Citation: 2005TCC323
Date: 20040506
Docket: 2004-1137(GST)I
BETWEEN:
JOVITO FEDERICO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2004-3581(GST)I
AND BETWEEN:
JOVITO FEDERICO and LYDIA
FEDERICO,
Appellant,
and
HER MAJESTY THE QUEEN
Respondent.
REASONS FOR JUDGMENT
Beaubier, J.
[1] These appeals
pursuant to the Informal Procedure were heard together on common evidence by
consent of the parties at Calgary, Alberta on April 29, 2005. Jovito Federico (“Jovito”) was the only
witness.
[2] The appeals are
from decisions that GST is owed by the Appellants respecting the same business,
“Global Care” for the periods January 1, 1997 to December 31, 2001
(except for calendar 1999 and 2000) for the partnership (2004-3581(GST)I) and
for the period January 1, 2000 to December 31, 2001 for Jovito.
[3] The assumptions in
paragraph 9 of the Reply to the Notice of Appeal in 2004-3581 (GST)I were not
refuted. They read:
9. In so assessing the Appellant and confirming the
Assessment, the Minister relied on the same assumptions of fact as follows:
(a) the Appellant was a partnership of Jovito
Federico and Lydia Federico;
(b) in 1993 the Appellant began operating
under the trade name of Global Care and provided placement services for
domestic workers from overseas;
(c) for the placement services it provided,
the Appellant received consideration in the form of a fee from both the
domestic worker placed and the employer of that domestic worker;
(d) the Appellant was a registrant as of January 1, 1997;
(e)
the supply of placement services was taxable at
7%;
(f)
the Appellant received consideration for
placement services it provided during the Relevant Periods and on which tax was
collectible as follows:
|
Period
|
Supplies
|
Collectible at
7%
|
|
1991-12-31
|
97,742.00
|
6,841.94
|
|
1998-12-31
|
95,061.00
|
6,654.27
|
|
2001-12-31
|
66,359.00
|
4,645.13
|
|
|
259,162.00
|
18,141.34
|
(g)
the Appellant was required to file its return on
an annual basis, with a year end of December 31st;
(h)
the Appellant failed to file returns and account
for the tax detailed in subparagraph 9(f) above; and
(i)
the Appellant failed to report and remit net tax
of at least $11,662.30 for the Relevant Periods.
[4] Paragraphs 7 – 12
of the Reply to the Notice of Appeal in 2004-1137(GST)I read:
7. By Notice of Assessment dated
May 02, 2003 (the “Assessment”), the Minister of National Revenue (the
“Minister”) assessed the Appellant for failure to report net tax for the
Relevant Periods and added penalty and interest as follows:
|
Reporting Period
|
Taxable Supplies
|
GST Collectible at 7%
|
Input Tax Credits allowed
|
Net Tax
|
Interest
|
Penalty
|
Total
|
|
2000-12-31
|
42,331.00
|
2,963.17
|
1,058.27
|
1,904.90
|
119.59
|
235.27
|
2,259.76
|
|
2001-12-31
|
31,129.00
|
2,179.03
|
778.23
|
1,400.81
|
30.47
|
76.21
|
1,507.49
|
|
|
|
5,142.20
|
1,836.50
|
3,305.71
|
150.06
|
311.48
|
3,767.25
|
8. The Appellant objected to the Assessment by a Notice of
Objection, dated June 9, 2003.
9. The Minister confirmed the Assessment by a Notice of
Decision dated December 22, 2003.
10. In so assessing the Appellant and confirming the
Assessment, the Minister relied on the following assumptions of fact:
(a) in 1993 the Appellant and Lydia Federico
commenced a business as a partnership (the “Partnership”);
(b) the Partnership operated under the trade
name of Global Care;
(c) Global Care provided placement services
for domestic workers;
(d) for the services provided Global care
received a fee from both the domestic worker placed and the employer of that
domestic worker;
(e) the Partnership was a registrant as of January 1, 1997;
(f) on or before January 1, 2000, the Appellant
began operating Global Care as a sole proprietor;
(g) the Appellant was a registrant at all
relevant times;
(h) the Appellant was required to file GST
returns on an annual basis with a year end of December 31;
(i) during 2000 the Appellant received
consideration of at least $42,331.00 in respect of the placement services he
provided;
(j)
during 2001 the Appellant received consideration
of at least $31,129.00 in respect of the placement services he provided;
(k)
the supply of placement services by the Appellant
was subject to GST at 7% of the consideration receivable for those placement
services;
(l)
the Appellant failed to report and account for
GST of $2,963.17 in respect of the placement services he provided during the
reporting period ending December 31, 2000;
(m)
the Appellant failed to report and account for
GST of $2,179.03 in respect of the placement services he provided during the
reporting period ending December 31, 2001;
(n)
the Appellant failed to report and account for
net tax of at least $1,904.90 for the reporting period ending December 31, 2000; and
(o)
the Appellant failed to report and account for
net tax of at least $1,400.81 for the reporting period ending December 31,
2001;
B.
ISSUE TO BE DECIDED
11. The issue to be decided in this appeal is whether the
Minister, in assessing the Appellant’s net tax for the Relevant Periods,
properly assessed the Appellant for unreported GST of $2,963.17 for period
ending December 31, 2000 and
$2,179.03 for period ending December 31, 2001, for a total amount of $5,142.20.
C.
STATUTORY PROVISIONS, GROUNDS RELIED
ON AND RELIEF SOUGHT
12. He relies on subsections 123(1), 127(3), 221(1), 225(1),
240(1) and sections 148, 152, 165, 168, 169, 171, 228, 238, 296 and 299 of the Excise
Tax Act (the “Act”), R.S.C. 1985, c. E-15, as amended.
None of the assumptions in paragraph 9 were refuted.
[5] Jovito testified
that in 1993 he spoke to Revenue Canada staff and was told that he need not register Global Care
for GST purposes or collect GST. He has never done so; rather, Revenue Canada or C.R.A. staff have
registered it for him. The particulars for the assessments under appeal were
obtained from income tax returns. To this day, no GST returns have been filed
because Jovito continued to rely on the original conversation in 1993. His
testimony about these conversations was not refuted and the Court believes it
to be true.
[6] However, once
Global Care began to exceed the $30,000 sales threshold set out in subsection
148(1) of the Excise Tax Act, it fell within the reporting and taxable
provisions of the G.S.T.
[7] On April 7, 2003
(Exhibit R-1), Jovito was notified that Global Care was registered for GST
purposes and told to report. These assessments followed during the calendar
year 2003. Jovito adhered to his view that Global Care had not been registered
and had been told that Global Care need not register.
[8] However, even if
Global Care receives part of its fees from workers in the Orient who wish to
work in Canada, it falls within paragraph 142(1)(g) and the supply of
its services is deemed to be made in Canada because its service (the placement
of foreign workers in jobs in Canada) is performed in whole or in part in
Canada.
[9] Finally, the law is
clear: the Excise Tax Act governs, wrong advice by Revenue Canada officials or anyone
else cannot act as a form of estoppel. If the Appellant falls within the Act,
the tax is due. (MNR. v. Inland Industries Ltd., [1974] S.C.R. 54).
[10] For these reasons,
the appeals are dismissed.
Signed at Saskatoon, Saskatchewan, this 6th day of May 2005.
“D.W. Beaubier”
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