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Citation: 2004TCC289
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Date: 20040628
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Docket: 2003-233(GST)I
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BETWEEN:
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ROBERT GOYETTE,
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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
Bédard, J.
[1] Mr. Robert Goyette
appeals the assessment against him dated July 12, 2002 related to the
goods and services tax (GST) for the period from November 1, 1997 to
December 31, 2000 (relevant period). The assessment made by the
Deputy Minister of Revenu Québec on behalf of the Canada Customs and Revenue
Agency against Mr. Goyette included net tax in the amount of $3,527.58,
interest in the amount of $428.65 and a penalty of $498.92.
[2] In
assessing Mr. Goyette, the Deputy Minister made the following assumptions
of fact:
a) The Appellant
sells used vehicles.
b) The
Appellant’s sales established for the quarters from October 1, 1996
to September 30, 1997 are in excess of $30,000.
c) In light of
the Appellant’s income, he should be registered under the Excise Tax Act.
d) On
February 1, 1998, the Respondent registered the Appellant for GST
purposes.
e) The Appellant
is thus registered for GST purposes.
f) During the
period from November 1, 1997 to December 31, 2000, the
Appellant was an agent of the Deputy Minister for the purposes of the
collection and remittance of the GST.
g) During the
aforementioned period, the Appellant neglected to remit to the Deputy Minister
net taxes in the amount of $3,527.28.
h) The net taxes
generated $428.65 in interest and penalties of $498.92.
i) The
Appellant’s failure to remit the tax to the Deputy Minister is due to his
negligence and carelessness, particularly in that:
i) the
Appellant admits to selling used motor vehicles;
ii) the
sale of used vehicles requires that the Appellant collect and remit the tax on
each sale made;
iii) during
the period in question, the Appellant made sales totalling:
1998: $28,551
1999: $15,972
2000: $
9,052
iv) the
Appellant was required to collect the taxes on the aforementioned sales and
remit them to the Deputy Minister;
v) used
motor vehicles are a taxable supply;
vi) the
sale of used motor vehicles constitutes a commercial activity and is the
Appellant’s main commercial activity;
vii) for
the purposes of his commercial activity, the Appellant was required to collect
taxes on all used motor vehicle sales.
Preliminary Comments
[3] Counsel
for the Respondent admitted at the hearing that the amount of net tax due from
Mr. Goyette was $2,898.49.
[4] During
the relevant period, the Société de l'assurance automobile du Québec (SAAQ),
for licensing and tax calculation purposes, accepted the vehicle value reported
by the parties to the transaction rather than applying the value indicated in
the Canadian Red Book (now the Guide d'évaluation Hebdo – automobiles et
camions légers). In the case at bar, the Deputy Minister was unaware of the
actual value of the vehicles purchased and sold by Mr. Goyette. The Deputy
Minister thus based the value of the vehicles in this appeal on the information
found in the Canadian Older Car/Truck Red Book ("Red Book"). During
his testimony, Mr. Martin, a research officer for the Deputy Minister,
explained the method used in the case at bar to determine the purchase and sale
prices of the vehicles sold by Mr. Goyette. Mr. Martin explained that the purchase and
sale price of a vehicle more than 10 years old was based on the Red Book.
Thus, the purchase price of a vehicle purchased for cash by Mr. Goyette
was determined by multiplying the lower average sale price for such a vehicle
as listed in the Red Book by 0.79 per cent (correction factor). Moreover,
the sale price of a vehicle sold for cash by Mr. Goyette was determined by
multiplying the higher average sale price for such a vehicle as indicated in
the Red Book by 1.036 per cent (correction factor). According to
Mr. Martin, the correction factors retained were determined based on
studies conducted by the Minister of Revenue and validated by an expert
retained by the Minister. Those studies are the result of research conducted
among Quebec auctioneers and insurers to best reflect the value of vehicles on
the Quebec market.
