Date:
20021223
Docket:
2002-1556-IT-I
BETWEEN:
LEO
CHOW,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent,
AND
BETWEEN:
2002-1561(IT)I
LEO'S
THE PLACE CABARET LTD.,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Judgment
Beaubier,
J.T.C.C.
[1]
These appeals pursuant to the Informal Procedure were heard
together on common evidence at Vancouver, British Columbia
on September 16 and on December 11, 2002. They were adjourned on
September 16 to allow the Appellants to gather further evidence.
Mr. Chow and the Appellants' accountant, Wayne Low,
testified. The Respondent called the assistant auditor on these
files, Michael Fortney.
[2]
Mr. Chow has appealed net worths assessed for 1997 and 1998. He
filed income tax returns for 1995, 1997 and 1998 in which he
reported income of $6,000 in each year. His only source of income
was from Leo's The Place Cabaret Ltd. ("LTPC").
That, plus the cost of living in Vancouver caused these
reassessments. Mr. Chow owned 67% of the shares of LTPC which
operated a bar and restaurant on Main Street in Vancouver. A
great deal of LTPC's business was on a cash basis and the
accounting and recording of the cash received was inadequate. Mr.
Fortney testified that when LTPC's staff received cash, they
did not put it in the cash register and record the sale as the
cash was received. Rather the staff simply pocketed the cash. Mr.
Fortney understood that the cash may or may not have been put in
the cash register later on. Moreover, LTPC's bank records did
not accord with its income reported.
[3]
At the opening of the hearing on September 16, 2002, the
Respondent conceded a reduction in the assessments of Leo Chow
and Leo's The Place Cabaret Ltd. in the amount of $17,400 in
each of 1997 and 1998. That is so adjudged.
[4]
Respecting the remaining sums assessed against each Appellant,
the Court finds as follows:
1.
Mr. Chow gave the only testimony for the Appellants based on
first hand knowledge. He is not believed. He did not provide any
supporting evidence to back up his testimony. He testified that
the discrepancy in the net worth accounting was caused by gifts
or loans received from a line of credit opened for him by his
parents.
2.
Mr. Chow is not believed for the following reasons -
(a)
No documents were supplied in evidence which actually recorded
advances from his parents or recorded the line of credit he
alleged, nor did his parents testify.
(b)
The audit was based on Mr. Chow's original interview and
statements he made about his income and personal expenses. He
stated then that his only income was from LTPC and that he
received a starting advance from his parents in 1993 or 1994. He
did not refer to any other source of funds, whether income, loans
or gifts. Mr. Fortney testified that, later, when he was advised
that these assessments would occur, Mr. Chow referred to his
parents as sources in 1997 and 1998.
(c)
The Appellants offered no supporting documents or testimony,
although these appeals were adjourned for that purpose in the
midst of trial on September 16, 2002.
3.
Leo Chow's -
(a)
1997 income tax return was filed on August 13, 1999,
and
(b)
1998 income tax return was filed on September 24,
1999.
No excuse
was given for the fact that they never filed on April 30 in
each proper year.
4.
After the Respondent's concessions are calculated, Mr. Chow
was assessed for about 300% of the income he reported. Moreover,
his income tax returns of round numbers coupled with the way that
Mr. Fortney testified LTPC's cash was handled and
deposited indicates that both Appellants were negligent and
indifferent as to whether the law was complied with or not. They
were both grossly negligent in the matters in
question.
5.
Therefore, respecting Leo Chow for 1997 and 1998, the assessments
of income, penalties for gross negligence and penalties for late
filing are confirmed for the remaining amounts
assessed.
6.
LTPC was assessed a corresponding identical set of sums for each
of Leo Chow's years' net worth as already described
and for penalties for gross negligence. They reflected Mr.
Chow's assessments exactly. No particular evidence was
offered on behalf of LTPC. Rather it was included in what is
described herein respecting Mr. Chow. However,
Mr. Fortney's description of LTPC's cash and income
dealings confirms LTPC's gross negligence, and the consequent
assessments. Therefore LTPC's assessments are
confirmed
respecting the amounts of the assessments which remain in
dispute.
Signed at Saskatoon, Saskatchewan, this 23rd day of December,
2002.
J.T.C.C.COURT
FILE
NO.:
2002-1556(IT)I and 2002-1561(IT)I
STYLE OF
CAUSE:
Leo Chow v. The Queen
Leo's The Place Cabaret Ltd. v. The Queen
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
September 16, 2002 and December 11, 2002
REASONS FOR
JUDGMENT BY: The Honourable Judge D. W.
Beaubier
DATE OF
JUDGMENT:
December 23, 2002
APPEARANCES:
Agent for
the
Appellant:
Leo Chow
Counsel
for the
Respondent:
Victor Caux
COUNSEL OF
RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-1556(IT)I
BETWEEN:
LEO
CHOW,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeals
heard on common evidence with the appeals of
Leo's
The Place Cabaret Ltd.v. Her Majesty the Queen,(2002-1561(IT)I)
on September
16 and on December 11, 2002 at Vancouver, British
Columbia,
by the
Honourable Judge D. W. Beaubier
Appearances
For the
Appellant:
The Appellant himself
Counsel
for the
Respondent:
Victor Caux
JUDGMENT
The appeals from the reassessment made under the Income Tax
Act for the 1997 and 1998 taxation years are allowed in
accordance with the attached Reasons for Judgment.
Signed at Saskatoon, Saskatchewan, this 23rd day of December,
2002.
J.T.C.C.
2002-1561(IT)I
BETWEEN:
LEO'S
THE PLACE CABARET LTD.,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeals
heard on common evidence with the appeals of
Leo Chow
v. Her Majesty the Queen,(2002-1556(IT)I)
on September
16 and on December 11, 2002 at Vancouver, British
Columbia,
by the
Honourable Judge D. W. Beaubier
Appearances
Agent for
the
Appellant:
Leo Chow
Counsel
for the
Respondent:
Victor Caux
JUDGMENT
The appeals from the reassessment made under the Income Tax
Act for the 1997 and 1998 taxation years are allowed in
accordance with the attached Reasons for Judgment.
Signed at Saskatoon, Saskatchewan, this 23rd day of December,
2002.
J.T.C.C.
Email this Content