Marie Corbett v. Minister of National Revenue, [1972] CTC 2071, 72 DTC 1066

J O Weldon:—This appeal with respect to the 1968 taxation year was heard at Toronto, Ontario on November 2, 1970 under the Tax Appeal Board as it was then constituted. The appellant, a solicitor, acted for herself in the matter and J S Gill, Esq, acted as counsel on behalf of the Minister.

The matter in dispute herein arose out of the disallowance by the Minister of a deduction from income of $500 claimed by the taxpayer in her 1968 return under paragraph 27(1 )(d) of the Income Tax Act, RSC 1952, c 148 as amended, dealing with “Blind persons and persons confined to bed or wheel chairs”. In response to the taxpayer’s notice of objection to the disallowance of the above-mentioned deduction, the Minister confirmed the disputed assessment on the ground that she had not shown that she was entitled to a deduction from income under paragraph 27(1)(d) of the Act. The evidence submitted by the taxpayer to the Minister along with her 1968 return dated March 29, 1969 in support of her above-mentioned claim consisted of a letter which she had obtained from The Montreal General Hospital, Montreal 25, Quebec, dated March 13, 1969 signed by its Registrar H E MacDermot, MD, which reads as follows:

TO WHOM IT MAY CONCERN:

317420

Re: CORBETT, Miss Marie

This patient was seen in our clinic Mar. 10-68 with severe conjunctivitis. This had been brought on by her leaving her contact lenses in for too long and had caused an inflammatory condition which rendered her sightless for at least a day. Eye patches were applied and she has not been seen since.

Paragraph 27(1 )(d) of the Act referred to above reads as follows:

27. (1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted from the income for the year such of the following amounts as are applicable:

(d) $500 if the taxpayer

(i) was totally blind at any time in the year or was, throughout the whole of the year, necessarily confined, by reason of illness, injury or affliction, to a bed or wheel chair, and

(ii) did not include any amount in respect of remuneration for an attendant, or care in a nursing home, by reason of his blindness, illness, injury or affliction in calculating a deduction for medical expenses under this section for the year;

The Shorter Oxford English Dictionary provides the following definitions which are helpful in obtaining an understanding of the medical term “conjunctivitis” used in Dr MacDermot’s letter quoted above:

Conjunction — The act of conjoining, the fact or condition of being conjoined;

Conjunctiva — The mucous membrane which lines the inner surface of the

eyelids and is reflected over the front of the eye-ball, thus conjoining this with the lids. Hence conjunctival means pertaining to the conjunctiva and conjunctive means serving to conjoin or unite, connective.

Conjunctivitis — Inflammation of the conjunctiva.

The facts leading up to the taxpayer’s scary experience can be stated briefly. On Saturday March 9, 1968 Miss Corbett, then a student-at-law residing in Toronto, proceeded to Montreal to spend the weekend with her mother. She testified, in effect, as follows: that —

I put my contact lenses in around 6.00 P.M. We were going out to dinner and going out in Montreal later with my family. I had them in from 6.00 P.M. until 4.00 A.M. (the following morning);

that, in other words, the contact lenses were in her eyes continuously from 6 pm on Saturday, March 9, 1968 to 4 am on Sunday, March 10, 1968, some 10 hours; that —

Now, I had probably at that point worn them between eight and ten hours but once again if you are out, as I was, smoking conditions would have different reactions on your eyes but I had worn them at least eight hours on prior occasions;

that (in reply to my question, in effect, as to whether contact lenses have to be removed at the end of certain periods of time for resting or whether the eyes can simply be washed out and the lenses immediately replaced) —

No, you should have a rest so that, for example, if you start off at two hours a day you should then rest an hour or two hours before starting on your two-hour period so that if you were up to eight hours a day you should then give them a rest of — well depending on your eyes — anywhere from two to five hours before putting them in again, but I have never, ever worn them longer than one set number of hours in a day because I! have had, you know, problems with them;

