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Citation: 2005TCC16
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Date: 20050111
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Docket: 2004-2694(IT)I
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BETWEEN:
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GAÉTAN TREMBLAY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1] These appeals, filed under the
informal procedure, concern expenses in the amounts of $6,116 and
$16,314 claimed by the Appellant for the taxation years 2000 and
2001 respectively, which were refused by the Minister of National
Revenue (the "Minister"), as stated in detail in Appendix II,
attached to the Reply to the Notice of Appeal.
[2] In establishing new assessments,
dated August 5, 2004, for the taxation years 2000 and 2001, the
Minister relied on the following assumptions of fact:
[translation]
(a) In his income
tax returns for the taxation years 2000 and 2001, the Appellant
claimed the following gross and net incomes from commission:
(admitted)
Description
2000
2001
Gross income
from
commission
$39,796
$48,999
Net income
from
commission
$20,683
$15,864
(b) The statement of
professional activities attached to the income tax report for the
taxation years 2000 and 2001 indicated "financial advisor" as the
profession; (admitted)
(c) During the
taxation years in question, the Appellant was the only
shareholder of the company 9046-6871 Québec Inc., which is
mentioned in paragraph 1 of the Notice of Appeal (hereinafter
called the "Company"); (denied as written)
(d) During the
taxation years in question, the Appellant was also the sole
administrator of the Company; (denied as written)
(e) The Company's
fiscal year ended December 31 of each year; (admitted)
(f) The
Company did not produce income tax reports for the taxation years
2000 and 2001; (denied as written)
(g) The Minister's
auditor performed an audit of the expenses regarding the income
from commission claimed by the Appellant; (admitted)
(h) Following his
audit, the auditor refused some of the Appellant's expenses from
commissions for the taxation years 2000 and 2001; (no
knowledge)
(i) Moreover,
based on the information provided, the Minister's auditor
estimated that the "business" use of his vehicle was 62% for the
taxation years 2000 and 2001; (no knowledge)
(j) The
Appellant did not show that the respective amounts of
$6,116 and $16,314, which he claimed as commission expenses
for the taxation years 2000 and 2001, and which the Minister
refused, were incurred to generate business income or income from
property (see detail in Appendix II [of the Reply to the Notice
of Appeal]. (no knowledge)
[3] Although he denied the Minister's
presumptions as written in subparagraphs (c), (d) and (f), the
Appellant admitted that he was the sole administrator and
shareholder of 9046-6871 Québec Inc. (Québec Inc.)
for the period May 1, 2001, to December 31, 2001. As for
subparagraph (f), the Appellant testified that Québec Inc.
produced its income tax reports on the date of the hearing, for
the taxation years 2000 and 2001, and that assessments had been
issued regarding these years.
[4] It must be noted that the only
points the Appellant contested were regarding the following
expenses[1] claimed
by the Appellant in the calculation of income for the taxation
year 2001:
(i) secretary's
fees:
$7,937;
(ii)
rent:
$3,069;
(iii) telephone and public
services:
$1,864.
$3,069 expense for rent
[5] The evidence showed the
following:
(i) starting May 1, 2001, the
Appellant began renting half of the main floor of a commercial
building in Chicoutimi. This building belonged to Immeuble Berlap
Enr. ("Berlap"). The Appellant rented this space to carry out his
duties as financial advisor. The parties signed the lease in
April 2001;
(ii) under the terms of the lease
(Exhibit A-1), the Appellant agreed to pay rent in the amount of
$3,069 for the period beginning May 1, 2001, and ending December
31, 2001;
(iii) this expense for rent ($3,069) was
paid by Québec inc., not the Appellant;
(iv) during this period, the Appellant
was the sole shareholder and administrator of Québec
inc.;
(v) Québec Inc. had deducted this
$3,069 expense in the statement of activities (Exhibit A-3) for
its fiscal year ending December 31, 2001. This expense appears
under "cost of goods sold;"[2]
(vi) this $3,069 was included in the
Appellant's income from commission of $29,605.87 from
Québec Inc. for the taxation year 2001;
(vii) the Appellant had claimed the $3,069
deduction of this expense from his $29,605.87 income from
commission for his taxation year 2001, although he did not pay
Berlap the rent himself in 2001.
[6] The Minister denied this expense
for the simple reason that he did not incur or pay this
expense.
[7] Essentially, the Appellant claimed
that the end result of these operations should be the same as if
Québec Inc. had paid him $3,069 as commission and then he
personally paid Berlap the $3,069 in rent.
[8] In my opinion, the Appellant's
theory would mean he paid an expense, whereas in this case, the
Appellant simply did not pay the expense in question. I therefore
find that the Appellant could not deduct this expense in the
calculation of his income from commission for the taxation year
2001.
Expenses for secretary's fees ($7,937) and telephone and
public services ($1,864)
[9] Since the evidence showed that
these expenses were handled in the same way as the expenses for
rent, for the income calculation of both Québec Inc. and
the Appellant, I find that the Appellant could not deduct such
expenses in the calculation of his income from commission for the
taxation year 2001 because he simply did not pay them.
[13] The appeals are therefore denied.
Signed at Ottawa, Canada, this 11th day of January 2005.
Bédard J.
Translation certified true
on this 12th day of April 2005.
Elizabeth Tan, Translator
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