Date: 20001003
Docket: 1999-3828(IT)I
BETWEEN:
F. BARRY YARDLEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hamlyn, J.T.C.C.
[1] These are appeals with respect to
the 1993 and 1994 taxation years.
[2] In reassessing the Appellant for
his 1993 and 1994 taxation years, the Minister of National
Revenue ("the Minister") included "unexplained
bank deposits" of $6,508 and $12,996 respectively in the
Appellant's income.
[3] During the 1993 and 1994 taxation
years, the Appellant operated a retail store "Bargain
Bee", and carried on a commission jewellery sales business.
The Minister submits that the Appellant did not keep adequate
books and records to substantiate the gross commission income and
the expenses from the jewellery sales business and that the
Appellant operated that business through his personal bank
account.
[4] The Minister states that, in
reporting his gross commission income for the 1993 and 1994
taxation years, the Appellant failed to include "unexplained
deposits" of $6,508 and $12,996 respectively. These amounts
were calculated as the difference between the total bank deposits
deposited into the Appellant's personal bank account for each
taxation year in question, and the gross commission income
reported by the Appellant for those years. The Minister also
advances that the Appellant did not purchase inventory in the
amount of $6,900, and thus could not claim such expense against
his gross commission income in his 1993 taxation year. The
Minister contends that a memorandum dated September 1, 1992
from Importer Diamonds & Italian Gold Jewellery in the amount
of $6,900 did not constitute proof of purchase, as the memorandum
stated that "This is not an invoice or bill of
sale".
[5] The Appellant appeals the
reassessments of his 1993 and 1994 taxation years. He maintains
that the Minister erred in the calculation of the
"unexplained deposits" for the 1994 taxation year. The
Appellant contends that this miscalculation is based on the
Minister mistakenly using the wrong amount regarding the
Appellant's reported income for his 1994 taxation year, and
that he has brought this to the attention of the Minister to no
avail. The Appellant also contends that he did in fact purchase
inventory in the amount of $6,900 and that he properly claimed
this amount as an expense in his 1993 taxation year, when he sold
the said inventory. To substantiate this purchase, the Appellant
has produced a memorandum dated September 1, 1992 from Importer
Diamonds & Italian Gold Jewellery.
[6] The memorandum filed by the
Appellant as proof of purchase of the inventory in question has
endorsed on its face the following:
The merchandise described herein is delivered to you on
MEMORANDUM only, at your risk ... The said merchandise is and
shall remain in OROGEM (the supplier) and is to be returned to us
on demand. [...] The undersigned (the Appellant) has no right to
transfer the said merchandise to any other person, firm or
corporation, whether on memorandum or otherwise, without the
written permission of OROGEM. Sale of this merchandise can only
be affected and title will pass only if and when OROGEM the said
owner, shall agree to such sale ... All above is binding on me/us
regardless of prior transactions.
ANALYSIS
[7] The Appellant filed his tax
returns for the said years as follows:
Bargain
Bee
Jewellery Sales
Business
Income
Commission Income
Gross
Net
Gross
Net
1993
168,642
(19,034)
15,000
(1,371)
1994
631,074
18,973
8,200
Nil
[8] The Appellant operated a jewellery
sales business through his personal bank account.
THE UNEXPLAINED DEPOSITS
[9] In reporting his gross commission
income for the 1993 and 1994 taxation years, the Appellant did
not include "unexplained deposits" of $6,508 (the
difference between total bank deposits of $21,508 into his
personal bank account and the gross commission income reported of
$15,000) and $12,996 (the difference between total bank deposits
of $21,196 into his personal bank account and the gross
commission income reported of $8,200) respectively in income.
[10] From the facts presented, the Appellant
has not provided any evidence or explanation to contradict the
Minister's contention that the "unexplained
deposits" were income earned by the Appellant in his 1993
and 1994 taxation years. Thus, the Appellant has not met his onus
to prove, on a balance of probabilities, that the
"unexplained deposits" were not income earned in his
1993 and 1994 taxation years.
[11] The Minister properly included the
amounts of $6,508 and $12,996 respectively in the income of the
Appellant for the 1993 and 1994 taxation years, pursuant to
sections 3 and 9 of the Income Tax Act.
THE JEWELLERY MEMORANDUM
[12] From the terms on the face of the
memorandum presented, it would appear that the inventory in
question had not passed to the Appellant, and that the Appellant
did not have an ownership interest in that inventory.
[13] Without a sales invoice or some other
convincing evidence, the Appellant has not met his onus, on a
balance of probabilities, of proving that title to the inventory
in question passed to his business, and thus any corresponding
inventory expense for his 1993 taxation year cannot be
substantiated.
[14] The Appellant failed to prove that he
incurred expenses in the amount of $6,900, a deduction prohibited
pursuant to paragraph 18(1)(a) of the Income Tax
Act.
AUTOMOBILE EXPENSES
[15] The Appellant also contested the
allocation of automobile expenses. While the log record for
kilometres was well maintained, the expense claim at the audit
stage did not match the kilometre log in terms of personal use.
The Appellant did not offer any evidence to the contrary.
[16] The Appellant did not dislodge the
automobile expense allocation of the assessment.
DECISION
[17] The appeals are dismissed.
Signed at Ottawa, Canada, this 3rd day of October 2000.
J.T.C.C.
COURT FILE
NO.:
1999-3828(IT)I
STYLE OF
CAUSE:
F. Barry Yardley and
Her Majesty the Queen
PLACE OF
HEARING:
London, Ontario
DATE OF
HEARING:
September 28, 2000
REASONS FOR JUDGMENT BY: The Honourable
Judge D. Hamlyn
DATE OF
JUDGMENT:
October 3, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the Respondent: Carole
Benoit
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
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