Date: 20011211
Docket: 2000-4832-GST-I
BETWEEN:
GRAZIANO FIRMANI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
For the Appellant:
The Appellant himself
Counsel for the Respondent:
Andrea Jackett
____________________________________________________________________
Reasonsfor
Judgment
(Delivered orally from the Bench at Toronto,
Ontario, on August 31, 2001)
McArthur J.
[1]
This is an appeal from an assessment under the Excise Tax
Act. The Minister of National Revenue submits that the
Appellant failed to report goods and services tax of $42,523. The
facts are that the Appellant together with Vince Maffi purchased
301 Spring Garden Avenue, North York in or about 1996, for
approximately $260,000. They demolished an existing home and
constructed a 3,400 square foot new home which they sold in 1998
for approximately $670,000. At the time of the sale, the
Appellant and Vince had a violent falling out. I believe Vince
wanted to falsify documentation to the effect that the home on
the property was the Appellant's principal place of residence
and not subject to GST.
[2]
The Appellant is a carpenter and unsophisticated in paperwork. As
partners, Vince was to look after the record-keeping. It appears
that upon the closing of the sale, the solicitor for the
Appellant originally withheld $30,000 on account of GST but
remitted only $15,000. He may have been misled or misunderstood a
GST officer as to the amount owing. This I do not find is an
issue.
[3]
The Minister allowed the Appellant the amount of $8,631 in input
tax credits based on invoices supplied in the approximate amount
of $99,000. Apparently, these invoices were provided to the
Revenue Canada auditor, Ms. Whyte, from Vince after, as I
understand it, some difficulty. There may well have been more
expenditures but this was as best she could determine from her
audit. She relied on paragraph 169(4)(a) of the Act
and I believe correctly so. It reads as follows:
169(4) A registrant may not claim an
input tax credit for a reporting period unless, before filing the
return in which the credit is claimed,
(a)
the registrant has obtained sufficient evidence in such form
containing such information as will enable the amount of the
input tax credit to be determined, including any such information
as may be prescribed; ...
[4]
The Appellant submitted in his Notice of Appeal:
... that the amount allowed for input tax credits, namely
the sum of $8,631, although this represents the amount of credits
confirmed by way of documentation submitted for income tax
credits, there is no relationship to the actual cost of
construction of the home and ignores the circumstances of the
subject case, namely that the taxpayer was not in possession of
documentation to substantiate income tax credits. It is submitted
that the cost of construction of the home and the subject
property was approximately $300,000 and the input tax credits
could reasonably be calculated and should have been calculated in
that amount or a similar amount.
The Appellant appeared on his own behalf. I offered him the
opportunity to have his solicitor and Vince given evidence but he
chose to proceed alone. He had no documentation other than the
$99,000 in invoices relied on by the Minister's officers. I
cannot guess as to the amount in excess of the $99,000 that may
have been expended and rely on the evidence of the Minister's
auditor. It is an unfortunate situation. Obviously, the cost of
materials to construct a 3,400 square home is a good deal more
than $99,000. There is an obligation on a supplier to provide
documentation to support a claim for input tax credits.[1]
[5] I
find as a fact that the Appellant was a 50% partner with Vince
and liable for 50% of the GST assessed. I note that the Appellant
is to be commended for his voluntary disclosure of the entire
transaction and that $15,000 has been paid toward the GST owing.
I take that $15,000 as having been paid on behalf of the
partnership and that the Appellant's share would be $7,500.
Somewhat arbitrarily, I find the unreported net tax to be $30,000
and not $33,891.84. The amount of $30,000 is more realistic in
that there is no doubt the Appellant was entitled to more than
$8,631.52 in ITCs. Further, I believe counsel for the Respondent
was satisfied with the net tax being $30,000.
[6]
The appeal is allowed to reflect that the Appellant had only a
50% interest in the transaction which gives rise to the GST and I
find that he paid $7,500 towards his 50% liability. He is liable
to pay the further sum of $7,500 with interest.
Signed at Ottawa, Canada, this 11th day of December, 2001.
"C.H. McArthur"
J.T.C.C.
COURT FILE
NO.:
2000-4832(GST)I
STYLE OF
CAUSE:
Graziano Firmani and
Her Majesty the Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
August 31, 2001
REASONS FOR JUDGMENT
BY:
The Honourable Judge C.H. McArthur
DATE OF
JUDGMENT:
September 6, 2001
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Andrea Jackett
COUNSEL OF RECORD:
For the
Appellant:
Name:
N/A
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
Email this Content