Date: 19980617
Docket: 97-2438(GST)I
BETWEEN:
ELEANOR KURBIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, J.T.C.C.
[1] This appeal pursuant to the
Informal Procedure was heard at Castlegar, British Columbia on
June 11, 1998. The Appellant and her husband,
Leonard Kurbis, testified on her behalf. The
Respondent's GST auditor, Alexander Cook, also testified.
[2] The Appellant was assessed
respecting her motel, mobile home court and campground business
in Salmo, British Columbia for the period July 1, 1993 to
September 30, 1995 after it was discovered that she reported
$409.85 GST collected and claimed $11,817.42 in input tax credits
for those periods.
[3] Paragraphs 3 to 7 inclusive of the
Reply to the Notice of Appeal read:
3. In filing
her GST returns for the period July 1, 1993 to September 30,
1995, the Appellant reported a total of $409.85 of GST collected
and claimed total input tax credits ("ITCS") of
$11,817.42;
4. By Notice
of Assessment No. 11EU0101859, dated November 27, 1996 (the
"Assessment"), the Minister of National Revenue (the
"Minister") assessed the Appellant $4,478.79 net credit
of GST, $1,602.80 interest and $1,599.71 in penalty with respect
to the period July 1, 1993 to September 30, 1995.
5. By Notice
of Objection dated February 8, 1997, the Appellant objected to
the Assessment.
6. By Notice
of Decision No. 115019440 dated April 30, 1997, the Minister
confirmed the Assessment.
7. In so
assessing the Appellant, the Minister relied on, inter
alia, the following assumptions of fact:
(a) the facts
admitted and stated above;
(b) the Appellant is
an individual and was registered under Part IX of the Excise
Tax Act (the "Act") with GST Registration
No. 110927746;
(c) the Appellant
operates as "Pine Springs Motel" in Salmo, British
Columbia;
(d) the
Appellant's main business activities are the supply of motel
and mobile home park services and campground facilities;
(e) the Appellant
had both taxable (for example, motel rooms and campground
facilities) and exempt supplies (for example, long term rentals
of mobile homes or mobile sites);
(f) all or
substantially all of the Appellant's motel rooms were, or
were expected to be, rented for periods of less than 60 days and
as a result, all of the Appellant's supplies of motel rooms
were taxable at 7%;
(g) the Appellant
did not keep adequate books and records;
(h) the Appellant
understated GST collected or collectible by $6,668.76 during the
period under appeal based on the analysis of the Appellant's
bank deposits; and
(i) the
Appellant overstated ITCS by $4,205.60 during the period under
appeal, including ITCS claimed on four vehicles which were not
used primarily in the Appellant's commercial activities.
[4] The Appellant is a middle-aged
woman who worked in the accounting department of Alberta
Government Telephones and of another major firm for five years.
During the periods in question she managed the small business
which was reassessed and also had what she described as a
part-time job in a nearby town. Her husband, Leonard Kurbis, had
a full-time job in addition to assisting Mrs. Kurbis in the
business. The Appellant's mother resided in Edmonton, Alberta
and her two sons were attending university at Edmonton.
[5] The Appellant presented exhibits
which purported to detail gross income from the motel, trailer
and camp business. They indicate a gross income deposited in two
financial institutions by year as follows:
1993
4th
Quarter
$ 9,285.34
plus $ 7,862.22
Total:
$17,147.56
(See Exhibit A-1)
1994
calendar
year
$62,420.43
plus $25,150.98
Total:
$87,571.41
(See Exhibit A-2)
1995
1st, 2nd & 3rd quarters $47,102.68
plus $44,494.91
Total:
$91,597.59
(See Exhibit A-3)
The Appellant stated that she had receipt books present in
Court for review which supported these statements although in
some cases they were duplicates of credit card receipts. Mr.
Cook, the Revenue Canada auditor, stated that none of the
statements prepared by Mrs. Kurbis and filed as Exhibits A-1, A-2
and A-3 and none of the receipt books or any names of customers
were made available to him on the audit. The audit, which took a
number of days and which was also reviewed by Mr. Cook with the
Appellant and her husband on two evenings later on during another
week in which he stayed at the motel, was made solely on the
basis of the bank accounts since the Appellant did not make any
records available to him.
[6] Because the Appellant did not make
any records available to the auditor at the time of the audit,
including any receipt books, it raises a question as to whether
or not the receipt books were prepared after the events in
question and were simply not in existence at the time of the
audit. Exhibits A-1, A-2 and A-3 were prepared after the
audit.
[7] Mr. Kurbis testified first. His
testimony offered no detail whatsoever respecting the accounting
that is necessary for the purposes of appealing the assessment.
Mrs. Kurbis testified respecting Exhibits A-1 to A-3 inclusive.
The statements themselves cannot be understood clearly. Mrs.
Kurbis testified in a very confusing manner respecting them and
indicated a number of duplications or mis-descriptions in these
exhibits. On one occasion, as an aside, she referred to cases in
which tenants of the mobile home court had contested levies by
Mrs. Kurbis of GST in Small Claims Courts in British Columbia and
won. However, she did not state the names of these tenants or the
dates in which they were alleged to have resided at Pine Springs
Motel. No names or periods of residence were given for alleged
residential tenants during the assessment periods in question.
The Court finds that the statements and her testimony were
designed to confuse the Court and the auditor who was in the
courtroom. The statements and her testimony did not refute the
assumptions. For someone who had worked in accounting for five
years, the testimony was not credible.
[8] The Appellant did not bring any
material to Court verifying anything in respect to the input tax
credits. Her testimony concerning input tax credits in
cross-examination was not credible. For example, she claimed
input tax credits in respect to a General Motors pick-up truck
which was purchased and given to her son. Input tax credits were
claimed respecting all goods purchased including a loveseat which
cost $3,233 which she stated was placed in the honeymoon suite in
the motel. Input tax credits were claimed on all vehicles and she
denied any personal use whatsoever. Yet she and her husband used
vehicles to go to their employments. Input tax credits were
claimed on all trips to Edmonton and elsewhere which she claimed
were totally business related. She stated she went to Edmonton
from Salmo, a distance of approximately 640 kilometres, for such
purposes as to repair a vacuum cleaner or to buy a few sheets of
wallboard and that the principal purposes of these trips were
business even though her mother and sons were living there at the
time. She claimed input tax credits respecting BC ferries,
cigarettes, groceries and other items. When pressed on
cross-examination, her final reply was sometimes "no
comment". Mr. Kurbis offered no germane evidence respecting
the claims for input tax credits.
[9] In summary, the Appellant's
evidence was not credible. Her evidence is not accepted as true.
On the evidence before the Court, the Appellant's reports
respecting GST, when filed, were deliberately false for the
period in question and were intended to be so. The appeal is
dismissed.
Signed at Ottawa, Canada this 17th day of June, 1998.
J.T.C.C.
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