Objections by Mr. Goyette
[5] Mr. Goyette
claimed that:
i) He did
not engage in the business of buying and selling used vehicles during the
relevant period. He stated that it was simply a "hobby" and that he
made very little profit from it.
ii) The
vehicles in question were in very poor condition and had a lot of mileage. He
claimed that the vehicles could thus not have been purchased and sold at the
prices calculated by the Deputy Minister based on the method described above.
In his opinion, the prices determined by the Deputy Minister were simply
unrealistic.
iii) During
the relevant period, he was a small supplier within the meaning of
subsection 148(1) of the Excise Tax Act (the "Act").
He was thus not required to register for the purposes of the Act and not
required to collect or remit GST as an agent of the Deputy Minister. He claims
that his sales for the quarters from October 1, 1996 to
September 30, 1997 were less than $30,000.
"Hobby"
[6] During
the relevant period, Mr. Goyette was unemployed and receiving social
assistance. During the period from 1993 to 2000, he purchased 129 used
vehicles and resold 114. He owned 77 vehicles for less than one
month, which represents 67.54% of the vehicles purchased during that period. Of
that number, 45 vehicles were owned by him for less than 10 days, 9
of which were sold on the same day they were acquired. It is apparent from
Exhibit A-3, filed by mutual agreement, that Mr. Goyette sold 42
vehicles during the period from February 1, 1998 to
December 31, 2000, most of which were in inventory for less than one
month, sometimes only one day. The theory of a "hobby" is simply not
credible.
Determination of the purchase and sale price by the
Deputy Minister
[7] To
prove the actual purchase and sale price of the vehicles for the period in
question, Mr. Goyette submitted a handwritten list (Exhibit A‑1)
that he prepared to the best of his knowledge in the fall of 2003. This list
indicated the date of purchase and sale of the vehicles, the names of the
buyers and sellers and the amounts paid or received for such, as applicable. He
had no documents demonstrating or contesting the purchase and sale of the
vehicles, nor any documents indicating the related terms. He kept no books or
records. He testified, however, that he had had certain documents, but that his
spouse had disposed of them. All transactions were carried out in cash.
[8] The
presumed validity of an assessment can be overturned by any legal evidence,
including testimony. However, the witness must be credible and the testimony
must carry weight. In the case at bar, I accord no weight to Mr. Goyette’s
testimony. It was not corroborated by any witnesses or any documentary evidence
contesting the assessment. He kept no records or documents to support the sales
that he made. All transactions were carried out in cash. The verbal explanations
given by Mr. Goyette to determine the purchase and sale prices for the
vehicles were simply not convincing.
[9] Mr. Goyette
questioned the reliable, reasonable and realistic character of the information
used by the Deputy Minister in calculating the purchase and sale values for the
vehicles in question. I feel that, in the absence of any tangible and credible
evidence, the method used by the Deputy Minister in determining the value of
the transactions is satisfactory and provides figures that do not seem
excessive. Furthermore, the assessment made based on leads, like all other
assessments, is presumed valid.
Was
Mr. Goyette a small supplier?
[10] It is apparent from Exhibit A‑3 that the vehicle sales made
by Mr. Goyette during the quarters from October 1, 1996 to
September 30, 1997 totalled less than $30,000, but that the sales (determined based on the method used by the Deputy Minister) for the
quarters from January 1, 1997 to December 31, 1997 were
greater than $30,000. Consequently, Mr. Goyette was no longer a small
supplier within the meaning of subsection 148(1) of the Act. He was
thus required to register under the Act and, as an agent of the Deputy
Minister, was thus required to collect and remit the GST on the sales of used
vehicles from February 1, 1998 to December 31, 2000.
[11] Finally, with all due
respect for the contrary opinion, Mr. Goyette’s testimony, which was not
supported by any documentary evidence or independent and credible testimony,
could not be considered as credible and plausible under the circumstances and
did not overturn the presumed validity of the assessment. The appeal is thus
dismissed. However, in light of the admission by the Deputy Minister, the
amount of net tax is $2,898.49 and the amount of interest and penalties must
thus be modified accordingly.
Signed at Ottawa, Canada, this 28th day of
June 2004.
Bédard,
J.
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