Appellant himself
|
|
Counsel for the Respondent:
|
Stephen Oakey (Student-at-law)
John Grant
|
____________________________________________________________________
JUDGMENT
The appeals from the reassessments made
under the Income Tax Act for the Appellant’s 2004 and 2005 taxation
years are allowed, and the matter is referred back to the Minister of National
Revenue for reconsideration and reassessment on the basis that:
(a)
in computing the
Appellant’s income from his sole proprietorship in 2004 the Appellant is
entitled to deduct $2,274 for accommodations; and
(b)
in computing the
Appellant’s income from his sole proprietorship in 2005 the Appellant is
entitled to deduct $9,200 for the amount he paid to his spouse for the services
that she rendered in relation to the sole proprietorship.
The Appellant is entitled to
costs which are fixed in the amount of $500.
Signed at Ottawa, Canada,
this 14th day of March,
2011.
“Wyman W. Webb”
Citation: 2011TCC160
Date: 20110314
Docket: 2010-1902(IT)I
BETWEEN:
KISHANTHAN NITHYANANDAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
These appeals relate to
the denial of certain amounts that were claimed by the Appellant as expenses in
determining his income from a sole proprietorship in 2004 and 2005. At the
commencement of the hearing the Appellant indicated that the deductions in
issue were for the following two items:
2004:
Accommodations: $2,274
2005:
Salaries and wages: $9,200
[2]
Following the
presentation of the evidence at the hearing, counsel for the Respondent
conceded that the Appellant should be allowed the deduction for accommodation
of $2,274. As a result the only remaining issue is whether the Appellant is
entitled to deduct $9,200 that was identified in the schedule that was
submitted at the hearing as “salaries and wages”.
[3]
The Appellant worked
full time for Ford Motor Company in 2004 and 2005. In addition to his job, the
Appellant operated, as a sole proprietorship, a consulting business that was related to leak test
applications for manufacturing companies to determine if the products that they
were manufacturing were leaking.
[4]
The Appellant’s
business was involved in one project in 2004 and 2005. There was a Phase A in
2004 and a Phase B in 2005. The Appellant had hired an arm’s length person as a
contractor and this contractor provided services in 2004 and 2005. In 2005 the
Appellant needed additional help and he retained his wife who has a Bachelor of
Science degree from the University of Windsor in Honours electrical
engineering / computer option. The Appellant stated that his wife would “supervise the [installation] and implementation and debugging of a
particular hardware portion of it”. This work was performed at the customer’s
site. The project assigned to his wife lasted for about 4 to 6 months.
[5]
The Appellant stated
that he paid his wife $9,200 in four payments made throughout the year. In
paragraph 9(g) of the Reply, it is stated that the Appellant’s spouse did
report $9,200 as gross business income in computing her income for 2005. As
well, the following are the total amounts deducted by the Appellant as
“salaries, wages and benefits” (which was how the amount paid to his wife in
2005 was claimed) in determining his income for 2004 and 2005:
|
|
2004
|
2005
|
|
Salaries, wages and benefits
|
$24,535
|
$19,700
|
[6]
The amount claimed for
2005 when his wife was providing services was less than the amount that he
claimed for 2004 when she was not providing services to his sole
proprietorship.
[7]
I accept the testimony
of the Appellant. It is more likely than not that he retained the services of
his wife in 2005 and that she earned and was paid $9,200 for these services.
[8]
As a result the appeals
are allowed and the matter is referred back to the Minister of National Revenue
for reconsideration and reassessment on the basis that:
(a)
in computing the
Appellant’s income from his sole proprietorship in 2004 the Appellant is
entitled to deduct $2,274 for accommodations; and
(b)
in computing the
Appellant’s income from his sole proprietorship in 2005 the Appellant is
entitled to deduct $9,200 for paid to his spouse for the services that she
rendered in relation to the sole proprietorship.
[9]
The Appellant is
entitled to costs which are fixed in the amount of $500.
Signed at Ottawa,
Ontario, this 14th day of March, 2011.
“Wyman W. Webb”
CITATION: 2011TCC160
COURT FILE NO.: 2010-1902(IT)I
STYLE OF CAUSE: KISHANTHAN NITHYANANDAN AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: January 25, 2011
REASONS FOR JUDGMENT BY: The
Honourable Justice Wyman W. Webb
DATE OF JUDGMENT: March 14, 2011
APPEARANCES:
|
For the
Appellant:
|
The Appellant himself
|
|
Counsel for the
Respondent:
|
Stephen Oakey (Student-at-law)
John Grant
|
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: Myles J. Kirvan
Deputy
Attorney General of Canada
Ottawa,
Canada
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