98-537(GST)I
BETWEEN:
898673 ONTARIO INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on October 1, 1998, at
Kingston, Ontario, by
the Honourable Judge A.A. Sarchuk
Appearances
Agent for the
Appellant:
G. Lee MacMillan
Counsel for the
Respondent:
Karen Cooper
JUDGMENT
The appeal
from the assessment made under the Excise Tax Act (for
goods and services tax), notice of which is dated May 15, 1997
and bears number 04DP0106156 is dismissed.
Signed at Ottawa, Canada, this 5th day of
November, 1998.
J.T.C.C.
Date: 19981105
Docket: 98-537(GST)I
BETWEEN:
898673 ONTARIO INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sarchuk, J.T.C.C.
[1] This is an appeal
by 898673 Ontario Inc. (the Company) from an assessment of GST
liability for the period of February 1, 1993 to August 1, 1996.
The notice of reassessment was dated May 15, 1997 and made the
following adjustments:
(a) reduced the
GST by the amount of $3,206.00;
(b) reduced the Input
Tax Credits (the "ITC") by the amount of
$10,312.69;
(c) assessed penalty
in the amount of $627.35; and
(d) assessed
interest.[1]
[2] The Appellant
takes the position, inter alia, that the Minister erred in
concluding that the income reported as earned by the Appellant
was generated through "employment" rather than
"commercial activity". For the same reason, the
Appellant also takes exception to the Minister's denial of
expenditures and maintains that all income and expenditures
occurring during the relevant periods of time did in fact arise
from "commercial activity" and not from
"employment". The Appellant also raised issues relating
to whether the Minister exercised procedural fairness and
questioned the manner in which the audit was conducted.
[3] During the course
of the hearing, evidence was adduced, inter alia, from Ann
Pratt, an audit officer with Revenue Canada. She met with G. Lee
MacMillan in November 1996 and discussed the GST returns filed on
behalf of the Appellant. In the course of her goods and services
tax audit, certain adjustments were made for the period February
1, 1993 to August 1, 1996 based on information provided to her by
MacMillan. This information, which she accepted, was that the GST
had been remitted on what he described as his employment income.
Accordingly, she advised MacMillan that it was unnecessary to
have remitted GST on employment income and as a result, allowed
an adjustment in the amount of $3,206 in the Appellant's
favour.
[4] During the course
of MacMillan's evidence, he stated that in fact, he operated
a taxi run for a school which involved the driving of students
from their homes to school and back. For each trip, the school
board paid the fare plus GST. When apprised of this testimony,
Pratt indicated that this was a taxable supply (apparently not
disputed by the Appellant) and that had she been aware of that
fact at the time of the reassessment, she would not have reversed
that portion of the GST remitted which she believed reflected
employment income.
[5] At the conclusion
of the evidence and after due consideration, MacMillan considered
the Appellant's position with respect to its appeal and
informed the Court that given the circumstances: "I think
you should throw it out, Your Honour".
[6] Accordingly, the
appeal is dismissed.
Signed at Ottawa, Canada, this 5th day of
November, 1998.
J.T.C.C.
COURT FILE
NO.:
98-537(GST)I
STYLE OF
CAUSE:
898673 Ontario Inc. and
Her Majesty the Queen
PLACE OF
HEARING:
Kingston, Ontario
DATE OF
HEARING:
October 1, 1998
REASONS FOR JUDGMENT BY:
The Honourable Judge A.A. Sarchuk
DATE OF
JUDGMENT:
November 5th, 1998
APPEARANCES:
Agent for the
Appellant:
G. Lee MacMillan
Counsel for the
Respondent: Karen Cooper
COUNSEL OF RECORD:
For the Appellant:
Name:
N/A
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
[1]
The net
effect was to assess additional tax to the Company in the
amount of $7,106.09 and interest of $518.68 in addition to the
amount of the penalty.
Email this Content