that, on the Sunday morning in question she got to bed about 4 am and awoke 2 or 3 hours later with a “phenomenal pain,” opened her eyes and found that she could not see; that she was astounded (ie shocked with alarm); that she roused her family and was taken by a taxicab to the Emergency Clinic of the Montreal General Hospital; that, after explaining her predicament to the examining doctor, he stated that it was probably caused by her contact lenses; that he also stated that, if you can only wear contact lenses for a certain length of time, you should not exceed that length of time and that she had probably reached her peak-wearing-time; that the same doctor. put drops in her eyes and tested them with various machines; that he mentioned to her that the corneas of her eyes were scratched and that there were abrasions “because the contact lenses had been worn for what was too long for her”; that, while there was nothing he could do about the pain and nothing he could do about her not being able to see, the examining doctor assured her that the pain would go away and she would be able to see again in about 24 hours’ time; that she returned to Toronto the same day, Sunday March 10, 1968, and that by the next morning, within 24 hours of her examination in The Montreal General Hospital almost to the minute, there was no more pain so she simply removed the eye patches and could see and everything was fine.

On the basis of the evidence and other material before me in this matter, it should be concluded that, while the appellant, admittedly, did not claim any amount in respect of remuneration for an attendant, she completely failed to establish that she was totally blind at any time in her 1968 taxation year within the meaning of paragraph 27(1 )(d) of the Act.

The following are a few of the reasons which I had in mind inter alia in reaching the above conclusion:

1. While in some rare instances it is possible, no doubt, for a totally blind person to recover his or her sight or ability to see, it was unusual, to say the least, to have a taxpayer appear before the Board, as in the present matter, claiming the right under paragraph 27(1)(d) of the Act to make the $500 deduction from income provided therein with respect to an alleged total period of blindness extending only over a 24-hour period. Since the appellant’s allegation outlined above that she became totally blind and then recovered her sight within 24 hours’ time simply does not make sense, the obvious question which immediately comes to mind is whether she ever was, in fact, blind at all.

2. While the appellant in the present matter was seriously of the opinion that her case fell within the four corners of paragraph 27(1)(d) of the Act quoted earlier herein, she only succeeded in establishing that she could not see for a 24-hour period during which time she was, according to the letter quoted earlier written by the Registrar of The Montreal General Hospital, suffering from “severe conjunctivitis”. It should be observed that, during the whole 24-hour period of her alleged total blindness, the appellant was wearing eye patches so it would seem to be reasonable to conclude that, at any given point of time during the said 24-hour period, she probably could not tell whether she could see or not. The above term “conjunctivitis” appears to be one of general application applicable to the inflammation of the conjunctiva defined earlier in these reasons as being the mucous membrane which lines the inner surface of the eyelids and is reflected over the front of the eye-ball, thus conjoining this with the lids. According to the Short Encyclopaedia of Medicine for Lawyers by Levitt, 1966 edition, cited by Mr Gill as part of his painstaking preparation of the Minister’s case in this matter, conjunctivitis or “pink eye” is defined as inflammation of the conjunctiva or the delicate transparent membrane which covers the white of the eye and the inner surfaces of the lids. Since there is not the slightest suggestion in the above definition that conjunctivitis or pink eye constitutes blindness, the Board has, obviously, no alternative but to conclude that the appellant has failed to bring herself within paragraph 27(1 )(d) of the Act.

3. Since blindness is not a condition which comes and goes but is usually recognized as a more or less permanent disability, the pertinent wording used in paragraph 27(1 )(d) — “$500 if the taxpayer was totally blind at any time in the year” — should be interpreted, in my view, as providing a deduction from income of $500 to a taxpayer if he or she were totally blind at any time in the taxation year in question even though such total blindness did not become a fact until towards the end or the very last day of the said taxation year.

4. Since one’s eyes are normally extremely sensitive and quick as a wink to react to the slightest of injuries and to dust and other foreign substances, almost everyone has experienced momentary or somewhat longer periods of sightlessness at one time or another. Even the presence of a minute particle in one eye seems to affect a person’s ability to see properly with the other eye. It should be observed that it is quite incorrect, in my view, to regard some temporary difficulty in seeing as constituting total blindness for the purpose of paragraph 27(1 )(d) of the Act, and that, while the word “totally” used with the word “blind” in subparagraph 27(1)(d)(i) appears prima facie to add little to the meaning of the provision because if a person is blind the word “totally” could not make him or her more so, it — the word “totally” — was probably introduced into the above section with the word “blind” to distinguish it from the state of being temporarily or partially blind.

In the result, the appeal with respect to the 1968 taxation year should be dismissed and the relevant assessment confirmed.

Appeal dismissed.

HANDS TIRE SALES LIMITED, Appellant,

and MINISTER OF NATIONAL REVENUE, Respondent.

