Aktary v. Canada, 2007 FCA 128

Date: 20070328

Docket: A-266-06

Citation: 2007 FCA 128

CORAM:       NADON J.A.

                        SHARLOW J.A.

                        PELLETIER J.A.

BETWEEN:

SHARIF M. AKTARY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

Heard at Vancouver, British Columbia, on March 28, 2007.

Judgment delivered from the Bench at Vancouver, British Columbia, on March 28, 2007.

REASONS FOR JUDGMENT OF THE COURT BY:                                              SHARLOW J.A.

Date: 20070328

Docket: A-266-06

Citation: 2007 FCA 128

CORAM:       NADON J.A.

                        SHARLOW J.A.

                        PELLETIER J.A.

BETWEEN:

SHARIF M. AKTARY

Appellant

and

HER MAJESTY THE QUEEN

Respondent

REASONS FOR JUDGMENT OF THE COURT

(Delivered from the Bench at Vancouver, British Columbia, on March 28, 2007)

SHARLOW J.A.

[1]               This is an appeal from a judgment of the Tax Court of Canada dismissing the appeal of Mr. Sharif M. Aktary from his income tax appeal for the year 2002 (2006 TCC 359).

[2]               Mr. Aktary operates, as a sole proprietor, a small high-tech manufacturing and exporting business. In 2002, he used $42,195 of the profits of his business to purchase shares of Nortel Networks and JDS Uniphase. He did so in order to protect his business from “contingencies”, or in other words to protect the assets of his business from the risk of loss due to an anticipated drop in sales revenue in 2003 and 2004, which did in fact materialize. During 2003 and 2004, he apparently sold part of the shares and used the proceeds to pay his continuing business expenses.

[3]               Mr. Aktary deducted the cost of the shares in computing his business profit for 2002. That deduction was disallowed. Mr. Aktary’s appeal to the Tax Court was dismissed on the basis that his cost of the shares was a non-deductible expenditure in 2002.

[4]               Mr. Aktary argues that the decision of the Tax Court is unreasonable because, when he sold the shares in 2003 and 2004 to obtain funds to pay his business expenses, the expenses were deductible. There is no merit in this argument. Business expenses incurred by Mr. Aktary in 2003 and 2004 would have been deductible in computing his profit for those years whether he paid them from the proceeds of sale of his shares, or from some other source.

[5]               Mr. Aktary also argues that the tax laws put sole proprietorships at a disadvantage compared to corporations operating the same kind of business because of the difference in tax rates. This point is not relevant to the issue under appeal. The computation of the profit of a business is the same whether the business is carried on by a corporation or an individual.

[6]               For these reasons, we are all of the view that the Tax Court judge was correct to dismiss Mr. Aktary’s income tax appeal for 2002. This appeal will be dismissed with costs.

[7]               Mr. Aktary also asks that the Court order a waiver of interest and penalties. The Minister alone has the authority to waive interest and penalties. The Court cannot give Mr. Aktary that relief.

“K. Sharlow”

FEDERAL COURT OF APPEAL

SOLICITORS OF RECORD

DOCKET:                                                                              A-266-06

STYLE OF CAUSE:                                                              SHARIF M. AKTARY v. HMQ

PLACE OF HEARING:                                                        Vancouver, British Columbia

DATE OF HEARING:                                                          March 28, 2007

REASONS FOR JUDGMENT BY:                                     NADON J.A.

SHARLOW J.A.

PELLETIER J.A.

DELIVERED FROM THE BENCH:                                  SHARLOW J.A.

DATED:                                                                                 March 28, 2007

APPEARANCES:

Sharif M. Aktary                                                                      ON HIS OWN BEHALF

David Everett                                                                           FOR THE RESPONDENT

Lisa Macdonell

SOLICITORS OF RECORD: