McArthur
J.T.C.C.:—This
appeal
was
heard
in
Montreal
under
the
informal
procedure
of
this
Court
concerning
the
appellant’s
1991
taxation
year.
Issue
The
issue
is
whether
the
sum
of
$26,000
from
Stephen
Kape
Industries
Inc.,
should
be
included
in
the
appellant’s
1991
taxable
income.
Facts
Some
of
the
relevant
facts
were
in
dispute.
Leona
Obrand
Kape
gave
evidence
on
her
own
behalf
and
much
of
her
testimony
was
confirmed
by
her
brother.
For
the
1991
taxation
year
the
appellant's
unsigned
income
tax
return
filed
with
the
Minister
of
National
Revenue
(the
"Minister")
indicated
income
as
follows:
|
Plastic
Coated
Textiles
1986
(Textiles)
|
$22,945
|
|
Stephen
Kape
Industries
Inc.
(Industries)
|
$26,000
|
The
appellant
acknowledged
the
Textiles
income
but
denied
receiving
the
$26,000
Industries
income.
Stephen
Kape
and
the
appellant
were
married
in
1965
and
separated
in
January
1992.
They
had
two
children
who
were
in
their
early
20s
in
1991.
Since
1986,
she
worked
full
time,
9:00
a.m.
to
5:00
p.m.,
five
days
weekly
with
Textiles,
which
Company
is
50
per
cent
owned
by
her
brother
H.
Obrand.
In
March
1992,
she
received
a
tax
return,
completed
on
her
behalf
by
the
accountants
for
Industries
which
indicated
a
total
1991
income
of
$48,945
to
include
$26,000
from
Industries.
She
categorically
denied
ever
providing
services
for
Industries
or
receiving
any
salary
from
it
nor
was
she
a
shareholder
of
that
Company.
She
acknowledged
that
weekly,
during
1991
taxation
year
and
in
previous
years,
she
received
the
sum
of
$300
cash
from
her
husband
which
she
used
to
buy
groceries
for
the
family
of
four
and
for
various
other
personal
expenses.
Stephen
Kape
paid
the
remaining
household
expenses
including
utilities,
municipal
taxes
and
insurance.
Their
principal
place
of
residence
was
registered
in
the
appellant’s
name.
Industries
made
rental
payments
in
part
for
an
automobile
used
by
the
appellant
together
with
a
$4,714
golf
membership
payment
for
both
husband
and
wife.
These
sums
were
included
to
arrive
at
the
$26,000
in
question.
The
appellant
testified
she
never
worked
for
Industries,
was
not
aware
that
she
was
on
its
payroll
until
March
1992
and
was
not
aware
she
received
taxable
benefits
from
Industries.
While
she
was
shocked
upon
receiving
the
1991
return
prepared
on
her
behalf,
she
filed
it,
as
is,
for
fear
of
incurring
penalties
for
non
filing.
For
the
most
part,
she
was
left
uninformed
with
respect
to
the
financial
affairs
of
Industries.
She
was
unaware
of
a
registered
retirement
savings
plan
(RRSP)
opened
in
her
name,
containing
$3,122.02
in
March
1992.
She
claimed
to
have
no
knowledge
whatsoever
of
weekly
cheques,
written
on
the
account
of
Industries,
in
the
amount
of
$297.63
to
her
favour
and
purportedly
endorsed
on
the
back
by
her
and
Stephen
Kape.
She
denied
ever
seeing
let
alone
endorsing
the
cheques
saying
the
Leona
Kape
signature
was
not
hers.
Stephen
Kape
testified
that
his
former
wife
did
work
for
Industries
over
the
years
prior
to
1991
and
throughout
1991,
taking
time
out
from
her
employment
with
Textiles
to
do
booking,
filing,
entertaining,
giving
advice
on
fashions
and
attend
business
trips.
He
stated
she
had,
in
fact,
two
jobs
and
she
would
provide
services
to
Industries,
periodically,
when
needed.
He
indicated
she
was
aware
of
the
benefits
flowing
to
her
from
Industries
and
weekly
he
would
present
the
Industries
pay
cheque
to
her,
have
her
endorse
it,
he
would
attend
the
bank,
cash
it
and
return
the
equivalent
of
the
cheque
in
cash
to
her
every
Thursday.
This
Court
accepts
the
appellant's
evidence
over
that
of
Stephen
Kape
when
the
two
are
contradictory.
Subsection
5(1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
under
the
heading
"Income
or
loss
from
an
office
or
employment—Basic
Rules”
reads
as
follows:
5
(1)
Subject
to
this
Part,
a
taxpayer’s
income
for
a
taxation
year
from
an
office
or
employment
is
the
salary,
wages
and
other
remuneration,
including
gratuities,
received
by
him
in
the
year.
A
taxpayer's
income
for
a
taxation
year
from
an
office
or
employment
is
the
salary,
wages
and
other
remuneration
received
during
the
year.
"Employment"
means
the
position
of
an
individual
in
the
service
of
some
other.
“Salary”
includes:
1.
remuneration
for
services
rendered;
2.
it
is
payable
under
an
express
or
implied
contract;
3.
it
is
computed
by
reference
to
time;
4.
it
is
payable
at
certain
definite
dates
or
times.
Wages
are
payments
to
a
person
for
services
rendered.
Giving
consideration
to
all
of
the
facts,
I
find
that
the
appellant
was
not
employed
by
Stephen
Kape
Industries
Inc.
and
did
not
receive
a
salary
or
wages
within
the
meaning
of
the
Act
from
the
Stephen
Kape
Industries
Inc.
The
$300
weekly
in
cash
was
for
living
expenses
of
the
family
unit
as
were
the
car
and
club
membership.
For
these
reasons,
the
appeal
is
allowed.
Appeal
allowed.
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