Watson D.J.T.C.:
1 This appeal, heard under the Informal Procedure in St. John's, Newfoundland on October 3, 1997, concerns the Appellant's 1989, 1990 and 1991 taxation years.
2 The Minister of National Revenue (the “Minister”) initially assessed the Appellant's 1989, 1990 and 1991 taxation years by Notices of Assessment dated December 27, 1990, December 11, 1992 and April 8, 1993 respectively. In computing his income for the 1990 taxation year, the Appellant deducted the amount of $1,949 as travel expenses; in 1991, he reported sales of $34,709 with respect to Seabreeze Beverages; he included $10,000 as an addition to the fixed assets of Vendmart for the 1991 taxation year.
3 In his Notice of Objection for 1989, 1990 and 1991, the Appellant requested the Minister to allow him to claim expenses which he had not claimed in his original 1989, 1990 and 1991 returns; he also requested the Minister to reduce the amount of his sales for 1991 by $5,482 and allow the $10,000 in respect of Vendmart as an expense rather than as an addition to fixed assets.
4 In respect of the 1989, 1990 and 1991 taxation years, the Minister admitted the following facts:
(1) in respect of the Appellant's 1989 taxation year, he was allowed CCA of $3,064 based on 80% business use of his vehicle;
(2) in respect of the Appellant's 1990 and 1991 taxation years, he was allowed CCA of $2,145 in respect of class 10 as well as $5,148 in respect of class 8 for a total of $7,293;
(3) the Appellant reported sales of $34,709 for Seabreeze Beverages for 1991;
(4) in respect of the Appellant's 1990 and 1991 taxation years, he was allowed CCA of $1,502 in respect of class 10 in addition to $5,105 in respect of class 8 for a total of $6,606; and
(5) in respect of the Appellant's 1991 taxation year, he has provided invoices to support the amount of $10,000 claimed as purchases on behalf of Vendmart.
5 The Minister, in his reassessment for the 1989, 1990 and 1991 taxation years relied on the following allegations of fact:
(a) The Appellant used his vehicle 80 per cent of the time for business purposes during the 1989, 1990 and 1991 taxation years.
(b) The Appellant is entitled to claim CCA on Class 10 assets in the amounts of $3,064, $2,145 and $1,502 respectively for his 1989, 1990 and 1991 taxation years (calculated as 80% of the maximum allowable CCA).
(c) The Appellant is entitled to claim CCA on Class 8 assets (equipment) in the amounts of $5,148 and $5,105 respectively for his 1990 and 1991 taxation years.
(d) The amount of $1,949 claimed as a travel expense was not an expense laid out to earn income from a business or property but represents an expenditure made to explore possible business opportunities which did not come to fruition.
(e) The Appellant's 1991 sales for Seabreeze Beverages were correctly reported by the Appellant as $34,709 which does not include $5,482 from Revenue Canada.
(f) The amounts of $9,500, $2,516 and $500 claimed in 1991 were not expenditures made by the Appellant.
(g) In 1991 the Appellant purchased inventory of $10,000, 56% of which remained unsold at the end of the year.
6 At the hearing the Appellant admitted paragraphs (a) to (c) and denied paragraphs (d) to (g).
7 The issues before the Court are whether:
(a) the Appellant is entitled to claim 80% of the maximum CCA available in respect of class 10 for his 1989, 1990 and 1991 taxation years;
(b) the expense of $1,949 was incurred for the purpose of gaining or producing income from business or property for his 1990 taxation years;
(c) the Appellant's sales for Seabreeze Beverages for the 1991 taxation year were $34,709;
(d) the amounts of $9,500, $2,516 and $500 were incurred by the Appellant for the purpose of gaining or producing income from business or property in 1991;
(e) the amount of $10,000 in respect of Vendmart in 1991 was incurred for the purpose of gaining or producing income for business or property; and
(f) the amount of $5,600 should be considered inventory of Vendmart at the end of the Appellant's 1991 taxation year.
8 The Appellant had the onus of establishing on a balance of probabilities that the Minister's reassessment for the 1989, 1990 and 1991 taxation years was ill-founded in fact and in law. Considering all of the circumstances, including the testimony of the witnesses, the admissions and documentary evidence, I am satisfied that the Appellant has failed in this onus. The appeal would have been dismissed in relation to the issues before the Court were it not for the request in the Reply to the Notice of Appeal “that the appeal be allowed on the basis” that the Appellant is “entitled to claim the amount of $4,400 as cost of goods sold in 1992”.
9 The appeal is accordingly allowed and the assessments are referred back to the Minister for reconsideration and reassessment on this basis.
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