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Citation: 2003TCC108
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Date: 20030318
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Docket: 2002-2985(IT)I
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BETWEEN:
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DAVID DAHL,
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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
(delivered orally from the Bench at
Vancouver, British Columbia on January 9, 2003)
Beaubier, J.T.C.C.
[1] This appeal pursuant to the
Informal Procedure was heard at Vancouver, British Columbia on
January 7, 2003. The Appellant testified. The Respondent called
the auditor on the file, Bhupendra Gill, and the Appeals Officer,
Ravinder Sandhu.
[2] On the Appellant's
application, it is ordered that the address of the Appellant be
changed to read 4948-196B Street, Langley, British Columbia,
V3A 7N7.
[3] Paragraphs 5, 6 and 7 of the Reply
to the Notice of Appeal read:
5. By Notice
of Reassessment dated July 11, 2002, the Minister reassessed the
Appellant's 2000 taxation year to decrease his net business
income by $960.00 to $33,182.00 (the "Revised Net Business
Income") as detailed on the attached Schedule
"A".
6. In so
assessing the Appellant, the Minister relied on the following
assumptions of fact:
a) the
Appellant in calculating his net business income claimed expenses
for the activities of:
(i) selling of
supplements for E.D. Internal Health (the "Supplements
Activity"); and
(ii) for selling
ice-cream in Cuba (the "Ice-cream Activity");
b) the
Appellant's business operation was called Off Balance
Marketing;
c) the
Appellant did not commence the Ice-cream Activity;
d) the
Appellant did not have any potential of earning income in the
2000 taxation year from the Ice-cream Activity;
e) the
invoices provided by the Appellant for the purchase of an
ice-cream machine were not issued in the Appellant's
name;
f) the
Appellant has not signed any binding contracts or obtained
purchase commitments that would allow the Ice-cream Activity to
commence in Cuba;
g) travel
expenses claimed of $12,900 were claimed in respect of the
Ice-Cream Activity;
h) charges for
the basic telephone line for the Appellant's personal
residence were not incurred to earn income from business or
property;
i)
charges in excess of 10% for long distance calls were
personal;
j) the
Appellant used a 1994 Dodge Caravan for both personal and
business use;
k) the
Appellant did not maintain a mileage log;
l)
insurance expenses claimed were in respect to the Appellant's
personal residence; and
m) expenses in
excess of the amounts allowed by the Minister were not incurred
or alternatively, if incurred were not incurred for the purpose
of gaining or producing income from a business or property but
were personal or living expenses of the Appellant.
B. ISSUE TO BE
DECIDED
7. The issue
is whether the Minister properly determined the Revised Net
Business Income.
[4] Assumptions 6(a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l) and (m) were not
refuted.
[5] In particular, respecting the
Ice-cream Activity:
1. The Appellant claimed
expenses personally which the Respondent denied because of a
finding that as yet there was no business. On balance, the Court
finds this to be correct.
2. However, the Court also
finds that the evidence is that the Ice-cream Activity was not
established to be the Appellant's. Based on the documents, it
might have been owned by a corporation called Yoggi Inc. The
Appellant claimed that he had unnamed joint venturers and refused
to submit cheques or bank records because he did not want their
identities known. He is an experienced businessman. He testified
that Yoggi Inc. was not incorporated, it was just his trade name.
The Court does not accept this testimony. An experienced
businessman would not use a "corporate" name unless it
was registered. On the basis of the vagueness of the
Appellant's testimony and the variety of documents on the
specific party attempting the "Ice-cream Activity", the
Court finds that it may have been Yoggi Inc.'s or it may have
been a partnership's or joint venture with others, but it was
not the Appellant's personal activity.
[6] The Court also finds that the
proposed expenses of the alleged activity in Cuba had a personal
element of a vacation or similar personal activity in Cuba. In
particular, the Appellant claimed expenses for his two
children's trip to Cuba in 2000. That was not in any sense a
business expense. It is fatal to any suggestion that there was no
personal element. As a result, objectively the Court finds that
no business was in place because:
1. There was no product as
yet.
2. There was no contract
or operation for the production of yoghurt cones.
3. There were no contracts
after alleged promotions commencing in 1998.
4. There is still nothing
and one proposed agency, Rumballs, was admittedly "on
hold" for two years after 2000.
[7] With respect to the other
expenses, the Appellant failed to prove any additional amounts
that the Appeals Officer did not allow. In particular, he is an
experienced commission salesman, yet he did not keep a vehicle
log, he did not itemize and organize his alleged expenses by
"vehicle", "entertainment", "gifts and
promotion", et cetera. Rather, they were mixed up and filed
in a manner that lacked credibility. He also failed to
particularize his vehicle usage clearly between personal and
business use.
[8] In total, his evidence was not
credible. It was not sufficient to upset the clear and detailed
findings of the Respondent in this case.
[9] The appeal is dismissed.
Signed at Ottawa, Canada this 18th day of March, 2003.
J.T.C.C.
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