Crane v. The Queen, docket 98-1068(IT)I (Informal Procedure)

98-1068(IT)I

BETWEEN:

WILLIAM A. CRANE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on July 23, 1999 at Toronto, Ontario, by

the Honourable Judge D.W. Beaubier

Appearances

For the Appellant:                                The Appellant himself

Counsel for the Respondent:                Lesley King

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1996 taxation year is dismissed in accordance with the attached Reasons for Judgment.

Signed at Ottawa Canada this 26th day of July 1999.

"D.W. Beaubier"

J.T.C.C.

Date: 19990726

Docket: 98-1068(IT)I

BETWEEN:

WILLIAM A. CRANE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Beaubier, J.T.C.C.

[1]      This appeal pursuant to the Informal Procedure was heard at Toronto, Ontario on July 23, 1999. The Appellant was the only witness.

[2]      Paragraphs 4 to 8 of the Reply to the Notice of Appeal set out the particulars relating to the appeal. They read:

4.          In computing income for the 1996 taxation year, the Appellant sought to claim a business investment loss in the amount of $27,500.00. Of the resulting Allowable Business Investment Loss (the "ABIL") of $20,625.00 the Appellant claimed a deduction in the amount of $.20,625.00.

5.          The Minister assessed the Appellant for the 1996 taxation year, Notice of Assessment thereof mailed on June 12, 1997.

6.          In so assessing the Appellant for the 1996 taxation year, the Minister disallowed the business investment loss in the amount of $26,991.00.

7.          In so reassessing the Appellant, the Minister made the following assumptions of fact:

(a)         the Appellant guaranteed a loan (the "Guarantee") in the amount of $25,000.00 in respect of The Original Sugar Free Shoppe Inc ("Original Sugar");

(b)         at no time was the Appellant a shareholder of Original Sugar;

(c)         the Appellant advanced funds in the amount of $27,500.00 (the "Advance") to Tania Crane, his granddaughter;

(d)         the Appellant failed to provide any documentation to show that there were any repayment terms, or interest payable with respect to the Advance;

(e)         the Advance was not a debt owing to the Appellant at the end of the 1996 taxation year which had been established by the Appellant to have become a bad debt in that year;

(f)          subsequently Original Sugar became insolvent, and the Appellant was required to honour the Guarantee;

(g)         in the 1988 and 1989 taxation years, the Appellant claimed capital gains deductions of $3,328.00 and $14,666.00, respectively;

(h)         in calculating the business investment loss, an amount equal to the capital gains deductions claimed in 1988 and 1989 X 3/2 must be deducted from the amount of the business investment loss ($17,994.00 X 3/2 = $26,991.00) (the "Reduction");

(i)          in the 1996 taxation year, the Appellant incurred a business investment loss in the amount of $509.00 ($27,500.00 - $26,991.00).

8.          In assessing the Appellant for the 1996 taxation year, the Minister erred in the calculation of the business investment loss allowed. The amount of the business investment loss in the 1996 taxation year should be an amount of $Nil (business investment loss of $25,000.00 - the Reduction of $26,991.00). In consideration of the amount involved, and the rules of this Honourable Court, the Minister does not seek to reassess the Appellant's 1996 income tax return to address the aforementioned error.

[3]      The evidence established that the assumptions contained in paragraph 7 of the Reply are true. In particular, the Appellant admitted that he was never a shareholder of The Original Sugar Free Shoppe Inc. In addition, the evidence is clear that the sum of $27,500 was advanced by the Appellant, in instalments, to his granddaughter and not to the corporation.

[4]      In these circumstances, the appeal is dismissed.

Signed at Ottawa, Canada this 26th day of July 1999.

"D.W. Beaubier"

J.T.C.C.

COURT FILE NO.:                             98-1068(IT)I

STYLE OF CAUSE:                           William A. Crane and The Queen

PLACE OF HEARING:                      Toronto, Ontario

DATE OF HEARING:                        July 23, 1999

REASONS FOR JUDGMENT BY:     The Honourable Judge D.W. Beaubier

DATE OF JUDGMENT:                     July 26, 1999

APPEARANCES:

For the Appellant:                      The Appellant himself

Counsel for the Respondent:      Lesley King

COUNSEL OF RECORD:

For the Appellant:

Name:                

Firm:                 

For the Respondent:                  Morris Rosenberg

                                                Deputy Attorney General of Canada

                                                          Ottawa, Canada