A
W
Prociuk:—The
appellant
herein
appeals
from
the
assessment
for
the
taxation
year
1967
by
the
Minister
who
determined
his
taxable
income
for
that
year
to
be
$173,293.82.
Taxes
assessed
were
as
follows:
federal—
$72,809.98;
provincial
—
$28,229.44,
together
with
interest
in
the
sum
of
$3,171.37.
The
case
was
heard
on
September
15,
1971
at
a
hearing
held
in
the
City
of
London
in
the
Province
of
Ontario,
at
which
the
presiding
member
was
J
O
Weldon,
Esquire,
QC,
then
a
member
of
the
Tax
Appeal
Board
which,
on
December
15,
1971,
became
the
Tax
Review
Board.
However,
judgment
was
reserved
and
no
decision
rendered
by
him
prior
to
his
retirement
from
the
Board
in
March
of
1972.
Accordingly,
by
consent
of
both
parties,
this
Board
has
now
been
given
jurisdiction
to
issue
its
decision
and
judgment
on
the
basis
of
the
transcript
of
evidence
and
the
argument
taken
before
Mr
Weldon,
without
further
representation
by
counsel.
The
appellant
is
president
and
chief
operational
officer
of
T
W
Johnstone
Company
Limited,
an
Ontario
company
doing
business
of
pipeline
construction,
with
head
office
at
London,
Ontario.
The
evidence
establishes
that
the
appellant
did
not
draw
a
regular
salary
but
was
remunerated
for
his
services
by
bonuses
annually,
which
the
company
declared
at
its
duly
constituted
meetings.
In
November
of
1967
the
company
declared
a
bonus
in
favour
of
the
appellant
of
not
less
than
$100,000
and
not
more
than
$110,000
to
be
paid
over
a
two-year
period
subsequent
to
November
27,
1967.
In
1968
the
company
paid
the
appellant
$70,000
and
in
1969
a
further
amount
of
$36,500.
The
appellant
declared
this
income
in
the
years
he
received
same.
During
the
year
1967
the
appellant
borrowed
from
the
company
a
total
of
$132,763.21.
He
executed
a
promissory
note
in
favour
of
the
company
for
this
sum
and
obligated
himself
to
repay
the
said
sum
within
one
year.
This,
he
did
in
accordance
with
the
terms
of
the
note,
in
1968.
In
filing
his
return
for
the
year
in
question
the
appellant
declared
the
sum
of
$69,093.82.
The
Minister
took
the
position
and
so
ruled
that
the
bonus
received
in
1968
and
1969
pursuant
to
the
company’s
resolution
of
November
1967
was
deemed
to
be
received
in
1967
and
taxable
in
that
year.
It
was
argued
at
the
hearing
that
the
advances
to
the
appellant
by
the
company
in
that
year
exceeded
the
total
amount
of
bonuses
declared
and
presumably
the
appellant
ought
to
be
grateful
that
only
$106,500
was
added
to
his
declared
income
and
not
the
full
amount
of
$132,763.21.
As
stated
earlier,
the
appellant
obligated
himself
by
executing
a
promissory
note
to
repay
the
full
amount
of
the
loan.
This
obligation
was
legally
enforceable
by
the
company,
its
creditors
or
its
trustee,
and,
accordingly,
could
not
be
treated
as
income.
Bonuses
received
in
1968
and
1969
were
properly
declared
in
those
years.
The
appeal,
accordingly,
is
allowed.
Appeal
allowed.
SAVARY
BEACH
LANDS
LTD
and
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