Christie
A.C.J.T.C.C.:—This
appeal
is
governed
by
the
informal
procedure
prescribed
by
section
18
and
following
sections
of
the
Tax
Court
of
Canada
Act.
The
years
under
appeal
are
1991
and
1992.
The
notice
of
appeal
reads:
In
1991
a
car
was
purchased
for
company
use.
Approximately
July
1992
I
had
a
payroll
audit
and
the
auditor
decided
grant
an
extra
income
of
$8,719
and
in
1992
an
extra
income
of
$13,919
was
granted.
I
totally
disagree
with
the
auditor’s
decision,
the
company
car
was
used
for
company
purposes
such
as
getting
new
clients,
pick
up
of
tickets
from
the
airlines
and
delivery
to
clients.
At
this
time
I
also
had
a
family
car,
a
Chrysler
K
car
for
family
and
personal
use.
Since
this
amount
of
money
was
added
to
my
income,
I
could
have
leased
a
1991
Buick
for
five
years
for
approximately
$400
per
month.
I
feel
that
this
is
totally
unjust,
the
company,
Standby
Travel
Incorporated,
lost
money
since
the
day
it
opened
till
it
closed.
Therefore,
1
am
appealing
to
this,
that
as
far
as
I
know
that
anyone
owing
a
company
and
a
company
car,
the
car
is
tax
deductible,
not
a
tax
gain.
I
wish
to
proceed
with
informal
procedure.
Paragraphs
1
to
7
inclusive
of
the
reply
to
the
notice
of
appeal
read:
1.
He
denies
all
allegations
of
fact
contained
in
the
notice
of
appeal.
4.
The
appellant’s
income
tax
returns
for
the
1991
and
1992
taxation
years
were
originally
assessed
on
August
23,
1993.
5.
In
computing
his
income
for
the
years
under
appeal,
the
appellant
did
not
include
any
amount
in
respect
of
standby
charges
for
an
automobile
or
benefits
relating
to
the
operation
of
an
automobile.
6.
In
reassessing
the
appellant
for
the
1991
and
1992
taxation
years
by
notices
of
reassessment
dated
August
31,
1994,
the
Minister
added
the
following
reasonable
standby
charges
for
an
automobile
and
benefits
in
respect
of
the
operation
of
an
automobile
to
the
appellant’s
income
for
1991
and
1992:
|
1991
|
1991—
|
|
Reasonable
standby
charge
|
|
|
$4,422.00
|
$
9,648.00
|
|
Benefit
re
auto
operation
|
|
|
S222LÛÛ
|
|
|
Total
addition
to
income
|
|
|
$6.643.00
|
|
In
so
reassessing
the
apellant,
the
Minister
made
the
following
assumptions
of
fact:
(a)
the
facts
hereinbefore
stated
and
admitted;
(b)
during
the
1991
and
1992
taxation
years
the
appellant
was
the
controlling
shareholder
as
well
as
an
employee
of
Standby
Travel
Inc.
(the
"company");
(c)
for
five
and
one-half
months
(169
days)
during
1991,
the
company
made
a
1991
Buick
Park
Avenue
automobile
(the
"automobile")
available
to
the
appellant;
(d)
for
12
months
(365
days)
during
1992,
the
company
made
the
automobile
available
to
the
appellant;
(e)
the
cost
of
the
automobile
to
the
company,
exclusive
of
GST,
licence
and
gas,
was
$37,758;
(f)
the
appellant
did
not
pay
any
amount
to
the
company
in
either
the
1991
or
1992
taxation
years
for
the
use
of
the
automobile;
(g)
in
the
years
under
appeal
the
appellant
did
not
pay
any
amounts
to
the
company
as
reimbursement
of
expenditures
related
to
the
operation
of
the
automobile;
(h)
the
aggregate
number
of
kilometres
the
automobile
was
driven
by
the
appellant
(otherwise
than
in
connection
with
or
in
the
course
of
his
office
or
employment
with
the
company)
was
not
less
that
5,500
km
in
1991
and
12,000
km
in
1992;
(k)
the
standby
charge
for
the
automobile
for
the
1991
taxation
year
was
calculated
as
follows:
|
27%
x
($37,758.00
x
5
1\2)
|
$4,153.00
|
|
G.S.T.
