Citation: 2007TCC486
Date: 20070831
Docket: 2006-3333(GST)I
BETWEEN:
RÉGINALD BOURGET,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Jorré J.
Issue
[1] The Appellant is appealing a goods and
services tax (GST) assessment for the period from August 4, 2003, to December
31, 2004.
[2] During the period in question, the
Appellant operated a campground in Percé, Quebec, known as “Camping du Phare.”
[3] The assessment in question involves the
amount of $5,234.60, plus penalties in $532 and interest in $212.64. In making
the assessment, the Minister concluded that
1. the
Appellant made supplies in the amount of $44,170.31 in 2003 and
$15,441.10 in 2004 which he did not report;
2. the
Appellant had to be a registrant as of August 4, 2003, since he had
already exceeded the threshold of $30,000, and that accordingly the GST was
payable as of August 4, 2003; and
3. the
Appellant was not entitled to input tax credits (ITCs) for the use of his
vehicle.
[4] The Notice of Appeal is very short and
states as follows:
[TRANSLATION]
“The Notice of Assessment does not
correspond to the amount owed as certain amounts are derived from a gift or
inheritance.”
[5] The Appellant did not follow up on the
issue of ITCs for vehicle use.
[6] As for the issue of registration as of
August 4, 2003, Sylvie Bouffard, the auditor, testified that the
Appellant was a registrant as of November 1, 2003, but that she noticed
that the Appellant’s sales were enough to require him to be a registrant as of
August 4, 2003. During the cross-examination, she explained that she made
that determination by simply adding up a list of sales invoices provided by the
Appellant.
[7] There was no other evidence in that
respect and I have no reason to conclude that the Minister was wrong to
register the Appellant as of August 4, 2003, and to impose the supplies as
of August 4, 2003.
[8] The sole issue remaining is whether the
Minister was right to add $44,170.31 in 2003 and $15,441.10 in 2004 to the
campground supplies and to assess the GST on those amounts.
Auditor’s testimony
[9] The auditor explained that she compared
the accounting documents to the campground sales invoices. Then, she visited
the premises and saw a panel indicating that laundry services were provided and
that he sold cod, ice and firewood. She also noticed that there were six permanent
trailers. She did not see any sales from those sources in the invoices. During
discussions with the Appellant, he said that the income from those sources
totalled $4,600 per year.
[10] Owing to the fact that those amounts did
not appear in the accounting documents, the auditor obtained the Appellant’s
bank statements and, after taking into account the reported income and the
amount of a loan from the Caisse populaire, she noticed significant
discrepancies.
[11] The auditor concluded that those discrepancies—of
$44,170.31 in 2003 and $15,441.10 in 2004—were income derived from
the campground and that the GST had to be paid on those amounts.
Appellant’s testimony
[12] According to the Appellant, those
discrepancies are amounts that his mother and aunt gave him.
[13] The Appellant testified that he operated a
campground business and that he was a skilled worker in the construction
industry.
[14] The Appellant stated that he received
between $100,000 and $105,000 in cash from his mother.
[15] His father passed away in 1982.
[16] According to his testimony, his parents
accumulated and received that amount from various sources over the years. Both
parents—and, after the father’s death, the mother—kept that amount of cash in
the house. None of the seven children knew that that cash existed.
[17] From 1990 to 1993, the mother gave various
land to various children. One of the children got a lobster fishing licence.
[18] In 1993, the Appellant received the
camping business and the land. His mother was proud of the business and at the
time, she told him that she would help him build a new comfort station and put
in a sewer system.
[19] It was in 1998 that his mother gave him
the $100,000 in a small cotton bag to help him build the comfort station. The Appellant
kept all that money in the house. For a long time, the Appellant did not seem
to be concerned about the risks of keeping so much money in the house.
[20] The other children did not receive cash.
[21] In 1998 and in 1999, the Appellant went to
borrow money from the Caisse populaire. The loan was denied; he was
told that the income from the campground was not high enough. It was then that
the Appellant had the idea that he should perhaps deposit the cash at the
Caisse populaire to convince it to grant him a loan.
[22] However, several years went by before he
acted. In October 2004, he borrowed $138,000 from the Caisse populaire to
fund the construction of the new comfort station. The construction began in
December 2004 and ended in spring 2005. The building cost about $140,000.
[23] The Appellant also testified that a
deceased aunt gave him “$7,000” to help him build a new office. He did not say
when.
[24] The Appellant’s mother and aunt are
deceased.
[25] At one point—although it is not clear
when—the Appellant became concerned that if his house were to be destroyed by
fire, he could lose the $100,000 and decided to deposit that amount at the
Caisse populaire.
[26] However, the
Appellant did not explain
(i) why
he did not use the $100,000 for the construction. Not only was that the reason
for the gift from his mother but it would have also allowed him to reduce the
amount of the loan from the Caisse populaire to about $40,000 or less;
(ii) why,
if he had the $100,000 on hand, he did not deposit it in 1998 or 1999 when he
was denied the loan. He may have been able to convince the Caisse at the time
that he had sufficient holdings and could have avoided waiting five years for
the loan;
(iii) why,
once he decided to deposit the $100,000, either to convince the Caisse or to
avoid the risk incurred by keeping such an amount in the house, he stretched
out the deposits over two years; and
(iv) why,
despite the fact that he concluded that he should not keep large sums of money
in the house, he did not deposit the balance of the original gift from his
mother—about $40,000.
Testimony of Mr. Martel
[27] The Appellant had Réjean Martel
testify. Mr. Martel prepared the income tax returns of the Appellant and the
Appellant’s mother. According to Mr. Martel, the Appellant’s mother told
him that there was some money [TRANSLATION] “for the person who would get the
campground.” She did not say what amount.
[28] That conversation took place in spring
1995, during the preparation of the mother’s income tax return. At the time,
Mr. Martel had only known the mother for three or four years.
[29] Considering that the
Appellant received the campground in 1993, it is surprising that his mother
stated in 1995 that
there was some money [TRANSLATION] “for the person who would get the
campground.” [Emphasis added.]
Conclusion
[30] I do not accept the Appellant’s evidence.
His testimony was often vague and the series of events he described is highly
unlikely.
[31] The conclusion is that the amounts
of $44,170.31 in 2003 and $15,441.10 in 2004 are not derived from gifts or inheritances. Accordingly, the appeal must
be dismissed.
Signed at Ottawa,
Canada, this 31st day of August 2007.
“Gaston Jorré”
Translation certified true
on this 26th day of September 2007.
Daniela Possamai, Translator
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