Docket: 2004-1295(GST)G
BETWEEN:
RICHARD BETCHER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on March 26 and 27, 2008, at Winnipeg, Manitoba
By: The Honourable Justice
C.H. McArthur
Appearances:
|
Counsel
for the Appellant:
|
Kris
Janovcik
|
|
Counsel for the Respondent:
|
Lyle Bouvier
|
____________________________________________________________________
JUDGMENT
On consent of
the parties, the appeal from the assessment made under the Excise Tax Act,
notice of which is dated December 16, 2002, and bears number 09DR0123387, for
the period April 1, 1999 to June 30, 1999, is allowed, and referred back to the
Minister of National Revenue for reconsideration and reassessment on the basis
that the 1999 Chevrolet
Silverado purchased by the Appellant is excluded from the definition of “automobile”,
as set out in subsection 248(1) of the Income Tax Act.
Signed at Ottawa, Canada, this 30th day of April 2008.
“C.H. McArthur”
Citation: 2008TCC270
Date: 20080430
Docket: 2004-1295(GST)G
BETWEEN:
RICHARD BETCHER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
McArthur J.
[1] This appeal under the Excise Tax Act (the
“Act”) is from a goods and services tax assessment in the amount of
$1,454.50 issued by the Minister of National Revenue for the Appellant’s
reporting period from April 1, 1999 to June 30, 1999.
[2] At the commencement
of the hearing, the parties informed the Court that they had settled the
contentious issues. The Appellant does not oppose the Respondent’s position
that the truck in question, a
1999 Chevrolet Silverado 1500 L5, extended cab, short-bed (exterior carrying
box), is a
passenger vehicle within the meaning of subsection 123(1) of the Act.
The Respondent conceded that the truck is excluded from the definition of
“automobile” because it was used exclusively in commercial activities. The
appeal is therefore resolved on this basis.
[3] While the appeal
has been dealt with at the request of counsel for the Respondent, I will
consider the question whether the truck was a passenger vehicle within the
meaning of subsection 123(1) of the Act and paragraph 248(1)(a)
of the Income Tax Act, which states, in part, as follows:
248(1) In this Act
"automobile" means
(a) a
motor vehicle that is designed or adapted primarily to carry individuals on
highways and streets and that has a seating capacity for not more than the
driver and 8 passengers,
(b) …
but does not include
…
(e)
a motor vehicle
(i) … a van or pick-up truck, or a similar
vehicle, that has a seating capacity for not more than the driver and two
passengers …
(iii) … of a type commonly called a
pick-up truck that is used in the taxation year in which it is acquired or
leased primarily for the transportation of goods, equipment or passengers in
the course of earning or producing income at one or more locations in Canada
that are …
Subsection 123(1) of the Act refers to
subsection 248(1).
[4] The facts
set out by the Minister are, for the most part, not opposed by the Appellant and
include the following:
(a) The Appellant
operates a grain farming operation near Swan River, Manitoba.
(b) The Appellant is a GST registrant.
(c) On June 22, 1999,
the Appellant purchased a 1999 Silverado Extended Cab 4x4 truck (“the truck”)
from Powell Motors in Swan
River, Manitoba
(d) The net price of the
truck was $39,614, plus GST of $2,772.98, plus PST.
(e) The Appellant
sold/traded in a 1992 GMC Sierra Extended Cab 4x4 truck (“1992 truck”) to
Powell Motors for $16,570.09, plus GST of $1,159.91
(f) The Appellant
failed to report the GST collected on the sale/trade of the 1992 truck in the
amount of $1,159.91, in filing his GST return for the April 1, 1999 to June 30,
1999 reporting period (“the reporting period”).
(g) The Appellant
claimed an input tax credit in filing his GST return for the reporting period
of $1,613.07 relating to the purchase of the truck. This amount was arrived at
by taking the total GST paid of $2,772.98 minus $1,159.91.
(h) The Minister
assessed the Appellant by Notice of Assessment No. 09DR0123387, dated December
16, 2002.
(i) In so assessing,
the Minister increased the Appellant’s GST collected for the period by
$1,159.91 for the sale of the 1992 truck.
(j) The Minister also
increased the allowable input tax credits from $1,613.07 to $1,820, which
resulted in a credit of $206.93.
(k) The total
adjustments for the assessment period were $952.98. Statutory penalties and
interest were added to the adjustments resulting in a total amount owing of
$1,349.45.
(l) The Appellant filed
a Notice of Objection with the Minister on January 9, 2003 stating that he is
entitled to full ITC’s of the GST paid on the purchase of the truck as the
truck is not an automobile under the Income Tax Act and, therefore, not
a passenger vehicle under the Act.
(m) The Minister confirmed the Notice of
Assessment by Notice of Decision dated December 19, 2003.
[5] The only evidence before me is an expert
report of T.R. Kurgess, PhD, P.E., filed on behalf of the Respondent. Mr.
Kurgess concluded as follows:
In my professional opinion, the vehicle under study, the 1999
Chevrolet Silverado 1500LS – Extended Cab, Short Bed is primarily designed for
passenger transportation, and not primarily designed for the movement of cargo.
This opinion is based on the review of a number of pertinent factors, including
the vehicle specifications, design and published capabilities; Canadian and US vehicle use surveys; as well as a review
of germane archival journal articles.
Based on the above, I find that the truck is an
automobile, as defined in paragraph 248(1)(a), having been designed
primarily to carry individuals. While subparagraph 248(1)(e)(i) does not
include a motor vehicle described as:
(i) … a van or pick-up truck, or a similar
vehicle, that has a seating capacity for not more than the driver and two
passengers…
the important exclusion is subparagraph (iii) which
applies to this appeal:
(iii) …
a pick up truck that is used in the taxation year in which it is acquired or
leased primarily for the transportation of goods, equipment or passengers in
the course of earning or producing income…
[6] As stated above, the Respondent acknowledged that the truck was
used all or substantially all for the transportation of goods and passengers in
the course of gaining or producing income, and that it is excluded from being
an automobile as defined in above. Further, subsection 202(2) of the Act provides that a registrant who
purchases a passenger vehicle used exclusively in commercial activities can
claim a full input tax credit regarding the purchase.
[7] Again, on the basis that the truck is excluded from
the definition of automobile, the assessment is vacated on the basis that the truck
is used primarily for the transportation of goods, equipment or passengers in
the course of earning or producing income. No costs are awarded.
Signed at Ottawa, Canada, this 30th day of April 2008.
“C.H. McArthur”
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