Tax Review Board (A J Frost, QC), January 10, 1972

Sale of goods and chattels — Whether sale of business as going concern.

The appellant held a Goodyear Tire dealer franchise and also operated a re-treading establishment. It ceased operations in 1967 and sold certain goods and chattels to one James Walker. It did not sell its inventory of goods on hand and collected its own accounts receivable. Goodyear transferred its franchise to Walker. The appellant’s contention was that it sold its goodwill to Walker.

HELD:

The facts were inconsistent with that contention. Walker purchased goods and chattels at an agreed price and then removed to another place, where he carried on business under a different name. Appeal dismissed.

James Otton, QC for the Appellant.

J S Gill for the Respondent.

A J Frost:—This appeal is from an income tax assessment in respect of the appellant’s 1968 taxation year. The appeal was heard at Toronto, Ontario, on October 26, 1971, by the Tax Appeal Board as it was then constituted.

The appellant held a Goodyear Tire Dealer franchise and as well operated a re-treading establishment. Its president, Mr Robert A Hands, took ill in 1964 and in 1966 decided he could no longer carry on with his business. The appellant ceased operations in April 1967 and, by Bill of Sale dated March 30, 1967, sold certain goods and chattels to James Walker and his wife Mary Walker for $20,000. It did not sell its inventory of goods on hand and decided to collect its own accounts receivable.

The president of the appellant company owned the building and rented it to Canadian Tire Corporation Limited. The Goodyear Tire & Rubber Co of Canada, Ltd transferred its dealer franchise to Mr Walker. The appellant company is still in existence but inactive.

The bill of sale for goods and chattels indicates that the transaction was not the sale of a business as a going concern. The facts of the case are inconsistent with Mr Hands’ contention that Hands Tire Sales Limited sold its goodwill to Mr Walker. The latter purchased goods and chattels at a price agreed to by the parties and then removed his goods and chattels to another place two miles away and carried on business under a different name.

In my opinion the sale to Mr Walker is a sale of goods and chattels and not the sale of an established business as a going concern. Under the circumstances goodwill cannot be considered as an element in the transaction.

Appeal dismissed.

JOSEPH MAJCHRZAK, Appellant,

and MINISTER OF NATIONAL REVENUE, Respondent.

Tax Appeal Board (RSW Fordham, QC), November 15, 1971.

Income Tax Act, RSC 1952, c 148 — 12(1)(h), 139(1 )(ae) — Farming losses —

The appellant, who was employed full-time as a foreman of Douglas Aircraft, sought to deduct amounts of $1,250.97 and $1,815.86 for the years 1967 and 1968 in respect of certain farm property held in partnership with one other. The Minister disallowed them as being personal or living expenses under paragraph 12(1)(h).

HELD:

The appellant had neither the time nor the means to do more than what might be termed “long-distance” farming at odd times. There was no likelihood of “a reasonable expectation of profit” in 1967 and 1968, when the only revenue was $80 and $815, respectively. Appeal dismissed.

S Malicki for the Appellant.

K von Finckenstein for the Respondent.

The Chairman:—This is yet another “farming” appeal and it relates to 1967 and 1968 in respect of which years the appellant claimed deductions of $1,250.97 and $1,815.86, respectively. In March 1970 the Minister ruled that these could not be allowed and were really personal or living expenses that came under paragraph 12(1)(h) of the Income Tax Act.

The facts are simple. In September 1967 the appellant, a full-time employee as a foreman of Douglas Aircraft Co, acquired an interest in 127 acres of farm land in the Township of Caistor, in the County of Simcoe, in partnership with one Joseph Rybak. The partnership was dissolved early in August, 1968, and thereafter the appellant continued to hold the property jointly with a Zdzislaw Chachaj and evidently still does so. The farm was said to consist of 20 acres of pasture, 67 acres of poor quality arable land and 40 acres of bush. The notice of appeal contains the following assertions, among others:

That in the year 1967 the partnership purchased a tractor and I worked partly on the farm.

That in the year 1968, 30 acres of oats were planted, hay was cut on 15 acres, which hay the partnership sold, that one field was rented to neighbour as pasture for cows, that I did personally work on improvement of barn and farm house.

That I resided in Toronto and in order to carry on the farming operations and to work on the farm, it was necessary for me to travel to place of work and stay overnight and my expenses, particularly the travelling expenses and meals, were necessary for these purposes.

