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Docket:
2005-1893(GST)I
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BETWEEN:
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CHRISTINE RABY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Appeal heard on February 25, 2008 at
Toronto,
Ontario
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Before: The Honourable Justice L.M.
Little
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Appearances:
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Counsel for the Appellant:
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Jeffrey L. Goldman
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Counsel for the Respondent:
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Suzanne M. Bruce
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____________________________________________________________________
JUDGMENT
The appeal from the assessment
made under Part IX of the Excise Tax Act, notice of which is dated May
13, 2004 and bears number 085P0051056 for the period from January 1, 2000 to
December 31, 2002 is allowed, without costs, and the assessment is referred back to
the Minister of National Revenue for reconsideration and reassessment in
accordance with the attached Reasons for Judgment.
IT IS FURTHER
ORDERED that the filing fee of $100 be refunded to the Appellant.
Signed at Vancouver, British Columbia, this 8th
day of January 2009.
Little
J.
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Citation: 2009 TCC 12
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Date: 20090108
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Docket: 2005-1893(GST)I
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BETWEEN:
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CHRISTINE RABY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Little J.
A.
FACTS
[1] This appeal was heard in common
evidence with the appeals from the income tax assessments concerning Christine
Raby v. the Queen (“Raby”) and Aapex Driving Academy Ltd. v. the
Queen (“Aapex”). I refer to the facts and defined terms as
they are stated in those respective decisions, in addition to the facts as
outlined below.
[2] In the reassessments issued against Raby,
the Minister of National Revenue (the “Minister”) included certain amounts in
the business income of Christine Raby relating to the Vehicle Fees that
Aapex credited in her Shareholder Account for the use of the Vehicles that she
owned.
[3] The Minister determined that the
Appellant did not collect or remit GST on the amount of Vehicle Fees that she
purportedly received from Aapex.
[4] The Minister reassessed the Appellant
for the period January 1, 2001 to December 31, 2002. The Minister:
(a)
increased
Goods and Services Tax (“GST”) payable in the amount of $37,636.77;
(b)
imposed
interest in the amount of $2,232.79, calculated as of April 29, 2004; and
(c)
imposed
a penalty in the amount of $4,820.97, calculated as of April 29, 2004.
B.
ISSUES
TO BE DECIDED
[5] The issues under this appeal are as
follows:
(a)
whether
the Minister properly assessed the Appellant for GST payable in the amounts of
$9,589.69, $12,476.77 and $15,570.31 for the respective 2000, 2001 and 2002
calendar years;
(b)
whether
the Minister was correct to impose interest in the amount of $2,232.79,
calculated as of April 29, 2004, with respect to the reassessment of GST on the
Appellant; and
(c)
whether
the Minister was correct to impose a penalty in the amount of $4,820.97,
calculated as of April 29, 2004, with respect to the reassessment of GST on the
Appellant.
C.
ANALYSIS
[6] During the hearing, counsel for the
Respondent stated that the revised tax payable under the current appeal should
be calculated as follows:
GST Payable: Raby
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Annual Periods Ending
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12/31/2000
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12/31/2001
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12/31/2002
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Net Tax per
Reassessment
Add: Additional GST Collectible
Vehicle Disposition
Percentage per Shareholder
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9,589.67
0
50%
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12,476.77
1,772.90
50%
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15,570.31
1,954.96
50%
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Attributable to Ms. Raby
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0
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886.45
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977.48
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Less: ITCs Claimable
Gas
Maintenance & Repairs
Vehicle Purchases
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3.913.58
2.256.28
4.925.32
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3,635.57
2,103.03
5,710.11
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4,549.83
3,298.33
4,115.21
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Total ITCs
Percentage per Shareholder
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11.095.18
50%
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11,448.71
50%
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11,963.37
50%
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Attributable to Ms. Raby
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5,547.59
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5,724.36
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5,981.69
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Revised Net Tax Payable
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4,042.10
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7,638.87
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10,566.11
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(Note: This is a change from the original reassessments)
[7] However, neither counsel for the
Appellant nor counsel for the Respondent made any submissions or arguments with
respect to the Minister’s reassessment of the GST payable by the Appellant.
Counsel for the Respondent did not make any submissions with respect to the revised
tax payable amounts that she presented during the hearing.
[8] Canadian courts
have established that the onus is on the taxpayer to prove that the reassessments
are incorrect. Based on the lack of any evidence or
argument regarding the reassessments of GST payable under this appeal, I reject
the Appellant’s position on this issue.
[9] In addition, counsel for the Respondent
did not make any submissions or arguments with respect to the penalty levied on
the Appellant by the Minister.
[10] Based on the lack of evidence and
argument with respect to the imposition of the penalty, I am unable to
ascertain how these penalties were calculated, and under which basis they were
assessed.
[11] In Consolidated Canadian Contractors
Inc. v. R., [1998] G.S.T.C. 91 (“Consolidated Canadian Contractors”),
the Federal Court of Appeal held that a penalty assessed under section 280 of
the Act may be cancelled if the Appellant can demonstrate due diligence
in attempting to comply with the GST legislation.
[12] In Tri-Bec Inc. v. R, [2003]
G.S.T.C. 75, the Court considered the decision in Consolidated Canadian
Contractors in deciding whether to cancel an assessment of penalty under
section 280 of the Act. In paragraph 25, Justice Lamarre Proulx
said:
The
respondent made no representation or comment on the assessment of penalty.
Relying on the decision by the Federal Court of Appeal in Consolidated
Canadian Contractors Inc. v. R. …, I do not see any clear manifestation of
a lack of diligence in this case. It is therefore my view that the assessment
of penalty is not founded under the Act.
[13] Similarly, based on the lack of any
evidence or argument on this issue, I am not convinced that the Minister was
correct to levy a penalty on the Appellant.
[14] Accordingly, the appeal is dismissed
with respect to the reassessment, but referred back to the Minister for
reconsideration and reassessment on the basis that the penalty should be
deleted in respect of the relevant periods.
[15] Since success is divided, I am not prepared
to award any costs.
Signed at Vancouver, British Columbia, this 8th day of
January 2009.
Little
J.
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