Ramdeyall v. R., [1996] 2 CTC 2506 (Informal Procedure)

Teskey J.T.C.C.: — Hamechandra Ramdeyall (the “husband”) and Parbitri Ramdeyall (the “wife”) are spouses of one another. The husband appeals his assessments of income tax for the years 1990, 1991 and 1992. The wife appeals her assessments of income tax for the years 1990 and 1992. Both elected to have their appeals heard pursuant to the informal procedure. All appeals were heard on common evidence.

The issue herein is whether the Appellants can deduct from income losses on three different properties.

Both the husband and wife jointly own:

1029 Danforth Road (“Dantforth”)

35 Gray lee Avenue (“Gray lee”)

586 Brimley Road (“Brimley”)

The husband attempted to write off all the losses on Graylee for the three years under appeal and all the losses sustained in 1993 on Danforth.

The wife attempted in 1990 to write off all the losses on Danforth and in 1992 all of the losses on Brimley.

Danforth

This property was purchased in 1979 for $63,500.00 and on January 1st, 1990 had a first mortgage of $39,604.15, bearing interest at the rate of 11.25% per annum; at December 31, 1990, the principal had been reduced to $39,365.36 (Exhibit A-l).

The last page of Exhibit A-1 shows that interest paid on this mortgage for the last six months of 1993 was $2,155.91 and the principal as of December 31, 1993 was $38,095.55.

Obviously the interest paid on the first mortgage on Danforth in 1990 was approximately $4,450.00. The wife testified that in 1987 they put a second mortgage on Danforth for $95,000.00. She claimed that $45,000.00 was used for the purchase of Gray lee, $25,000.00 was used to renovate Graylee and $25,000.00 was used to renovate Danforth. This Royal Bank mortgage bore interest at 10.75%. No contracts, cancelled cheques or receipts were produced in any way to substantiate these $50,000.00 worth of repairs. Even if I accepted these repair expenses (which I do not), then the total amount of interest that could be claimed in both 1990 and 1992 would be $7,100.00, and even if the Appellants claimed the total interest on both mortgages, it would only total approximately $14,600.00. Yet, the wife, in her 1990 T1 tax return claimed the interest paid was $20,472.00 and the husband claimed in 1992 as interest expenses $17,480.00. These figures are incorrect. Without any positive evidence, I am not satisfied that any of the money from this second mortgage was used for the benefit of Danforth or Gray lee. The alleged rental and expenses for 1990 and 1992 as filed are:

I cannot accept without actual receipts that both taxes and utilities were less in 1992 than in 1990. The alleged interest payments are obviously overstated.

Graylee

Concerning Graylee, the alleged annual rental and expenses claimed for the three years are:

Year Rent Taxes Interest Insurance Utilities Repair

1990	$20,280 $2,900	$29,760	$398	$5,003	$ 520
199]	$20,400 $2,900	$21,624	$ 348	$2,850
1992	$14,300 $2,524	$13,968	$ 368	$3,108
					$1,296

Obviously when you look at these alleged rents and expenses, they do not ring true. I am not at all satisfied that there is any accuracy to them whatsoever. I cannot accept without actual receipts that taxes and utility expenses were less in 1992 than in 1990. There is no written evidence before me to set out how the interest was calculated.

Brimley

This property contains the residence of the Appellants. They occupy two-thirds of the house and a tenant occupies one-third. Thus, even assuming the expenses claimed were the actual amount, they have to be reduced to one-third and since the Appellants both own Brimley, both expenses and rental have to be shared equally. The wife’s tax return does not disclose any portion of the expenses as applicable to personal use. Obviously, if I do this, the wife would show a taxable income and not a loss. As she cannot come out of the case worse than when she started, I must dismiss her appeals. Again, no documentation was produced to satisfy me that her alleged rental and expenses are accurate.

The Appellants have failed to convince me that the assessments are wrong nor that any of the assumptions of fact made by the Minister are wrong. For all the reasons contained herein, the appeals are dismissed.

Appeals dismissed.