Brulé
T.CJ.:
These
two
appeals
were
heard
on
common
evidence
and
involve
a
payment
made
to
Richard
Perren
in
1989.
The
Minister
of
National
Revenue
(the
“Minister”)
reassessed
him
in
respect
of
his
1988,
1989
and
1990
taxation
years.
The
corporate
Appellant
was
reassessed
in
respect
of
its
1989
taxation
year
ending
August
31,
1989.
Facts
These
are
best
found
in
the
Notice
of
Appeal
of
Richard
Perren
as
follows:
In
1989,
Richard
Perren,
the
principal
shareholder
of
this
small
company,
received
from
Mr.
J.M.
Jerwood,
a
long
time
family
friend
and
benefactor,
a
payment
of
$120,000
U.S.
Because
Mr.
Perren
did
not
have
a
U.S.
dollar
account
the
money
was
paid
into
the
Company’s
U.S.
dollar
account
where
it
was
a
credit
for
the
benefit
of
Mr.
Perren.
In
reassessing
the
Appellant’s
income
the
Minister
has
included
the
following
amounts:
The
Appellant
understands
that
these
personal
reassessments
relate
to
the
Minister’s
treatment
of
$142,800
($120,000
U.S.)
deposited
in
the
U.S.
dollar
account
of
Richard
Perren
&
Company
Inc.
(“the
Company”).
In
a
reassessment
of
the
Company’s
income
for
the
1989
taxation
year,
the
Minister
included
an
amount
of
$142,800
representing
the
$120,000
U.S.
paid
into
the
Company’s
U.S.
dollar
bank
account.
The
reassessments
of
the
Appellant,
made
on
the
same
day
as
the
Company’s
reassessment,
seem
to
be
based
on
the
assumption
that
these
monies
were
Company
income
and
that
any
payment
thereof
to
the
Appellant
was
a
taxable
use
of
Company
funds.
Issues
The
issues
to
be
decided
are
whether
the
amounts
reassessed
by
the
Minister,
as
set
out
above,
were
properly
included
in
the
Appellant’s
income
for
the
1988,
1989
and
1990
taxation
years,
and
whether
the
$120,000
deposited
in
the
corporate
U.S.
dollar
account
is
income
to
the
company.
Analysis
Mr.
Perren
gave
evidence,
in
detail,
as
to
his
family’s
background
and
relations
with
a
Mr.
Jerwood,
the
payor
of
the
$120,000
U.S.
Mr.
Jerwood
had
given
Mr.
Perren
gifts
over
the
years,
and
as
a
very
wealthy
individual,
indicated
to
Mr.
Perren
if
ever
he
needed
funds
they
would
be
forthcoming.
Mr.
Jerwood
also
dealt
on
a
business
basis
with
Perren’s
company
supplying
the
company
with
product
and
invoicing
accordingly.
The
particular
transaction
arose
as
a
result
of
a
shortage
of
funds
by
Perren
after
purchasing
a
cottage.
Jerwood
was
approached
and
a
figure
of
$120,000
U.S.
was
agreed
upon.
There
was
no
discussion
of
whether
the
payment
was
a
loan
or
gift.
Perren
had
no
U.S.
dollar
account
and
so
the
funds
were
temporarily
placed
in
the
corporate
U.S.
account.
A
discovery
of
a
Revenue
Canada
person,
who
did
an
audit,
did
not
reveal
any
connection
between
the
payment
and
the
supply
of
product.
The
witness,
Mr.
Perren,
was
very
honest
and
forthright
in
his
testimony
and
in
addition
there
was
evidence
in
the
discovery
that
complete
cooperation
was
given
to
Revenue
Canada.
There
is
no
evidence
that
the
payment
was
anything
other
than
personal
to
the
Appellant
Perren.
The
corporate
involvement
was
only
one
of
convenience.
Accordingly
the
appeals
are
allowed
with
costs.
Appeal
allowed.
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