Gabrielle Gullison v. Her Majesty the Queen, [1993] 2 CTC 2108, 93 DTC 595

Rip, T.C.C.J. (orally):—These are appeals for 1985, 1986, 1987 and 1989 of Gabrielle Gullison. At commencement of trial the assumptions of fact relied on by the Minister of National Revenue (" Minister") in making the assessment were reviewed by the Court and Ms. Gullison. Ms. Gullison raised various issues of various matters with which she did not agree with Revenue Canada. These included such items as receipt of income of $2,210 from Renfrew Chrysler in 1985, whether it be Renfrew Chrysler 1977 Ltd. or Renfrew Chrysler 1988 Ltd., is unknown. In the Minister's reply at paragraph 8(c) he does not distinguish — does not allocate the $2,210 as between Renfrew Chrysler 1977 Ltd. and Renfrew Chrysler 1985 Ltd. Ms. Gullison also disputed income of $321.79 of Varsity Chrysler in 1986, $730.67 by the same company in 1987, $34,391.31 for the same company in 1989. She also disputed the calculation of benefits with respect to Las Vegas trip, fishing trip and auto benefit, in 1986, 1987 and 1989 as well as standby charges and operating costs assessed against her by Varsity Chrysler in 1986, 1987 and 1989. During the course of the trial the Revenue Canada Appeals Officer, Ms. Taylor explained how Revenue Canada assessed and Ms. Gullison was satisfied with the explanation as to how she was assessed and how the amounts were added to her income. For example, with respect to the fishing trip and Las Vegas trip and auto benefits — there was a pro rata allocation.

Now the amount in dispute or the amount that neither the court nor Ms. Gullison could be satisfied with was that in 1985 the amount of $2,210 was added to her income from either Renfrew Chrysler 1977 or 1985 Ltd. These are two separate entities and in the Minister's assumptions he did not distinguish between Renfrew Chrysler 1977 Ltd. and Renfrew Chrysler 1988 Ltd. Therefore as a result of this confusion the Minister simply wrote Renfrew Chrysler (1977 & 1985) Ltd." As I said, as a result of this confusion this is not a fact the Minister can rely on.

Ms. Gullison also stated that in the fall of 1984 she was in an accident and was unable to work full-time as a car salesman at the end of 1984 and the beginning of 1985. She disputes that of this $2,210 she received $1,569 simply for the month of January 1985, when she was working for Renfrew Chrysler 1977 Ltd. Ms. Taylor, the appeals officer, stated that the Revenue Canada Officers were able to find the origin of $641.75 of this amount but could not find the origin of the balance of $1,569. Accordingly, for this reason, I am going to allow the appeal of 1985 and refer the assessment for 1985 back to the Minister for reconsideration and reassessment on the basis that he deletes from income the amount of $1,569, that is $1,569. The appeals for 1986, 1987 and 1989 will be dismissed.

So you will be getting a reassessment for 1985. Thank you very much. You will be reassessed for 1985 and you will be getting a refund on that amount. Your income will be reduced by $1,569 and you will be getting a check if there is money owing to you. Everything else is dismissed.

Ms. Gullison, there is one thing I forgot to add, and that is I just want to make a comment on the Constitution issue which you raised; I think it would be in order. You raised the issue of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") is not intra vires, that is not within the jurisdiction of the federal government. Do you remember that? In your notice of appeal, you stated that under the B.N.A. Act, sections 91 and 92 of the British American Act, the federal government has no jurisdiction to tax and therefore the Act is beyond the jurisdiction of the federal government. Do you remember saying that in your notice of appeal?

MS. GULLISON: Yes, I copied it out of the Act.

THE COURT: I just want to tell you, and I don't need to hear from you Mr. Titosky : there is a case, at least one case, I just want to refer to the one that is in Alberta. There is a case Winterhaven Stables Ltd. v. Canada (Attorney General), [1989] 1 C.T.C. 16, 53 D.L.R. (4th) 413, which is a case of the Alberta Court of Appeal on October 17, 1988 and the Alberta Court of Appeal affirmed that statutes, including the Act, were intra vires, that is, are within the jurisdiction of the federal government. The Act being valid for tax legislation under subsection 91(3) of the Constitution Act, 1967 and the spending statutes being law dealing with the distribution of federal public funds are valid under paragraph 91 (1)(a) and section 106 of that Act.

Now, the Court of Appeal at page 431 (C.T.C. 29-30) agreed with the trial judge [(1986) 29 D.L.R. (4th) 394, 71 A.R. 1] and the trial judge said as follows at page 418 (A.R. 21):

In my view the challenge to the Income Tax Act on the basis that it is direct taxation within a province in order to raise money for provincial purposes and therefore invalid cannot be sustained. The power given under subsection 91(3) to "the raising of money by any mode or system of taxation” is a general and wide power. It would appear to be subject only to the exception contained in section 125 which contains an exemption from taxation of lands or property belonging to the federal or provincial authority.

And he added,

I do not believe that it can be said that the Income Tax Act has as its intended object the raising of money for provincial purposes.

And then he goes on:

It is however clear that the main object of the Income Tax Act is not to raise money by direct taxation for provincial purposes. It is concerned with raising money by taxation.

And found that the Act was within the jurisdiction of the federal government. Okay. I just wanted to put that into the reasons for judgment so that all of your notice of appeal is covered.

MS. GULLISON: I can't understand, can you explain this to me.

THE COURT: I’ll explain it to you that in your notice of appeal you said that the federal government cannot assess tax. The Court of Appeal of Alberta said that you are wrong, that the federal government can assess tax under the Act. Okay.

MS. GULLISON: Did I misinterpret the Act, is that what I did?

THE COURT: That's okay, no problem. Thank you very much.

Appeal allowed in part.