on
standby
charge
exclusive
|
|
|
of
provincial
sales
tax:
|
|
|
270
[($37,758.00
-
$2,796.88)
x
5
1\2]
x
7%
|
269.00
|
|
$4.422.00
|
(1)
the
standby
charge
for
the
1992
taxation
year
was
calculated
as
follows:
|
2%
x
($37,758.00
x
12)
|
$9,061.00
|
|
$9,061.00
|
|
G.S.T.:
2%
x
[($37,758.00
-
$2,796.88)
x
12]
x
7%
|
587,00
|
—S8.7.QQ
$9,648.00
(m)
the
benefits
in
respect
of
the
operating
costs
of
the
automobile
were
estimated
by
reference
to
subsection
6(2.2)
of
the
Income
Tax
Act
as
follows:
|
989
|
1990
|
|
Benefit
estimated
at
1\2
standby
charge*
|
$2,076.00
|
$4,530.00
|
|
G.S.T.
at
7%
|
145,00
|
317.00
|
|
$2,221.00
|
$4.847,00
|
(n)
the
total
amounts
referred
to
in
paragraph
6
of
this
document,
including
automobile
standby
charges
and
benefits
in
respect
of
the
operation
of
the
Automobile,
are
to
be
included
as
income
of
the
appellant
from
his
employment
with
the
company.
This
appears
as
paragraph
8
of
the
reply
to
the
notice
of
appeal:
The
issues
to
be
decided
are:
(a)
whether
the
Minister
properly
assessed
reasonable
standby
charges
in
the
amounts
of
$4,422
and
$9,648
for
the
1991
and
1992
taxation
years
respectively
pursuant
to
paragraph
6(1
)(e)
of
the
Act,
and
(b)
whether
the
appellant
received
benefits
pursuant
to
paragraph
6(1
)(a)
of
the
Act
as
an
employee
of
the
company
in
the
amounts
of
$2,221
and
$4,847
in
the
1991
and
1992
taxation
years
respectively
in
respect
of
the
operation
of
the
automobile
owned
by
the
company
and
made
available
to
him.
What
is
relevant
to
these
appeals
in
the
paragraphs
of
the
Income
Tax
Act
referred
to
provide
that:
6(1)
There
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
as
income
from
an
office
or
employment
such
of
the
following
amounts
as
are
applicable:
(a)
the
value
of
board,
lodging
and
other
benefits
of
any
kind
whatever
received
or
enjoyed
by
him
in
the
year
in
respect
of,
in
the
course
of,
or
by
virtue
of
an
office
or
employment,
except
any
benefit
(iii)
that
was
a
benefit
in
relation
to
the
use
of
an
automobile,
except
to
the
extent
that
it
related
to
the
operation
of
the
automobile,
(e)
where
his
employer
or
a
person
related
to
his
employer
made
an
automobile
available
to
him,
or
to
a
person
related
to
him,
in
the
year,
the
amount,
if
any,
by
which
(i)
an
amount
that
is
a
reasonable
standby
charge
for
the
automobile
for
the
aggregate
number
of
days
in
the
year
during
which
it
was
made
so
available
exceeds
(11)
the
aggregate
of
all
amounts,
each
of
which
is
an
amount
(other
than
an
expense
related
to
the
operation
of
the
automobile)
paid
in
the
year
to
the
employer
or
the
person
related
to
the
employer
by
the
taxpayer
or
the
person
related
to
the
taxpayer
for
the
use
of
the
automobile;
Notices
of
reassessment
for
the
years
under
review
were
placed
in
evidence
on
behalf
of
the
respondent.
Both
notices
are
dated
August
31,
1994,
and
the
attached
explanation
(T7W-C)
states
this
with
respect
to
1991:
"Add:
Employment
income
received
from
‘Standby
Travel
Inc.’
$6,643".
The
explanation
for
1992
reads:
"Add:
Employment
income
received
from
‘Standby
Travel
Inc.’
$14,495".
It
is
evident
that
a
basic
assumption
on
which
the
reassessments
are
founded
is
that
the
appellant
was,
at
the
times
relevant
to
these
appeals,
an
employee
of
Standby
Travel
Inc.
The
evidence
on
this
point
at
the
hearing
is
that
he
was
not
so
employed.
A
basic
fact
on
which
the
reassessments
are
founded
having
been
demolished,
the
appeals
shall
be
allowed.
In
argument,
counsel
for
the
respondent
submitted
for
the
first
time
that
the
appeals
be
dismissed
on
the
alternative
ground
that
the
appellant
had
a
benefit
conferred
on
him
under
subsection
1
SCI)
of
the
Act.
I
disagree.
The
appeals
are
allowed.
Appeals
allowed.
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