Roland
St-Onge
(orally:
June
14,
1977):—The
appeal
of
Angus
E
Barton
&
Associates
Limited
came
before
me
on
June
14,
1977
at
the
City
of
Toronto,
Ontario
and
it
is
with
respect
to
the
appellant’s
1973
and
1974
taxation
years.
In
its
notice
of
appeal
the
appellant
alleged
that
it
was
incorporated
for
the
specific
purpose
of
investing
in
property
of
all
kinds
and
that
it
should
be
entitled
to
the
small
business
deduction
of
subsection
125(1)
of
the
Income
Tax
Act.
On
the
other
hand,
the
respondent
contended
that
the
appellant,
for
the
years
under
appeal,
derived
virtually
all
its
income
from
dividends
and
interest
and
consequently
did
not
carry
On
an
active
business.
The
only
witness
heard
was
Mr
Francis
Lorenzen,
the
secretary
of
the
appellant
company.
He
testified
that
in
September
of
1971
the
appellant
company
was
incorporated
to
take
over
the
assets
and
business
of
Tanner’s
Technical
Services
Limited
and
that
the
objectives
of
the
company
were
to
be
in
conformity
with
subsection
125(1)
of
the
Income
Tax
Act.
The
main
shareholders
of
the
appellant
company
are
Mr
and
Mrs
Barton.
Mr
Barton
is
the
president.
According
to
the
financial
statements,
in
1973
the
appellant
reported
as
capital
gain
the
sum
of
$2,122.69
and
in
1974,
again
according
to
the
financial
statements
filed
as
Exhibits
R-1
and
R-2,
the
appellant
purchased
Canada
Savings
Bonds
for
a
sum
of
$20,000.
The
appellant
had
the
onus
to
prove
that
it
was
sufficiently
active
to
be
able
to
benefit
from
subsection
125(1)
of
the
Income
Tax
Act.
On
cross-examination,
Mr
Lorenzen
explained
that
the
office
of
the
appellant
company
was
located
in
the
dining-room
of
the
residence
of
the
Bartons
and,
according
to
his
testimony,
it
seems
that
there
were
not
very
many
employees.
Again,
according
to
the
financial
statements,
there
were
some
insignificant
sums
of
money
(some
$500)
paid
to
Mr
Barton
and
his
wife.
According
to
the
evidence
adduced,
it
seems
that
the
only
income
received
by
the
appellant
company
was
from
investment
and
there
is
no
doubt
that
the
appellant
company
was
not
very
active
in
any
other
businesses.
The
most
interested
person
in
the
case,
Mr
Barton,
did
not
testify.
I
have
to
say
that
the
onus
was
on
the
appellant
to
prove
a
certain
degree
of
activity,
but
it
failed
to
do
so.
For
these
reasons,
the
appeal
is
dismissed.
Appeal
dismissed.
Email this Content