Date: 19971010
Docket: 96-4775-IT-I
BETWEEN:
VERNA GOGOL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Lamarre Proulx J.T.C.C.
[1]
The Appellant is appealing by way of the informal procedure
assessments made by the Minister of National Revenue
(the "Minister") for the years 1989, 1990 and
1991. These assessments were made by the net worth method under
paragraph 152(7) of the Income Tax Act (the
"Act").
[2]
In assessing the Appellant, the Minister made the assumptions of
fact described in paragraph 6 of the Reply to the Notice of
Appeal as follows:
(a)
the Appellant's returns of income for the 1989, 1990 and
1991 taxation years were required to be filed with the Minister
on or before April 30, 1990, April 30, 1991 and April 30, 1992,
respectively;
(b)
the Appellant failed to file income tax returns for her 1989,
1990 and 1991 taxation years as and when required by subsection
150(1) of the Act;
(c)
in the 1989 taxation year, the Appellant purchased a property
located at 24 Marion Street, Toronto, Ontario (the
"Property") for $175,000.00;
(d)
at all material times, the Appellant's son and his
common-law spouse resided in the Property;
(e)
the unreported income of the Appellant during the 1989, 1990 and
1991 taxation years were [sic] $59,783.00, $27,573.00 and
$41,645.00, respectively;
(f)
the Minister used information available to him to determine the
unreported amounts by the net worth method (a copy of the
Statement of Personal Net Worth is attached as Schedule A);
(g)
the Minister used the net worth method to prepare assessments of
the Appellant's taxes payable for the 1989, 1990 and 1991
taxation years, concurrent notices of which were dated April 10,
1995, in accordance with the provisions of subsection 152(7) of
the Act.
[3]
The Appellant and her son, Mr. Gordon Washington, testified at
the request of counsel for the Appellant. Mr. Cesare Chiarotto,
an appeals officer for the Minister, testified for the
Respondent.
[4]
The Appellant testified that she had received from her father, in
the year 1988 or 1989, an amount of money in the neighbourhood of
$15,000, and that she received an inheritance at the death of her
father in 1992. The agent for the Minister testified that the
auditors had seen an amount received in 1992 but not that
allegedly received in 1988 or 1989.
[5]
The Appellant said that the property had been paid for by loans
from friends and that her son, Gordon Washington, had made
the mortgage payments. She also stated that her son paid half her
personal expenses.
[6]
Mr. Gordon Washington's testimony was to the same effect as
his mother's except that he said that he had paid all his
mother's personal expenses. He said that he had never filed
any income tax returns but that he made enough money from a
billiard room that he owned to pay these expenses. He said that
he had intended to sort things out with Revenue Canada but, that
in the end, his affairs were not going well enough for him to do
so. He also stated that he had received loans from his friends.
On this last subject, counsel for the Appellant wanted to
introduce as evidence affidavits by some of the son's
friends stating that they had loaned money to him in the year in
question. Counsel for the Respondent objected on the basis that
the persons having sworn the affidavits were not there to
testify. I upheld the objection but I allowed questions to be put
to the witness regarding the receipt of these loans. The
testimony was vague and unclear as to the time, the amount and
the terms of reimbursement of these alleged loans from
friends.
[7]
There was no documentary evidence concerning either the amount
allegedly received by the Appellant from her father in 1989 or
the alleged loans from her son's friends, nor was there any
documentary evidence that it was the Appellant's son who
made the mortgage payments. In fact, the mortgage payments appear
very clearly in the mother's bank accounts, as shown in
Exhibit R-2.
[8]
Only one document was produced by the Appellant and that was the
statement of adjustments between the vendor and the puchaser
regarding the property located at 24 Marion Street, Toronto
(Exhibit A-1). It showed that "due to encroachments"
the sale price had been abated by $5,000. Although this document
had not been seen previously by the Minister's auditors, it
is to all appearances genuine and I believe it should be
accepted.
[9]
Schedule A to the Reply to the Notice of Appeal (the
"Reply") was entirely proven by
Exhibits R-1 to R-11. These exhibits are
statements of a Visa account and of two bank accounts in the
Appellant's name (Exhibits R-1 to R-3), a
document showing the rental payments for the apartment occupied
by the Appellant on Dundas Street (Exhibit R-4), a
document showing the mortgage payments made with respect to the
Marion Street property (Exhibit R-5), a statement of
municipal taxes and the water and sewage statement of account for
the property located on Marion Street (Exhibit R-6 and
the first page of Exhibit R-7), a statement of the
cablevision payments for the apartment located on Dundas Street
(the other pages of Exhibit R-7), the deed of transfer
of the Marion Street property to the Appellant
(Exhibit R-11). These Exhibits confirmed the statement
made in subparagraph 2(f) of the Reply. Respecting the abatement
of the purchase price previously mentioned and shown in
Exhibit A-1, Mr. Chiarotto stated that if the Court
were to accept the abatement as a fact, that it would affect only
the accrued income for the year 1989.
Analysis
[10] The
allegations as to income received from the friends of the
Appellant's son and from the Appellant's father have
not been validly proven and cannot stand in the fact of a net
worth audit based entirely on documents in the Appellant's
name and carried out very conservatively with regard to the
Appellant's personal expenses.
[11] The
appeals for the years 1990 and 1991 are dismissed and the appeal
for the year 1989 is allowed only to the extent of reducing the
increase in net worth by $5,000, the whole without costs.
"Louise Lamarre Proulx"
J.T.C.C.
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