[OFFICIAL ENGLISH TRANSLATION]
2001-53(GST)I
BETWEEN:
STÉPHAN DUSSAULT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on October 2, 2001, at
Montréal, Quebec, by
the Honourable Judge Louise Lamarre Proulx
Appearances
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Alain-François Meunier
JUDGMENT
The appeal from the goods and services tax assessment made
under the Excise Tax Act, the notice of which is dated
November 16, 2000, and bears number 7P0165, is allowed and the
assessment is referred back to the Minister of National Revenue
for reconsideration and assessment on the following basis: the
amount of tax payable to be collected by the appellant is
$5,469.33 and the amount of the input tax credit to which he is
entitled should be increased by $500, the whole in accordance
with the attached Reasons for Judgment.
The
appellant is entitled to no further relief.
Signed at Ottawa, Canada, this 31st day of October 2001.
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Date: 20011031
Docket: 2001-53(GST)I
BETWEEN:
STÉPHAN DUSSAULT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Lamarre Proulx, J.T.C.C.
[1] This is an appeal under the
informal procedure from an assessment made under the Excise
Tax Act (the "Act") with respect to the
period from October 1, 1995, to December 31, 1998.
[2] The question at issue in this case
concerns the amount of tax to be collected and the amount of the
input tax credit under sections 221, 225 and 169 of the
Act.
[3] The appellant and
Francine Guidi, a tax auditing technician, testified.
[4] The appellant admitted that he was
a registrant for the purposes of Part IX of the Act and
that he operated a business as a business turnaround consultant.
He also admitted that his books and accounting records for the
period at issue were deficient.
[5] The evidence showed that the
appellant had failed to a significant degree to remit the tax
that he had billed to the recipients of his services. According
to the original audit, he billed an amount of $6,482.67 as
tax and on his returns reported an amount of $535. The appellant
tried to account for this state of affairs by the fact that he
billed certain amounts as tax at the request of a recipient
although he should not have done so, for, according to the
appellant, those amounts were royalties owed to him. However, the
appellant's invoices for that recipient referred to an amount of
tax and the appellant, as an agent for her Majesty, collected
that amount of tax. This explanation had already been given to
the officers of the Minister of National Revenue (the
"Minister") who had not accepted it. The Court
confirmed to the appellant that the tax collected had to be
remitted to the Minister. He should have understood this already
since, at the hearing, the argument dealt mainly with the amount
of the input tax credit.
[6] According to the Minister's
auditor, who based her conclusion on the invoices issued by the
appellant, the amount of tax payable to be collected was
$5,469.33. The appellant's calculation was $5,228.31. There was
no real discussion regarding the total, and I accept the
auditor's amount.
[7] The appellant introduced as
Exhibit A-1 a description of his income for each quarter,
beginning in October 1995 and ending in April, May and June 1998.
The description includes the amounts of tax billed. Next there
came a statement of expenses. These documents were sent to the
auditor who analysed them in a document filed in evidence as
Exhibit I-5. The appellant claimed an amount of $3,750.06
and the auditor allowed $1,558.79.
[8] The above-mentioned
Exhibit I-5 is a 13-page enumeration of the inputs
that were disallowed. The auditor explained why they were
disallowed: there were, inter alia, cases where no amount
for tax appeared on the invoice, where the invoices are
undated, where a subscription to the newspaper La Presse
was involved, where entertainment expenses were claimed in full
when what is eligible as an input tax credit is 50 per cent
thereof, where amounts of tax on car insurance and office
insurance were not eligible because they were not amounts of tax
under the Act, and where decorating expenses unrelated to
office expenses were involved. The auditor testified that she
would have liked to visit the appellant's office, located in his
residence, and that he did not authorize her to do so. The
appellant, in his testimony, denied this version of the
facts.
[9] After hearing the appellant's
comments concerning some of the inputs that were disallowed,
namely with regard to the proportion disallowed for the
telephone, the communications service, the Internet and cable, I
am of the opinion that the amount of ITC allowed in respect of
these could be increased by $500. Otherwise, it is my view that
the auditor's disallowance of certain inputs following an
objective analysis of the invoices submitted by the appellant was
done with care and in accordance with the provisions of the
Act.
[10] The appeal is allowed on the following
basis: the amount of tax payable to be collected by the appellant
is $5,469.33 and the amount of the input tax credit to which he
is entitled should be increased by $500.
Signed at Ottawa, Canada, this 31st day of October 2001.
J.T.C.C.
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