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Citation: 2004TCC825
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Date: 20041217
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Docket: 2004-1535(IT)I
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BETWEEN:
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ANDRÉ PERRAULT,
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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
Judge Tardif
[1] This is an appeal concerning the
1995, 1996, and 1997 taxation years.
[2] The issues are as follows:
a) whether the Minister of
National Revenue (the "Minister") correctly added in computing
the Appellant's income, for the 1995, 1996, and 1997 taxation
years, the amounts of $5,795, $8,546, and
$9,952 respectively, as taxable benefits for the use of a
motor vehicle,
b) whether in computing the
Appellant's income, the Minister correctly disallowed the amount
of $21,368 for the 1996 taxation year, claimed as carrying
charges.
[3] After having been sworn in, the
Appellant admitted the following facts:
a) On March
13, 1992, the company Stabo Inc. purchased a Lincoln TownCar 1988
vehicle for $16,800 + tax ($1,176 in GST and $918 in
QST).
b)
Stabo Inc. gave the Appellant exclusive use of the
automobile during the 1995 taxation year and part of the 1996
taxation year.
c) On March
27, 1996, Stabo Inc. purchased a Lincoln Continental 1994
automobile for $32,000 + tax ($2,240 in GST and $2,226
in QST).
d)
Stabo Inc. gave the Appellant exclusive use of the
automobile for part of the 1996 taxation year and the 1997
taxation year.
[...]
f)
During the period at issue, the Appellant managed
Stabo Inc.
g) The
Appellant was also a shareholder of Stabo Inc. from 1975 to
1996.
[4] Firstly, the Appellant addressed
the issue of the loss of $21,368 that resulted from a loan to his
son Richard. The Appellant was amazed that the person responsible
for his file could have concluded that this was a capital loss
and not a business loss without making an analysis or taking into
consideration all of the facts relating to the loan from which
this issue arose.
[5] He also explained in detail all
the facts and circumstances that led him to agree to give the
loan to his son Richard. As someone who lived markedly above his
means, his son was not in a position to assume financial
obligations.
[6] The Appellant did not want his son
to have to make an assignment of his property because the
consequences for his future would be disastrous; this is a great
concern for his father, the Appellant.
[7] To save the family's honour, by
his own testimony, the Appellant wanted to intervene to help put
his son's income and expenditures in order, anticipating various
situations involving the entire family and the credit union
financing buildings that his son owned.
[8] The Appellant was very critical
and severe toward all the parties; it seems that he thought he
was the only one who knew the right way to do things. The
Appellant failed to convince all the parties to agree with his
methods and his son was forced to make an assignment of his
property, resulting in the loss of $21,368.
[9] The reasons for which he had
loaned the $21,368 to his son were compassionate and familial.
They stemmed from the concern of a father who wanted to keep his
son from having to declare bankruptcy, from motives ranging from
pride to authority and setting an example of dignity.
[10] For the Court to accept the Appellant's
argument that the loss was a business loss and not a capital
loss, he would have had to prove that he made the loan in his
normal course of activity and that it was a commercial
activity.
[11] Not only was the Appellant unable to
prove this fact, but he instead proved beyond all doubt that he
wanted to keep his son from having to declare bankruptcy at all
costs. He also wanted to impress upon his son the notions of
responsibility and the importance of accepting it, as well as
living within one's means, etc.
[12] The evidence did not establish that the
Appellant operated a money-lending business. He was involved in
real estate mainly as an agent or broker.
[13] Even though it was commendable,
legitimate, and irreproachable, the Appellant's gesture toward
his son ($21,368 loan with interest) was not a commercial
decision, and certainly not a decision in the course of the
commercial activity of a money-lending business.
[14] With regard to the second issue
concerning the Appellant's use of vehicles that belonged to the
company of which he owned shares, the Appellant made some
admissions that are very relevant and that will definitely affect
this part of his appeal.
[15] The Appellant's admissions will be
reproduced here:
a) On March
13, 1992, the company Stabo Inc. purchased a Lincoln TownCar 1988
vehicle for $16,800 + tax ($1,176 in GST and $918 in
QST).
b)
Stabo Inc. gave the Appellant exclusive use of the
automobile during the 1995 taxation year and part of the
1996 taxation year.
c) On March
27, 1996, Stabo Inc. purchased a Lincoln Continental 1994
automobile for $32,000 + tax ($2,240 in GST and $2,226
in QST).
d)
Stabo Inc. gave the Appellant exclusive use of the
automobile for part of the 1996 taxation year and the 1997
taxation year.
[...]
f)
During the period at issue, the Appellant managed
Stabo Inc.
g) The
Appellant was also a shareholder of Stabo Inc. from 1975 to
1996.
[16] The Appellant did not submit any
evidence on his personal use of the vehicles. He simply took it
for granted that it was normal and legitimate for a company to
provide one of its managers with a car. For that reason, there
was no question of a logbook or anything comparable to use as
evidence for the part of the appeal having to do with personal
use of the vehicle and use by the company that owns it.
[17] As evidence for this part of his
appeal, the Appellant essentially expressed several criticisms of
Revenu Québec. He confirmed that he had filed an amended
tax return for 2000 to make up for previous tax returns. He also
admitted that he had always believed it to be normal, standard,
and acceptable for a company to provide its managers with a
car.
[18] He expressed frustration and
disappointment, and described the problems that he had had with
Revenu Québec in recent years.
[19] The assessments for the 1995, 1996, and
1997 taxation years being appealed with respect to taxable
benefits arising from use of a vehicle were made under
paragraphs 6(1)(e), 6(1)(e).1, and
6(1)(k), subsections 6(2), 6(7), 15(1), and 15(5), and
section 248 of the Income Tax Act. The assessment for the
1996 taxation year concerning the amount of $21,368 claimed as
carrying charges was made under paragraphs 18(1)(a) and
20(1)(p) of the Act.
[20] I essentially need to decide whether
the assessments that he appealed were made in compliance with the
relevant provisions of the Act.
[21] To make this decision, I must, on the
basis of the evidence - the burden of proof being on the
Appellant- assess whether the Appellant did, on the balance of
evidence, prove that his interpretation of the facts should lead
to a different conclusion than that made by the Respondent.
[22] In this case, with regard to the issue
of the loss, the evidence submitted failed to demonstrate the
merit of the claims made by the Appellant; rather, it confirmed
the correctness and validity of the assessment.
[23] With regard to the benefit arising from
the exclusive use of a vehicle, the Appellant did not submit any
relevant evidence that should be taken into account to call into
question the correctness of the assessment.
[24] For these reasons, the appeal must be
dismissed.
Signed at Ottawa, Canada, this 17th day of December
2004.
Tardif J.
Translation certified true
on this 22nd day of March 2005.
Colette Dupuis-Beaulne, Translator
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