Guy
Tremblay:—This
case
was
heard
in
Toronto,
Ontario,
on
April
2,
1980.
1.
The
Point
at
Issue
The
point
at
issue
is
whether
the
coupon
bond
interest
of
$5,811
available
in
November
1975,
but
cashed
only
in
January
1976
should
be
included
in
the
1975
or
1976
return.
The
appellant’s
contention
is
that
it
should
be
included
in
1975,
and
the
respondent’s
contention
is
that
it
should
be
included
in
1976.
The
appellant
keeps
his
accounts
on
a
cash
received
basis.
2.
Burden
of
Proof
The
burden
is
on
the
appellant
to
show
that
the
respondent’s
assessment
is
incorrect.
This
burden
of
proof
results
particularly
from
several
judicial
decisions,
including
the
judgment
delivered
by
the
Supreme
Court
of
Canada
in
R
W
S
Johnston
v
MNR,
[1948]
CTC
195;
3
DTC
1182.
3.
The
Facts
3.01
The
facts
are
not
in
dispute.
In
November
of
the
years
1974,
1975
and
1976,
the
coupon
interest
from
Canada
Savings
Bonds
became
payable.
In
1974
and
1976,
the
appellant
“clips”
them
in
November
of
the
same
year.
3.02
In
November
1975,
the
appellant’s
coupon
interest
from
CSB
amounted
to
$5,811
($2,047.50
and
$3,763.50).
3.03
The
appellant
failed
to
clip
the
1975
interest
in
November
or
December,
and
therefore,
“they
were
not
credited
to
my
account”
during
the
year
1975.
3.04
In
fact,
the
coupons
were
clipped
only
on
January
23,
1976.
3.05
The
respondent
included
the
said
amount
of
$5,811
in
the
computation
of
income
for
the
1976
taxation
year.
3.06
The
appellant
contends
that
the
said
amount
should
have
been
included
in
calculating
his
income
for
the
taxation
year
1975.
3.07
The
appellant,
who
is
70
years
of
age,
is
retired.
It
was
admitted
that
the
appellant
computes
his
income
on
a
cash
received
basis.
4.
Law—Comments
4.1
Law
The
main
section
of
the
Income
Tax
Act
involved
in
the
present
case
is
paragraph
12(1)(c)
which
reads
as
follows:
There
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year
as
income
from
a
business
or
property
such
of
the
following
amounts
as
are
applicable:
(c)
any
amount
received
by
the
taxpayer
in
the
year
or
receivable
by
him
in
the
year
(depending
upon
the
method
regularly
followed
by
the
taxpayer
in
computing
his
profit)
as,
on
account
or
in
lieu
of
payment
of,
or
satisfaction
of,
interest;
4.2
Comments
4.2.1
The
crux
of
the
matter
is
whether
the
interest
from
the
coupons
in
November
1975
was
“receivable”
or
if
it
was
“received”.
4.2.2
An
account
receivable
is
an
account
which
is
due
so
that
the
creditor
is
entitled
to
enforce
the
payment.
When
a
taxpayer
computes
his
income
on
an
account
receivable
basis,
this
kind
of
account
must
be
included
in
the
computation
of
the
creditor’s
income
for
the
year
it
became
receivable
even
if
the
amount
in
fact
is
not
received
during
that
year,
but
in
a
later
year.
It
is
clear
that
when
the
said
amount
is
actually
received
in
a
later
year
it
is
not
taxable
a
second
time.
4.2.3
When
a
taxpayer,
as
in
the
present
case,
computes
his
income
on
a
cash
received
basis,
an
account
receivable
must
not
be
included
in
the
income,
but
only
in
the
year
when
it
is
received.
4.2.4
In
the
present
case,
the
appellant
had
on
hand
the
interest
coupons.
It
was
up
to
him
to
cash
them
immediately
or
to
wait
until
after
1975.
Does
an
amount
“received”
or
“receivable”
depend
on
the
taxpayer’s
decision
or
on
the
taxpayer’s
caprice?
The
Board
doubts
that.
It
is
inclined
to
think
that
the
definitions
of
an
“account
received”
and
‘account
receivable”
are
something
objective
not
subjective.
It
is
true
that
in
the
case
Dewar
v
CIR,
[1935]
2
KB
351,
it
was
decided
an
amount
would
not
have
been
“received”
in
the
years
when
it
became
owing
even
if
the
debtor
had
been
willing
to
pay
him
at
that
time,
but
the
taxpayer
did
not
desire
payment
to
be
made.
As
in
the
present
case
the
taxpayer
computed
his
income
on
a
cash
received
basis.
However,
in
that
case,
the
taxpayer
did
not
have
the
cheque
in
hand.
It
was
not
physically
at
his
disposal.
When
an
employee
receives
a
pay
cheque
at
the
end
of
December,
the
amount
is
considered
as
received
even
if
the
employee
cashes
it
only
at
the
beginning
of
January.
It
is
not
considered
as
a
receivable.
How
can
he
enforce
his
employer
to
pay
him.
As
he
already
has
the
cheque,
he
has
the
payment
in
hand.
In
the
present
case,
the
appellant
had
in
hand
the
required
document
to
cash
the
amount.
He
is
not
even
entitled
to
enforce
the
payment
of
the
amount
because
it
is
already
at
his
disposal.
It
has
already
been
received
in
1975.
The
amount
of
$5,118
must
be
included
in
the
appellant’s
income
for
the
year
1975.
5.
Conclusion
The
appeal
is
allowed
and
the
matter
is
referred
back
to
the
respondent
for
reassessment
in
accordance
with
the
above
reasons
for
judgment.
Appeal
allowed.
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