Appellant’s oral testimony did little more than merely confirm these allegations. He has a wife and three or four children to support and his income from the employing company, in 1967, was a trifle over $8,400. It appears to me that he had neither the time nor the means to enable him to operate a farm as a side-line of activity. The farm property was an appreciable distance from appellant’s home on Indian Road, Toronto, and the most that appellant could do was what might be termed “long-distance” farming at odd times when his plant duties so permitted. Whatever the appellant’s hopes and in- tentions may have been, there was certainly no likelihood, in my opinion, of ‘‘a reasonable expectation of profit” in 1967 and 1968, when the only revenue was $80 and $815, respectively. In this regard, reference should be had to paragraph 139(1)(ae) of the Act.

It seems to me that the assessors concerned were quite right in assessing as they did with respect to 1967 and 1968 and that, as was said at the termination of the hearing, at Toronto, the appeal only may be dismissed.

Appeal dismissed.

FREDERICK DENNIS BEAUCHAMP, Appellant,

and MINISTER OF NATIONAL REVENUE, Respondent.

Tax Review Board (A J Frost), January 10, 1972.

Income Tax Act, RSC 1952, c 148 — 11(1)(i) — Registered pension plan —

Since 1944 the appellant had always been a participating member of his employer’s registered pension plan. In addition to his regular contributions in respect of current services, he also paid into the plan an additional $1,500 in each of 1967 and 1968 for services rendered in previous years in which he was a contributor to the plan. In issue was whether a regular contributor to a registered pension plan could deduct in any taxation year an amount in excess of $1,500 for current and previous services combined.

HELD:

Where a taxpayer had always been a contributor he was not permitted to deduct more than $1,500 for current and/or previous services in any taxation year. Appeal dismissed.

The Appellant acted on his own behalf.

R B Thomas for the Respondent.

A J Frost:—This is an appeal from the appellant’s income tax assessments for the 1967 and 1968 taxation years. Upon notices of objection duly signed and filed, the Minister of National Revenue reconsidered the assessments and confirmed them on August 10, 1970. The appeal was heard at Toronto on October 26, 1971 by the Tax Appeal Board as it was then constituted.

It was agreed at the hearing that the argument in this case should apply equally to that of Mary H Stewart v MNR who is also an employee of the National Sanitarium Association and a contributor to the said association’s registered pension plan.

The appellant has been employed with the National Sanitarium Association since 1944 and was always a participating member of the association’s registered pension plan (hereinafter referred to as “the plan”). At no time while employed was the appellant a non-contributor to the plan. During the 1967 taxation year, in addition to his regular contributions in respect of current services, he paid into the plan an additional $1,500 for services rendered prior to 1967 and in the 1968 taxation year he again paid in an additional amount of $1,500 for services rendered prior to 1968.

The question before the Board is whether or not the appellant, being a regular contributor to a registered pension plan, is entitled to deduct an amount in excess of $1,500 for current and previous services combined in any taxation year.

Paragraph 11 (1 )(i) of the Income Tax Act permits an employee under a registered pension fund or plan to deduct in calculating his income:

(i) current service contributions not exceeding in the aggregate $1,500 to the fund or plan;

(ii) past service contributions not exceeding in the aggregate $1,500 that were paid in the year into the plan or fund in respect of services rendered by the employee in previous years while he was not a contributor;

(iii) in respect of previous years’ contributions where a taxpayer was a contributor, such amount with respect to those services not exceeding an aggregate of $1,500 less any amount deducted under subparagraph (i) or (ii) of paragraph 11 (1 )(i).

The appellant in his argument contended that since subparagraph (i) gives $1,500 universally to anybody who is in a pension plan, subparagraph (iii) becomes “meaningless”. because he said “if you get $1,500 under paragraph (i) why in the world do you want to summon up (iii)?”. This contention is without foundation as the 1968 assessment allowed the appellant to deduct $1,419 for current contributions and an additional $81 in respect of previous service.

The section indicates clearly that where a taxpayer /s a contributor he is not permitted to deduct more than $1,500 for current and/or previous services in any taxation year. As the appellant was a participating member of the plan from 1944 and contributed to the plan on a regular basis, he is not entitled to deduct more than $1,500 in any taxation year.

Appeal dismissed.