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Citation: 2003TCC861
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Date: 20031205
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Docket: 2002-4153(IT)I
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BETWEEN:
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TAMARA BOLTON,
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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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____________________________________________________________________
Agent for the Appellant: Peter Bolton
Counsel for the Respondent: Eric Sherbert
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Toronto, Ontario, on September 18, 2003)
McArthur J.
[1] Mr. and Mrs. Bolton, you
are upset and distressed with the manner in which you feel you
were treated by Canada Customs and Revenue Agency. I have let you
vent your frustrations and if you were not treated with respect,
that is regrettable, but it is not something I can take into
consideration this afternoon, and I have to disregard that part
of your argument.
[2] You have not made it terribly easy
for me because your books are not only in disarray, I have not
seen any books. I have heard your general arguments and nothing
specific. On the positive side, I find you both honest and
straightforward. You did not come here to lie but you do not have
the evidence to prove your situation. My decision will be, out of
necessity, somewhat rough and ready. In listening to both sides
and trying to work out figures, I am going to allow everything
claimed for 1997 but for $8,000 and I will give you my reasons
briefly.
[3] Dealing with the largest expense
for supplies of $18,000 in 1997, you agreed that $12,000 was a
capital expense for computers for a difference of $6,000, $3,000
of which was unsubstantiated and I do not allow you that $3,000.
I do allow the $3,000 which is an expense occurred in trying to
renovate 210 and 212 Main Street. I find that the business you
intended to carry on was an extension of the bookstore and one
and the same. So those extension expenditures I find are part of
the bookstore expenses. So, there was a $3,000 amount not allowed
because it is unsubstantiated and I have nothing but your
submissions.
[4] Agood deal of the utilities
claimed was based on an allocation of 2,500 square feet for your
upstairs apartment, and 2,800 square feet for the bookstore. I
accept your figure of 900 square feet for upstairs and 2,800
square feet for the downstairs. I have not done the arithmetic
again because I do not have exact figures in front of me. I was
impressed with the auditor's presentation and her evidence.
Many invoices were dumped on her lap. I believe she did the best
she could with what she was given.
[5] Surely, you had advertising
amounts in excess of what was allowed but I can do no more than
divide the amount claimed in two and disallow one-half of
the $2,882 advertising. With respect to the business tax, fees,
license, I think probably with the information that I had, you
were properly disallowed the $1,000. The rent is not one that can
be compromised. It either was or was not. I can well understand
the auditor not allowing it if she did not have such a thing as a
cancelled cheque and evidence in the return of Mr. Bolton.
But, again, I accept the evidence of the Appellant and
Mr. Bolton, and accept that that was an amount that was
paid.
[6] Now, those figures are given in an
attempt to arrive at the gross figures that I have already given.
The appeal for the 1997 taxation year will be allowed to permit
the Appellant to deduct total expenses of $30,000 as opposed to
her claim of about $39,000.
HIS
HONOUR:
Now, Mr. Sherbert, is that something I can incorporate in an
order. Are you satisfied with the global number or is it
something you want to give some thought to? I want help in
preparing the order.
MR. SHERBERT: No. I
think that the global number is enough, I believe. You mean as
far as Revenue Canada adjusting this?
HIS
HONOUR:
Yes.
MR. SHERBERT: I
believe a global number is enough. I think that would be fine is
my understanding.
HIS
HONOUR:
So, if in the order for the 1997 taxation year I say the appeal
is allowed to permit Tamara Bolton to deduct expenses in the
total amount of $30,000, is that clear enough for CCRA?
MR. SHERBERT: You
mean given that the net income right now is at zero? So, it would
be a $30,000 loss, is that -
HIS
HONOUR:
Yes, a $30,000 loss.
MR. SHERBERT:
Perhaps if it is stated as a business loss or something of that
nature so they understand that this is on the loss side and not
the total amount.
HIS HONOUR:
All right.
The revenue is zero you are saying. Now, do you understand that,
Mr. and Mrs. Bolton?
MR.
BOLTON:
I think.
HIS
HONOUR:
I am not asking you to argue with me.
MR.
BOLTON:
No.
HIS
HONOUR:
I have made my decision. I am asking you do you understand?
MR.
BOLTON:
I think what you're saying is that --
I'm going to the top of page 2 here in this correspondence
that came from Mr. Sherbert to myself. It says at the top of
this page 2 that these expenses would result in a net loss of
twenty-nine ninety-five [phon] for 1997, and I think
that you're making that loss $32,925.
HIS
HONOUR:
$30,000.
MR.
BOLTON:
So, $30,000 even?
HIS
HONOUR:
Yes.
MR.
BOLTON:
So, you are augmenting it by about $27,000?
HIS
HONOUR:
How many?
MR.
BOLTON:
About $27,000 higher? Like, because they had the loss at
twenty-nine twenty-five [phon] for that year.
HIS
HONOUR:
Oh, I see. When you said 29, I thought you meant $29,000.
MR.
BOLTON:
$2,925. So, you are augmenting that allowable loss
to --
HIS
HONOUR:
We are singing from different song sheets. I do not have the
document, not at this point. I am referring to the Notice of
Appeal. My file consists of two things, this document and your
Notice of Appeal and nothing else, and after a half day of
evidence, I still have nothing which is credible to me.
But what I am saying is the Reply to the Notice of Appeal,
1997, Schedule "A".
MR.
BOLTON:
This one?
HIS
HONOUR:
Yes. If you go to the schedule. Mr. Sherbert, would you be
good enough to go over?
MR. SHERBERT: Yes. I
think I understand what he means. Yes. He is correct. That given
the settlement we had, it would have been a business loss of
$2,000 --
MR.
BOLTON:
925.
MR. SHERBERT: That
business loss is now $30,000 exactly.
HIS HONOUR:
You both
follow that?
MR. SHERBERT: Yes.
That explains I think the question we had.
HIS
HONOUR:
What do we do with 1998? I presume you have made a settlement and
1998 was not a concern.
MR. SHERBERT: No.
Because Revenue Canada had again set that year or her
loss -- her net income for that year at zero and
we both felt that that was fine for both sides.
HIS
HONOUR:
Now, the 1998 appeal is withdrawn?
MR. SHERBERT: Yes.
Effectively, it is withdrawn or the Appellant withdrew their
appeal to that year, yes.
HIS
HONOUR:
Is that accurate?
MR.
BOLTON:
Yes, Your Honour. We are basically agreeing with their submission
of zero income for the year.
HIS
HONOUR:
All right. Good. That is it then. Thank you very much.
Signed at Ottawa, Canada, this 5th day of December, 2003.
J.T.C.C.
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