Tardif T.C.J.:
1 This is an appeal under the informal procedure regarding notices of assessment for 1991 and 1992. The applicable statutory provisions are ss. 3, 9, 13, 152, 248(1) and 20(1)(a) of the Income Tax Act (“the Act”).
2 The facts on which the assessments are based are set out in paragraph 6 of the Reply to the Notice of Appeal as follows:
[TRANSLATION](a) the appellant is a notary;
(b) the appellant works for the Quebec Ministry of Finance full-time as an administrator;
(c) in 1987 the appellant began working at his home part-time as a notary;
(d) for the 1989 taxation year the appellant included in Class 8 renovations worth $23,810 for his office, and books relating to his profession as a notary, which he valued at $34,200, for a total of $58,010,
(e) the value of the said books was only $15,000;
(f) the appellant failed to include the purchase of a fax machine worth $5,000 in Class 8;
(g) the Minister accordingly reduced Class 8 undepreciated capital cost at the start of 1991 by $38,010, for a revised balance of $20,000;
(h) the Minister also revised the Class 1 undepreciated capital cost balance at the start of 1991, bringing its amount to $40,000;
(i) for the 1989 taxation year the appellant put in Class 10 his car, which he valued at $5,444;
(j) according to the “Red Book”, the fair market value of this car was $2,830;
(k) the appellant failed to include in Class 10 the purchase of a computer worth $1,200;
(i) the Minister accordingly reduced the Class 10 undepreciated capital cost balance at the start of 1991 by $1,414, giving a revised balance of $4,030.
3 The Reply to the Notice of Appeal listed four issues, set out as follows:
[TRANSLATION](a) Did the Minister rightly deduct the sum of $38,010 from the undepreciated capital cost at the start of the 1991 taxation year for Class 8?
(b) Did the Minister rightly deduct the sum of $1,414 from the undepreciated capital cost at the start of the 1991 taxation year for Class 10?
(c) Did the Minister rightly increase by $40,000 the undepreciated capital cost balance at the start of the 1991 taxation year for Class 1?
(d) Did the Minister correctly calculate the CCA for each of 1991 and 1992 and the recapture for 1991?
4 In actual fact the question is essentially whether the valuations were made in accordance with standard practice and whether the result reflects fair and realistic values. Secondly, the question is whether the Department could verify, discuss or assess certain facts and expenditures relating to the appellant's building by going back beyond the three years corresponding to the period of acquisitive prescription.
5 The appellant, a notary by training, carried on his profession as a sideline to full-time employment with an employer. For that purpose he made certain changes to his residence, setting up an office in which he could practice his profession part-time. He accordingly assigned a value to collections of books which he said were necessary to his practice; he purchased office equipment and recorded the expenses for use of his vehicle. Those are the main facts at issue here.
6 It is clear from the evidence that the appellant arbitrarily set the value of the books in his library: the value assigned was not the result of any consultation, valuation or attempt to determine the actual value. It was essentially more an intuitive than a rational valuation. The respondent, on the other hand, took careful, valid and useful steps to determine the actual value of the books at issue in the instant case.
7 The appellant just as arbitrarily assigned a value to the expenses relating to the automobile he used to serve his clients, who were about five in number. His estimate assigned most of the vehicle expenses to its use for professional purposes.
8 The procedure followed by the Department in making the various valuations was carried out entirely in keeping with standard practice and the result was thus unexceptionable: the respondent analyzed and examined the case very impartially and gave great attention and consideration to the appellant's often arbitrary claims.
9 When he was audited, the appellant was able to submit any comments, supply any documents, and lastly, benefit from the advice of an accountant to support and flesh out his claims.
10 The assertions to the effect that the Department could not, as regards his building, go back beyond the prescription period are absurd and have no basis: the purpose of the concept of depreciation requires that periods well beyond the short prescription period be considered, especially where buildings are concerned.
