Citation: 2006TCC622
Date: 20061114
Docket: 2005-3852(GST)I
BETWEEN:
RENNIE INVESTMENTS LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the Informal Procedure was heard at Kelowna, British Columbia, on November 1, 2006. Lynn Rennie, the director and shareholder of the Appellant, was the only witness. At the outset, it was ordered that the address of the Appellant is changed to:
222 - 11791 Kings Road
Richmond, British Columbia
V7A 3B5
[2] Paragraphs 1 to 7 of the Reply to the Notice of Appeal outline the matters in dispute. They read:
A. STATEMENT OF FACTS
1. With respect to the allegations of fact in the Notice of Appeal he:
a) admits that the net Goods and Services Tax ("GST") in dispute is $1,876.36, representing input tax credits ("ITCs") claimed by the Appellant;
b) admits that the Appellant is an investment company;
c) denies that the GST paid on the Honda Magna motorcycle was never allowed and states that ITCs of $621.43 claimed in respect of the motorcycle in the GST reporting period from October 1, 2004 to December 31, 2004 were allowed by the Minister of National Revenue (the "Minister") in error; and
d) denies any remaining facts alleged in the Notice of Appeal.
2. The Appellant filed quarterly GST returns reporting no supplies or GST collectible and claiming total ITCs of $2,497.79 in respect of the reporting periods from January 1, 2001 to December 31, 2004 (the "Period"), as detailed in Schedule "A".
3. By the Assessment, the Minister assessed the Appellant for disallowed ITCs of $1,876.36, penalty of $367.03 and interest of $159.77 in respect of the Period, as detailed in Schedule "B".
4. By Notice of Objection received by the Minister on July 18, 2005, the Appellant objected to the Assessment.
5. On September 2, 2005, the Minister confirmed the Assessment.
6. In so assessing net tax, and in confirming the Assessment, the Minister assumed the same facts, as follows:
a) the Appellant was registered under Part IX of the Excise Tax Act, R.S.C. 1985, c. E-15, as amended (the "Act") effective October 14, 1998, on the basis that it was engaged in the business of selling compact disks and t-shirts, and was assigned the GST Registration number 10447 5868;
b) the Appellant was required to file quarterly GST returns;
c) at all material times, all or substantially all the Appellant's supplies were taxable at the rate of 7 percent;
d) the Appellant filed quarterly GST returns and reported taxable supplies of $0.00 in respect of the Period, as detailed in Schedule "A";
e) in its GST returns for the Period, the Appellant reported GST collectible in the amount of $0.00 and claimed ITCs in the amount of $2,497.79, for the Period, as detailed in Schedule "A";
f) during the Period, the Appellant was an investment company involved mainly in the stock market, and no longer sold compact disks and t-shirts;
g) during the Period, the Appellant's supplies were exempt of GST; and
h) during the Period, the Appellant did not make any taxable supplies.
B. ISSUES TO BE DECIDED
7. The issues, during the Period, are whether:
a) the Appellant was in a business of providing exempt supplies;
b) the Appellant is entitled to ITC's; and
c) the Minister has properly assessed the Appellant for net tax, interest and penalties.
[3] Ms. Rennie advised the Court that the Appellant is not making any claim respecting GST ITCs on the Honda Magna. She also stated that she only had receipts for $1,289.25 in GST paid. Some of these receipts were not in the Appellant's name, and others were for dates outside of the Period.
[4] All of the ITCs claimed relate to moneys paid by the Appellant for the Laurie Cook Band (the "Band").
[5] However, the evidence is that the Appellant was neither in business with, nor a business partner of the Band.
[6] Rather, Ms. Rennie stated that the Appellant and the Band had a written contract that the Band would repay the Appellant the moneys advanced to or for the Band out of its net profits. That contract was not exhibited in evidence. Nonetheless, it was an investment contract entered into by the Appellant. Moreover, as the Reply states, the Appellant never reported any sales of goods for GST purposes. It did report sales for income tax purposes of $5,264 for its fiscal year ending March 31, 2004. The result of this is a conflict in the Appellant's evidence respecting "sales". But that does not cure this Court's finding that in fact and in law, the Appellant's advance of moneys to the Band was simply an investment; whether it was to bear interest of any kind is unknown. It did not sell compact disks and t-shirts.
[7] For this reason, the appeal is dismissed.
Signed at Ottawa, Canada, this 14th day of November 2006.
"D.W. Beaubier"
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