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Citation: 2003TCC374
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Date: 20030606
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Docket: 2001-4409(IT)I
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BETWEEN:
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PAUL PROCIUK,
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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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____________________________________________________________________
REASONS FOR JUDGMENT
O'Connor, J.T.C.C.
[1] This appeal was heard at Winnipeg,
Manitoba, on May 2, 2003. The appeal relates to whether certain
employment expenses claimed in 1993, 1994 and 1995 by the
Appellant, a car salesman, were properly claimed; there is also
an issue as to whether penalties for late filing were properly
levied.
[2] The Appellant's receipts for
the expenses had been lost or stolen. However, at the hearing the
Appellant furnished various exhibits consisting principally of
log-books and re-cap sheets detailing the various expenses that
he claimed on his income tax returns.
[3] Counsel for the Respondent
accepted most of the evidence and submissions of the Appellant
and this resulted in the granting of several concessions with
respect to most of the expenses.
[4] The concessions made are
summarized at pages 43 to 46 of the Transcript of the Hearing
which reads as follows:
MS. GOLDSTEIN: Thank you, Your
Honour. I have decided not to call a witness. And in light of
some of the evidence that I have heard from Mr. Prociuk, the CCRA
is willing to make a number of concessions. Perhaps if I could
read those out to you and then you can deal with the remaining
issues.
You will have to, I believe, take the returns, Exhibits R-1, R-2
and R-3, and I will tell you what we are willing to agree should
now be allowed to Mr. Prociuk.
HIS
HONOUR:
All right.
MS. GOLDSTEIN: The first expense
issue is advertising and promotion, the CCRA is not willing to
concede any more than has already been conceded for 1993, that
would be the $400.00.
With respect to the allowable motor vehicle expenses, Mr. Prociuk
claimed -
HIS
HONOUR:
Just one second.
MS. GOLDSTEIN: Sorry.
HIS
HONOUR:
The first one?
MS. GOLDSTEIN: CCRA's
position is that we already permitted him $400.00 on account of
entertainment and so we are not willing to change that one.
The next one is allowable motor vehicle expenses, $2,337.40, we
will concede that that is now an allowable expense.
HIS
HONOUR:
That is $2,237.40?
MS. GOLDSTEIN: Yes.
The $48.00, again part of the entertainment and we are not
willing to concede on that.
The $100.00 parking, we are willing to concede on that.
Supplies, $153.94, we are willing to concede on that.
Referral fees of $350.00, we are willing to concede on.
The other issue for 1993 would be late filing penalties, the
respondent is willing to adjust them to take into account the
current concessions and to that extent would reduce them, but not
delete them completely.
On Exhibit R-2 for 1994.
HIS
HONOUR:
Yes?
MS. GOLDSTEIN: Turning to the
Statement of Employment Expenses, the first number of advertising
and promotion $567.58, the CCRA reduced that, in part for lack of
documentation and in part due to the 50 percent reduction and
allowed Mr. Prociuk $250.00. We are not willing to provide
anything more than that.
The next line is the allowable motor vehicle expenses, we are
willing to allow that in full.
HIS
HONOUR:
So they are conceding $2,412.20?
MS. GOLDSTEIN: Correct.
HIS
HONOUR:
All right.
MS. GOLDSTEIN: It looks as if
the $8.00 and the $25.00 below that have been properly calculated
and reduced, so we will concede those as now being allowable.
Parking, allowable.
Supplies, $79.08, allowable.
And referral fees of $325.00, allowable.
Late filing penalties would be adjusted downward accordingly,
but not eliminated.
And now turning to Exhibit R-3, 1995, the Statement of
Employment Expenses.
HIS
HONOUR:
Yes.
MS. GOLDSTEIN: Advertising and
promotion, we provided $250.00 as an allowable amount and that is
with the 50 percent reduction. We stay by that amount.
The allowable motor vehicle expenses -
HIS
HONOUR:
I am sorry, you are sticking with the $250.00?
MS. GOLDSTEIN: Correct.
HIS
HONOUR:
Yes, okay.
MS. GOLDSTEIN: Allowable motor
vehicle expenses of $4,032.48 we are willing to concede was
properly expensed.
The $142.62 looks like it has already been reduced by 50
percent so it too should be allowed.
Supplies of $393.54 should be allowed.
Referral fees of $325.00 should be allowed.
And on the penalties, again the respondent is willing to
reduce them to bring them into alignment with the additional
reductions to income, but not eliminate them altogether.
HIS
HONOUR:
What about the calculation of allowable motor vehicle
expenses?
MS. GOLDSTEIN: Oh,
$4,032.48.
HIS
HONOUR:
Okay, that is the total, yes.
MS. GOLDSTEIN: That is now
acceptable.
HIS
HONOUR:
Okay.
The foregoing concessions produce the following results.
[5] For 1993 the expense claimed for
advertising and promotions of $419.87 counsel for the Respondent
was prepared only to allow the amount previously granted of $400
thus producing an amount disallowed of $19.87. Also, counsel for
the Respondent refused to concede on the $48 item for
entertainment, as was the previous position of the Minister of
National Revenue (the "Minister"). Consequently the
amounts disallowed total $67.87. The total amount claimed by the
Appellant on his return was $3,409.21. Thus the reduction of
$67.87 to this amount results in an employment expense allowed to
the Appellant of $3,341.34 in 1993.
[6] For 1994 counsel for the
Respondent reduced the $567.58 figure in respect of advertising
and promotions to $250 representing one-half of what the Minister
considered a reasonable amount of $500. The 50 per cent reduction
results from the application of section 67.1 of the Income Tax
Act (the "Act"). Thus the amount disallowed
was $317. The total amount originally claimed by the Appellant on
his return was $3,516.86 which when reduced by the said amount of
$317 results in an employment expense allowed in 1994 of
$3,199.86.
[7] For 1995 the expense of $731.13
representing advertising and promotions was reduced to $250 for
the same reasons as set forth above for 1994. Thus the amount
disallowed was $731.13 less $250 resulting in the disallowance of
$481.13. The total amount claimed by the Appellant on his return
was $5,624.77 which when reduced by the said amount of $481.13
produces an allowable employment expense for 1995 of
$5,143.64.
[8] Considering the lack of receipts
for certain items and considering the 50 per cent reduction
in 1994 and 1995 pursuant to said section 67.1 of the Act,
in my opinion the amounts disallowed as set forth above are
correct.
[9] Consequently the employment
expenses allowed are $3,341.34 for 1993, $3,199.86 for 1994 and
$5,143.64 for 1995 and the matter is referred back to the Minster
for reconsideration and reassessment on that basis.
[10] As to the late filing penalties, which
I find are justified, this matter is also referred back to the
Minister to recalculate the penalties taking into consideration
the reductions in taxes resulting from the aforesaid
reassessment.
Signed at Ottawa, Canada, this 6th day of June 2003.
J.T.C.C.
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