Docket: 98-3622(IT)I
BETWEEN :
ANDRÉ DUGAS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Appeal
heard on April 8, 2008, at Montréal, Quebec.
Before: The Honourable
Justice Louise Lamarre Proulx
Appearances:
|
For the Appellant:
|
The Appellant himself
|
|
Counsel for the Respondent:
|
Philippe Dupuis
Simon Petit
|
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under the Income
Tax Act for the 1986 taxation year is dismissed, in accordance with the
attached Reasons for Judgment.
Signed at Ottawa,
Canada, this 18th day of April
2008.
“Louise Lamarre Proulx”
Translation certified true
on
this 23rd day of October 2008.
Bella
Lewkowicz,
Translator
Citation: 2008TCC225
Date: 20080418
Docket: 98-3622(IT)I
BETWEEN:
ANDRÉ DUGAS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL
ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] At the beginning of the hearing, the Appellant
explained the circumstances and reasons for his investment in “La société en
commandite de recherche et développement de logiciels utilitaires opérant sous
PC-DOS”.
[2] A friend, Michel Picotte, a computer technician,
involved with a corporation in the Zuniq group, convinced him to contribute to
this financial plan, which had the self-professed goal of scientific research
and experimental development to create a software prototype.
[3] The Appellant confirmed his contribution to
the research. Over a couple of Sunday afternoons (perhaps two), when the two
families saw each other, the Appellant and Mr. Picotte allegedly conducted some
networking trials in Mr. Picotte’s basement. The Appellant admitted that his
field of expertise was not in software but in hardware development.
[4] Richard Bernier, the auditor for this file, then
testified. He produced documents related to the limited partnership. The
research contract had been awarded to Zuniq Corporation, which had then
sub-contracted it to Data Age Corp. The Appellant was never an employee of
either of these companies.
[5] Mr. Bernier explained, with the help of related
documents, that only 40% of the funds were used for research. The date of the
Appellant’s economic interest is allegedly December 22, 1986. The redemption
or remittance of 60% of the interest apparently occurred in January of 1987.
[6] The auditor asked two scientific advisors to
evaluate the research project based on the criteria in section 2900 of the Income
Tax Regulations. Both concluded that the research project did not meet the
criteria in any way. The investment tax credit was therefore disallowed.
[7] The investments, however, were treated as
business expenses and the deduction was applied against the Appellant’s income.
[8] The Appellant then informed the Court that he was
not contesting Mr. Bernier’s comments regarding the redemption of shares or
other events as described in the Reply to the Notice of Appeal and repeatedly
mentioned in the various decisions rendered on the same subject. However, he
was always of the opinion that the research was valid.
[9] The Court then asked him about the nature of the
evidence he would present in this regard. He did not call an expert in
software development, nor did he provide an expert’s report. None of the
scientists listed in the limited partnership documents had been called to
testify. The Respondent had produced an expert’s report and was to have the
expert witness testify. The Appellant admitted he was not a software
development expert. He had not participated in the research as he was not an
employee of the research company used.
[10] The Court also
reminded the Appellant that in an appeal from an assessment, the burden of
proof in opposing the presumptions of fact made by the Minister of National
Revenue (“Minister”) lies with the taxpayer.
[11] It is also interesting to note a judgment of this
Court rendered October 26, 2005, regarding the same research project. The
appeal was dismissed. The decision in question is Boudreault v. Canada,
[2005] T.C.J. No. 518 (Q.L.), found at Tab 2 of the Book of Authorities given
to the Appellant during the hearing by counsel for the Respondent.
[12] For the purpose of not wasting his own time, the
Court’s time and the time of all those involved in the judicial process, the
Appellant decided to drop his appeal and withdraw.
[13] He reiterated, however, that he found that his
hearing in 2008, 22 years after the year in question, 1986, was too long a
period. He also raised the question of interest.
[14] The Notice of
Reassessment is dated December 10, 1991. (There was a waiver of the three-year
time limit signed by the Appellant April 10, 1990, and received by the Minister
April 23, 1990.) The Notice of Objection was served on the Minister February
25, 1992. The Notice of Appeal was filed with this Court October 30, 1998,
before the Minister confirmed the assessment or made another assessment.
[15] Regarding the issue of excessive delay, first,
reference must be made to section 169 of the Income Tax Act (“Act”),
which states that a taxpayer may appeal to our Court after 90 days following
service of the Notice of Objection have elapsed. Second, it must be noted that
the Court record does not show any request by the Appellant for a hearing to be
set down after he filed his Notice of Appeal.
[16] The issue of
excessive delay was analyzed in some similar so-called research project
decisions: Boudreault, supra; Lassonde v. Her Majesty the Queen, 2003TCC715, [2003] T.J.C. No. 560 (QL);
2005FCA323, [2005] F.C.A. No. 1682 (QL); and Moledina v. Her Majesty the Queen,
2007TCC354, [2007] T.J.C. No. 286 (QL). According to all these decisions, the Appellant
had the legal power necessary to obtain a judicial decision within a reasonable
time, and if there was any delay, it was caused by negotiations or accepted
postponements of appeal hearings — circumstances that had been accepted by the
Appellant or his counsel at the time.
[17] With regard to interest, the Court does not have
the discretionary authority to cancel it when it was imposed pursuant to the
provisions of the Act. However, pursuant to subsection 220(3.1) of the
Act, the Minister has the power to waive interest. Information Circular 98-1R2
contains information in this regard. On the specific topic of interest, see
this Court’s decision concerning interest in Moledina, supra.
[18] For all these reasons and due to the abandonment
of the appeal by the Appellant, the appeal is dismissed.
Signed at Ottawa, Canada, this 18th day of April 2008.
“Louise Lamarre Proulx”
Translation
certified true
on
this 23rd day of October 2008.
Bella
Lewkowicz,
Translator
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