Cécile Cliche-Paquet v. Minister of National Revenue, [1980] CTC 2331

Roland St-Onge [TRANSLATION]:—The appeal of Cécile Cliche-Paquet came before me on December 6, 1979 in Quebec City, Quebec and was heard on common evidence with the appeals of Annette Henry, Lucette Gosselin, Claire Pedneault and Claudette Dionne.

The matter to be decided is the amount of tips received by the appellant during the 1975 and 1976 taxation years.

The facts of this appeal are set out clearly in subparagraphs 6(a) to (i) of the reply to the notice of appeal; these read as follows:

6. In assessing the appellant for the 1975 and 1976 taxation years, the respondent, the Minister of National Revenue, relied, inter alia, on the following presumptions of fact:

(a) during the 1975 taxation year, the appellant was employed as a waitress in the Aquarium Inc restaurant in Quebec City;

(b) the Aquarium Inc restaurant subsequently changed its name during the 1975 taxation year and became Le Chalet Suisse Inc restaurant; the appellant remained in the employment of Le Chalet Suisse Inc restaurant and worked there as a waitress during the 1975 and 1976 taxation years;

(c) In computing her income for the 1975 and 1976 taxation years, the appellant reported the following amounts of employment income:

Wages	Tips	Wages	Total
1975	nil	$3,934.62	$3,934.62
1976	$1,074.71	$4,103.72	$5,178.43

(d) In computing her net income for the 1975 taxation year, the appellant did not include any amount in respect of tips received. In computation her net income for the 1976 taxation year, she included only an amount of $1,074.71;

(e) during the years in question, the appellant received substantial amounts in tips. These amounts were paid to her either by means of credit cards or in cash;

(f) during the taxation years in question, according to the cash register records of Le Chalet Suisse Inc and Aquarium Inc, the appellant received the following total amounts of tips paid on credit cards:

Year	Tips received (credit cards)
1975	$1,557.65
1976	$1,074.71

(g) the appellant also received the following amounts of tips in cash:

Year	Tips received (cash)
1975	$2,755.40
1976	$1,883.62

(h) the respondent deducted from the above-mentioned amounts the proportion of tips paid to bus boys—10% of the gross tips earned by the appellant;

(i) the respondent also deducted the tips already reported by the appellant: “nil” for the 1975 taxation year and an amount of $1,074.71 for the 1976 taxation year.

Four of the five appellants testified that 80% of their payments were on credit cards. The respondent, however, established that cash sales represented 32% of revenues. Mrs Gosselin’s case was selected by the respondent in order to demonstrate that of a total sales figure of $70,000, $20,000 had been paid by means of credit cards and about $50,000 had been paid in cash. It is thus well established that the appellant’s contention concerning 80% credit card sales is exaggerated.

In my view, the Minister has done his duty and has used the best method to establish the appellant’s income. I must also take into consideration the fact that the appellant encountered many difficulties at the Aquarium Inc restaurant. I am prepared to accept that in this particular case it happened more frequently than in other cases that customers did not pay their bills or did not pay the full customary percentage as a tip.

It therefore falls to the Board to determine the appellant’s income; it has decided to amend the 1975 and 1976 assessments by reducing the amount added to the appellant’s income in respect of “unreported income from tips’’ in these assessments by 15%. The penalties will therefore be reduced accordingly.

The appeal is allowed in part and the matter referred back to the respondent for reassessment.

Appeal allowed in part.