Homersham v. The Queen, docket 2001-2989-IT-I (Informal Procedure)

Date: 20020703

Docket: 2001-2989-IT-I

BETWEEN:

ESTATE OF JOHN HOMERSHAM,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

Beaubier, J.T.C.C.

[1]            This appeal pursuant to the Informal Procedure was heard at Regina, Saskatchewan on June 26, 2002. The Appellant's accountant, Jim Chow, C.M.A. testified. The Respondent called the auditor on the file, William Peake.

[2]            At the hearing, the Appellant was represented by a lawyer and henceforth the address for service of the Appellant is his address, namely:

                Glen Dowling

                Robb & Dowling

                Ste 4 - 2305 Victoria Avenue

                Regina, Saskatchewan

                S4P 0S7

[3]            The positions of the parties are set out in paragraphs 2 to 6 inclusive of the Reply to the Notice of Appeal. They read:

2.              The 1996, 1997 and 1998 income tax returns were initially assessed by the Minister of National Revenue (the "Minister") on June 25, 1998, June 22, 1998 and June 7, 1999.

3.              In computing income for the 1996, 1997 and 1998 Taxation Years, the Appellant reported taxable capital gains ("TCG") in the amounts of $12,529, $46,535 and $9,506 respectively.

4.              In reassessing the Appellant for the 1996, 1997 and 1998 Taxation Years, the Minister added TCG in the amounts of $8,059, $3,575 and $6,572 respectively.

5.              In so reassessing the Appellant, the Minister made the following assumptions of fact:

(a)            the Appellant received a T3 information slip from the Public Trustee in the 1996 Taxation Year showing capital gains in the amount of $27,449.72;

(b)            the Taxable portion of the capital gain for the 1996 Taxation Year is $27,449.72 x 75% = $20,587.29;

(c)            the Appellant claimed a capital loss in the 1996 Taxation Year calculated as follows:

                Public Trustee: Proceeds of Disposition           16,704.89

                                                Adjusted Cost Base                            27,449.72

                                                Capital Loss                                          (10,744.83)

(d)            the Appellant reported a TCG of $12,528.67 in the 1996 Taxation Year calculated as follows:

                Capital Gain                                                                            27,449.72

                Capital Loss                                                                           (10,744.83)

                Net Capital Gain                                                    16,704.89

                Taxable Portion 75%                                                             12,528.57

(e)            the Appellant failed to report TCG of $8,059 in the 1996 Taxation Year;

(f)             the Appellant received a T3 information slip from the Public Trustee in the 1997 Taxation Year showing capital gains in the amount of $14,235.75;

(g)            the Taxable portion of the capital gain for the 1997 Taxation Year is $14,235.75 x 75% = $10,676.81;

(h)            the Appellant claimed a capital loss in the 1997 Taxation Year calculated as follows:

                Public Trustee: Proceeds of Disposition           9,468.65

                                                Adjusted Cost Base                            14,235.75

                                                Capital Loss                                          ( 4,767.10)

(i)             the Appellant reported a TCG of $46,534.72 in the 1997 Taxation Year calculated as follows:

Capital Gain Per T3	14,235.75
Capital Gain (Land)	52,577.64
Capital Loss	( 4,767.10)
Net Capital Gain	62,046.29
Taxable Port 75%	46,534.72

(j)             the Appellant failed to report TCG of $3,575 in the 1997 Taxation Year

(k)            the Appellant received a T3 information slip from the Public Trustee in the 1998 Taxation Year showing capital gains in the amount of $21,437.84;

(l)             the Taxable portion of the capital gain for the 1998 Taxation year is $21,437.84 x 75% = $16,078.38;

(m)           the Appellant reported a TCG of $9,506.22 in the 1998 Taxation Year calculated as follows:

                Capital Gain                                                            12,674.96

                Taxable Portion 75%                                             9,506.22

(n)            the Appellant failed to report TCG of $6,572 in the 1998 Taxation Year

B.             ISSUES TO BE DECIDED

6.              The issue is whether the Minister has correctly calculated the amount of Taxable Capital Gains to be included in the Appellants income in the 1996, 1997 and 1998 Taxation Years.

[4]            However, the essential point of the appeal of the assessments is that the estate's accountant filed income tax returns for the years in question on the basis that the T-3 slips received by the Appellant from the Public Trustee of Saskatchewan were for more total money than the Appellant received from the Public Trustee. A summary is set out by Exhibit A-4 prepared by Mr. Chow. It reads:

Estate of Homersham

Capital Gain

Year	Allocation Per T3	Actual Credit to Account	Variance	Accum
1992	1,518.38	2,092.63	-574.25
1993	3,081.86	5,754.74	-2,672.88
1994	14,990.64	13,757.18	1,233.46
1995	5,352.00	12,736.59	-7,384.59
1996	27,449.72	16,704.89	10,744.83
1997 pre date of death	14,235.75	9,468.65	4,767.10	6,113.67
1997 post date of death	21,437.84	13,214.96	8,222.88	8,222.88
	88,066.19	73,729.64	14,336.55	14,336.55

[5]            The Respondent assessed on the basis of the T-3's. Revenue Canada also wrote a letter to the Public Trustee of Saskatchewan outlining the Respondent's position respecting the Estate and querying the Public Trustee (Exhibit R-4). It received no reply to this letter.

[6]            The Respondent's witness, Mr. Peake, stated that the assessment was made on the basis of the T-3's because there is no evidence that the total shortage claimed by the Appellant of $14,336.55 is deductible. It might result from general administration fees by the Public Trustee, or what the Public Trustee called the "smoothing" of gains and losses, or something else altogether.

[7]            Mr. Peake is correct. The onus is on the Appellant to prove that (the shortfall of $14,336.55 or) the individual amounts claimed in each year are due to deductible expenditures. There is no evidence before the Court respecting the cause of these shortfalls. It is for the Appellant to establish the cause and the fact that the discrepancies are deductible for income tax purposes. The Appellant did not do this.

[8]            For this reason, the appeals are dismissed.

                Signed at Saskatoon, Saskatchewan, this 3rd day of July, 2002.

"D. W. Beaubier"

J.T.C.C.

COURT FILE NO.:                                                 2001-2989(IT)I

STYLE OF CAUSE:                                               Estate of John Homersham v. The Queen

PLACE OF HEARING:                                         Regina, Saskatchewan

DATE OF HEARING:                                           June 26, 2002

REASONS FOR JUDGMENT BY:      The Honourable Judge D. W. Beaubier

DATE OF JUDGMENT:                                       July 3, 2002

APPEARANCES:

Counsel for the Appellant: Glen Dowling

Counsel for the Respondent:              Tracey Harwood-Jones

COUNSEL OF RECORD:

For the Appellant:                

Name:                                Glen Dowling

Firm:                  Robb & Dowling

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-2989(IT)I

BETWEEN:

ESTATE OF JOHN HOMERSHAM,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeals heard on June 26, 2002 at Regina, Saskatchewan, by

the Honourable Judge D. W. Beaubier

Appearances

Counsel for the Appellant:                    Glen Dowling

Counsel for the Respondent:                Tracey Harwood-Jones

JUDGMENT

          The appeals from the reassessments made under the Income Tax Act for the 1996, 1997 and 1998 taxation years are dismissed in accordance with the attached Reasons for Judgment.

          Signed at Saskatoon, Saskatchewan, this 3rd day of July, 2002.

"D. W. Beaubier"

J.T.C.C.