Delmer
E
Taylor
(orally:
February
18,
1977):—This
is
an
appeal
by
Eddie
Oswald
against
assessments
of
tax
for
the
1970,
1971
and
1972
taxation
years.
In
summary,
as
a
result
of
an
investigation
by
the
Department
of
National
Revenue
of
the
affairs
of
Mr
Oswald,
which
included
reference
to
businesses
in
which
he
was
either
the
major
or
a
substantial
participant
(Maitland
Sportsmen’s
Club,
Ensign
Tours,
and
Ensign
Travel),
the
Department
added
to
the
income
of
the
appellant
an
amount
of
$39,677,
being
$10,783
for
the
year
1970,
$23,728
for
the
year
1971,
and
$5,166
for
the
year
1972.
In
addition,
as
a
result
of
the
investigation
carried
out,
the
Minister
has
assessed
the
appropriate
penalties
under
the
Income
Tax
Act,
as
applicable
in
the
respective
taxation
years.
The
difficulties
which
required
investigation
by
the
Department
of
National
Revenue
were
the
result
of
the
process
by
which
the
appellant
maintained
the
affairs
of
the
businesses
to
which
reference
has
been
made—he
did
not
have
an
accountant
during
the
years
in
question;
there
was
no
set
of
books;
there
were
no
reports
presented
that
would
have
indicated
evidence
of
information
given
to
other
parties
with
which
he
was
involved;
there
were
no
financial
statements
prepared;
there
was
no
filing
of
tax
information
in
advance
of
the
Department’s
demands
to
do
so.
The
appellant
has
presented
practically
nothing
of
substance
in
the
way
of
evidence
in
support
of
his
case.
The
respondent
has
provided,
through
Mr
Rose
from
Revenue
Canada,
a
thorough
and
detailed
report
covering
the
basis
on
which
the
reassessments
were
made.
The
fundamental
document
of
value
to
the
Board
is
Exhibit
A-1,
supplied
by
the
accountant
for
the
appellant,
which
purports
to
represent
a
reconciliation
of
operations
of
a
particular
business
for
the
years
involved.
The
end
result
of
this
documentation
is
the
claim
that
only
an
amount
of
$13,379
should
be
added
to
the
appellant’s
income
for
the
years
in
question.
Mr
Rose’s
analysis,
Exhibit
R-1,
starts
with
Exhibit
A-1
and
progresses,
using
bank
records
and
supportable
documentation
to
the
conclusion
that
the
additional
income
is
that
mentioned
above,
ie
$39,677.
From
the
evidence
of
Mr
Rose
and
the
cross-examination
of
the
appellant
and
his
accountant,
the
Board
has
concluded
that
one
specific
addition
to
income
in
the
amount
of
$1,000,
shown
in
connection
with
personal
accounts
for
the
year
1972
on
Exhibit
R-1,
should
be
deleted
and
the
appellant
given
credit
for
it.
Counsel
for
the
respondent
agreed.
The
major
contention
of
the
appellant
relates
to
the
year
1971,
a
disallowance
by
the
respondent
of
some
$14,000
in
alleged
loss
on
the
operations
of
one
of
the
appellant’s
businesses—Ensign
Travel.
The
Department
has,
in
my
view,
taken
a
rather
magnanimous
viewpoint
in
light
of
an
almost
complete
lack
of
data
and
has
merely
said
that
the
Department
would
agree
there
was
no
taxable
income
for
that
year
from
Ensign
Travel,
but
the
Department
would
not
accept
any
claim
for
an
unsupported
loss.
Ensign
Travel
dealt
with
reservations
for
air
travel,
and
I
find
it
impossible
to
accept
that
the
appellant
would
pay
out
more
in
fare
payments
than
were
received
for
such
fare
reservations
from
his
customers,
let
alone
the
further
expenses
he
has
claimed.
The
Board
sees
no
basis
for
any
change
in
any
respect
of
the
Minister’s
reassessments
other
than
the
$1,000
referred
to
above
and
therefore,
the
appeal
is
allowed
in
part
with
respect
to
the
year
1972,
but
in
all
other
respects
the
appeal
is
dismissed.
Appeal
allowed
in
part.
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