Guy Savoie v. Minister of National Revenue, [1983] CTC 2564, 83 DTC 526

Cardin, TCJ:—The appeal of Guy Savoie is from an assessment of tax with respect to the 1977 and 1978 taxation years.

The respondent assessed the appellant on the assumption that the appellant failed to report income from his fishing business in the following amounts:

(During 1977 the appellant earned the right to a fall lobster rebate in the amount of $167.30 which he received in 1978)

1978 —	$6,247.00 — Sale of lobster to WS Loggie Company, Limited
	167.30 — Fall lobster rebate earned in 1977
	$6,414.30

The appellant’s position is that he reported sales to WS Loggie Company, Limited on the basis of form T-4F provided by that company which shows sales of $363 for the 1977 taxation year. He alleged that May 26 and 27, 1977 were storm days and no fish were landed or sold to Thaddee LeBlanc. The appellant denies that any sales were made to WS Loggie Company, Limited in 1978.

Background: The appellant, a licensed fisherman who owned his fishing boat, was assisted by two helpers in the operation of his business. As a member of the Baie Ste-Anne Fishing Co-operative, he was required to sell all his catch to the Co-op. For the 1978 taxation years the appellant filed his returns on the basis of the T-4F slips issued by the Co-op.

Mr Martin, a fish buyer for WS Loggie Company, Limited during the period under review, purchased fish on a cash basis from the various fishermen at Baie Ste-Anne. The name of the fishermen, the quantity of fish and the price paid were recorded on purchase slips which were used by the company for its records and from which the T-4F slips were prepared. Mr Martin remembered clearly having purchased lobsters on behalf of WS Loggie Company, Limited from the appellant in both 1977 and 1978. Mr Martin is the appellant’s brother-in-law.

Mr Martin and Mr Daly, the manager of WS Loggie Company, Limited, both testified that some fishermen were reluctant to have their names inscribed on the purchase slips and did not want to receive T-4F forms. Indeed many of the purchase slips did not indicate the fisherman’s name.

The lobster season in which the appellant was licensed to fish ran from May 1 to June 1 and from August 10 to October 10. In 1977 WS Loggie Company, Limited declared a Fall Lobster rebate or bonus which was calculated on the basis of $0.10 per pound of lobster purchased. The rebate or bonus was paid to the fishermen on application and on presentation of proof of the quantity of lobster sold to the company.

The rebate to which the appellant was entitled for lobster sold to WS Loggie Company, Limited in 1977 was $167.30. On the basis of a bonus of $0.10 a lb of lobster sold, $167.30 represents 1673 lbs of lobster purchased by WS Loggie Company, Limited from the appellant. At $1.20 a lb, the appellant sold some $2,000 worth of lobster to WS Loggie Company, Limited in 1977 over and above the sales of $363 declared in his return on the basis of the T-4F slip issued by the company for that year.

The respondent called as witness Mr Frank Breau, a financial analyst with the Department of National Revenue, whose assignment it was to enquire into the procedures followed in the purchase and sale of fish in the Atlantic region.

Mr Breau’s study led him to examine the records of fish buyers — including the fish purchase slips as well as the T-4F slips issued by the companies. Mr Breau also examined the tax returns filed by fishermen who had sold their catch to various buyers. The study made from computer print-outs showed considerable discrepencies between the company’s purchase records and the sales reported by certain fishermen.

From the computer print-outs the appellant was recorded as having sold to Thaddee LeBlanc $479 worth of herring on May 26, 1977 and $868 worth of fish on May 27, 1977 which he did not report in his 1977 tax return.

In 1978 the appellant did not report the 1977 Fall lobster rebate of $167.30 and he did not report the sales of $6.247 worth of lobster to WS Loggie Company, Limited which were taken from the company’s records and confirmed by Mr Daly, the manager of the company, and produced as Exhibit R-1.

The appellant produced as Exhibit A-2 a series of sales slips for fish sold to the Co-operative Baie Ste-Anne in October 1978 and claimed that the amount of sales made to the Co-op represented a normal catch for the period, which was confirmed by the manager of the Co-op. The appellant argued that he could not have made sales in the amount of $6,247 to WS Loggie Company, Limited in the same period.

The credibility of the appellant is an important factor in determining the issue. The appellant was evasive under cross-examination and was clearly contradicted by Mr Martin, his brother-in-law, and by Mr Daly, the manager of WS Loggie Company, Limited. Sales of lobster to WS Loggie Company, Limited in 1977 and 1978 have been confirmed by company records. Many of the dates of the sales slips with respect to sales made to the Co-op, which have been produced as Exhibit A-2, had been altered. Some were originally dated as far back as July or August 1978 and the appellant’s argument that he could not have made sales to WS Loggie Company, Limited since the sales made to the Co-op in October 1978 represented a normal catch is not supported.

I find that the appellant has not succeeded in establishing that the assumptions on which the appellant [sic] based his assessment are wrong and I accept that sales attributed to the appellant in each of the taxation years in question were in fact made. Furthermore, the amount of unreported sales were so considerable, compared to the amount of income reported by the appellant, that their omission in his tax returns cannot be an oversight and must be attributed to gross negligence.

Judgment will go dismissing the appeal and upholding the penalty assessed.

Appeal dismissed.