Jerome,
A.C.J.:—
This
is
an
appeal
by
the
plaintiff
from
a
decision
of
the
Tax
Court
of
Canada
which
dismissed
his
appeal
from
an
assessment
issued
by
the
Minister
of
National
Revenue
on
September
21,
1988.
Mr.
Laskaris
is
a
businessman
who
resides
in
the
city
of
London,
Ontario,
and
who,
during
the
1985
taxation
year,
was
a
shareholder
of
an
Ontario
numbered
company,
484859
Ontario
Ltd.
During
the
course
of
his
1985
taxation
year,
the
plaintiff
secured
the
sum
of
$92,926
from
the
company.
He
maintains
that
of
those
moneys,
the
sum
of
$81,500
was
a
capital
dividend
paid
out
by
the
corporation
to
himself
as
a
shareholder,
and
the
balance
was
a
loan
from
the
corporation
repaid
to
it
during
the
1986
taxation
year.
However,
on
September
21,
1988,
the
Minister
of
National
Revenue
assessed
the
amount
as
income
of
the
plaintiff,
on
the
basis
that
the
funds
did
not
constitute
a
capital
dividend
paid
out
by
the
corporation
to
Mr.
Laskaris
as
shareholder
nor
were
any
of
the
moneys
a
loan
from
the
corporation.
The
assessment
was
based
on
the
following
facts:
1.
At
all
material
times,
the
plaintiff
was
a
shareholder
of
the
corporation;
2.
During
his
1985
taxation
year,
the
plaintiff,
in
his
capacity
as
a
shareholder
of
the
company,
appropriated
funds
of
the
company
of
not
less
than
$92,925.80;
3.
The
company
did
not,
at
any
material
time,
declare
a
capital
dividend
to
its
shareholders;
4.
An
election
under
section
83
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the"Act")
was
not
filed
in
a
timely
manner
by
the
company,
and
the
purported
election
which
was
delivered
to
the
Minister
of
National
Revenue
on
May
17,
1988,
disclosed
an
amount
in
the
company's
capital
dividend
account
in
excess
of
the
actual
amount;
5.
The
appropriations
by
the
plaintiff
of
the
company’s
funds
during
his
1985
taxation
year
were
not
recorded
in
the
books
and
records
of
the
company.
On
November
5,
1992,
at
the
conclusion
of
argument
by
counsel
for
the
taxpayer,
I
dismissed
the
appeal
without
calling
on
counsel
for
the
Minister.
The
sole
issue
here
is
whether,
during
the
1985
taxation
year,
there
was
a
valid
and
proper
election
made
pursuant
to
section
83
of
the
Income
Tax
Act
which
would
allow
the
moneys
in
question
to
be
treated
as
a
capital
dividend
paid
by
the
company
to
its
shareholders,
and
excluded
in
the
computation
of
the
shareholders’
income.
The
evidence
simply
does
not
support
such
a
finding.
The
plaintiffs
numbered
company
was
a
family
business;
the
bookkeeping
was
attended
to
by
Mr.
Laskaris'
brother-in-law
who
gave
evidence
at
the
hearing,
and
who
appears
to
be
a
competent
bookkeeper.
However,
it
is
clear
that
neither
he
nor
the
plaintiff,
nor
anyone
else
involved
in
the
operation
of
the
business,
appreciated
the
tax
consequences
which
would
arise
from
a
large
sum
of
money
being
paid
out
of
the
corporation's
treasury
over
a
period
of
time
to
the
plaintiff.
Indeed,
it
was
not
until
an
audit
was
conducted
by
Revenue
Canada
in
1988
that
Mr.
Laskaris
became
aware
that,
in
the
absence
of
an
election
under
section
83
of
the
Income
Tax
Act,
the
moneys
would
be
included
in
the
computation
of
his
income.
Furthermore,
there
is
nothing
in
the
records
of
the
corporation
that
moneys
were
being
set
aside
for
payment
of
a
capital
dividend
to
shareholders.
There
is
no
indication
in
the
minute
book
of
the
company,
that
the
issue
was
ever
addressed
by
the
shareholders.
The
amount
declared
by
the
plaintiff
to
have
been
set
aside
in
the
corporation's
capital
dividend
account
cannot
result
from
any
calculation
based
on
section
83
as
I
understand
it.
Even
if
the
amount
had
been
correctly
calculated,
it
was
all
paid
to
the
plaintiff.
Had
a
proper
election
under
section
83
been
made,
there
would
have
been
disbursements
on
a
pro
rata
basis
to
Mr.
Laskaris,
his
wife
and
his
daughter.
Accordingly,
for
reasons
given
orally
from
the
Bench
on
November
5,
1992,
I
dismissed
the
appeal
without
costs.
Appeal
dismissed.
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