11 The appellant did not discharge the burden of proof upon him: on the contrary, the evidence showed among other things that his valuations were arbitrary and totally unjustified. On the other hand, the inquiry made it clear that the respondent had proceeded judiciously and in accordance with standard practice. After identifying the collections of books discussed with the appellant, Mr. Massaad contacted the U.S. publisher and obtained all the relevant information concerning inter alia the exchange rate at the time, customs duties and transportation costs, and the figures provided completely refuted the appellant's claims.
12 In the circumstances, I see no need to analyze the other items in detail, as here again, the evidence showed that the appellant had overvalued several things, including the percentage of the business use of his car and the amount of the expenses inherent in the practice of his profession. It also seems worth noting that the appellant's evidence — the burden of proof being on him— was not supported or confirmed by any documentation.
13 In fact, in his argument the appellant acknowledged the quality of the work done by the respondent.
[TRANSLATION]
So I say, it's just too bad, but that's how it is.And all their valuations, they made them too late. He did, a good job, he could not do otherwise with the information I gave him— which I used, O.K., but if he had made them in time, perhaps it would've been different, but he didn't, and I am now entitled to say “Look, it's too late.” When you lose a claim — at some point you have a claim — you have someone — a lawyer is owed $5,000, and he does nothing, if I don't go — if I don't go and collect it, I run out of time, it expires, and I lose my $5,000: it's exactly the same. There was no deal, there was absolutely nothing, no action bang, bang, bang, nothing was done, time went by and that settled it. So, I come back to those cases. [My emphasis.]
14 The great majority of the observations and comments made by the appellant related essentially to the number of years the Department could go back in making a valuation. After the respondent's argument and a recess to allow the appellant to look at the authorities filed, the appellant said the following:
[TRANSLATION]
I had at this point two ... there are two judgments here. The judgments we have here clearly refer to four years— all that — the time in our case — in fact that's for corporations: for an individual like me it's three years. The judgments here, they speak of four years, but they don't mention depreciation; there is no reference at all to depreciation, absolutely none, they speak of transactions that have occurred. Nowhere is there any mention of depreciation, none at all. So, these two judgments refer to other situations.
Judgments are being used against me that deal with other points — in fact, it's sophistry. Perhaps I haven't studied the situation, but they are basically “estimates”, they seem to want — let's say some guy has a building, he has bought it, but in the contract you're supposed to put the cost of the land and the cost of the building: if you don't put it in the valuation has to be redone. We're going backwards here, I'm sorry, but it's an estimate, it's not cut and dried like the system of depreciation. We are dealing with “estimates”, with financial transactions, losses and — losses and profits. That does not apply to my case.
In my case — what happened was that there was an amount which I put, I deducted the remainder. The Act says there are three years during which you can intervene; if you don't go back within three years, well— no one did anything, neither the Department nor the taxpayer. Time passed and then it was too late. When time has run out time has run out and you can't go back. It doesn't depend on what transactions have taken place — that's not my field, it's outside my system. I'm saying that the two judgments here don't have anything at all to do with what concerns me: depreciation, because no mention whatever is made of that, they just say four years. Four years on what basis?
There are judges who have dealt with this, have developed — but with reference to other criteria and other situations. They have nothing to do with my situation at all.
So unfortunately time has run out, but when someone does nothing, well, someone loses a right, and nothing can be done, that's what I say. They had three years to do it and they didn't. Just because it's said — that's just sophistry — just because, in the case of some transactions, permission has been given to go further back than the prescription period, that doesn't mean that this applies to everyone, that it applies to all cases.
15 First, I am of the view that the cases cited and filed are entirely applicable; second, I believe that the Department can go back beyond the prescription period, not to reassess but to determine the actual value of property.
16 The appellant did not discharge his burden of proof. He submitted evidence which was quite inadequate and not supported by documents or any objective information; furthermore, it is clear from that very evidence that the figures and values used were arbitrary and had no basis, which undoubtedly encouraged him to take refuge behind the legal point which was his main argument, namely prescription. The Court found the appellant's arguments in this regard unpersuasive.
17 For these reasons, the appeal is dismissed with costs to the respondent.
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