Date: 19991008
Docket: 1999-1530-IT-I
BETWEEN:
RICK S. COLLINS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
SOMERS, D.J.T.C.C.
[1] This appeal was heard on August 30, 1999 at Gander,
Newfoundland under the Informal Procedure.
[2] The Appellant appeals from a reassessment of income tax
for the 1995 taxation year.
[3] In reassessing the Appellant, the Minister of National
Revenue (the "Minister") relied on the following
assumptions of fact, which were admitted or denied:
"(a) the Appellant had acquired a property that was used
by the Appellant as a rental property to earn income;
(admitted)
(b) due to land ownership disputes the Appellant moved his
rental building to another location; (admitted)
(c) prior to moving the building onto the new location, the
Appellant was required to make improvements to the land to bring
it up to the standards required by the Newfoundland Department of
Health; (admitted)
(d) the Appellant expended the amount of $8,000.00 to meet the
Department of Health standards and to beautify the land;
(admitted)
(e) to level the land the Appellant was required to have 10
loads of backfill, 50 loads of gravel and 3 loads of crushed
stoned delivered and dumped onto the land; (admitted)
(f) the Appellant was invoiced the amount of $6,300 for the
backfill, gravel and crushed stone; (admitted)
(g) the Appellant expended other amounts to bring the total
spent on improving the land and landscaping to $8,000;
(admitted)
(h) in settlement of the Notice of Objection, it was
determined that a reasonable amount to be attributed to current
year landscaping expenses was $2,000 or 25% of $8,000;
(denied)
(i) in settlement of the Notice of Objection, it was
determined that a reasonable amount to be attributed to current
year repairs and maintenance expense was $900 or 25% of
$3,627." (admitted)
[4] The Minister relied on paragraphs 18(1)(a),
18(1)(b) and 20(1)(aa) of the Income Tax
Act:
[5] Paragraph 20(1)(aa) of the Income Tax
Act reads as follows:
"(aa) Landscaping of grounds – an
amount paid by the taxpayer in the year for the landscaping of
grounds around a building or other structure of the taxpayer that
is used by the taxpayer primarily for the purpose of gaining or
producing income therefrom or from a business;"
[6] The Appellant testified that he bought a house in
December, 1994 for rental purposes. The house had to be moved to
another location due to land ownership disputes. Prior to moving
the building on the new location, the Appellant was required by
the Newfoundland Department of Health to elevate the land by four
feet for sewage purposes.
[7] The Appellant fulfilled this task by paying for 50 loads
of gravel, 10 loads of backfill, 3 loads of crushed stone and 4
loads of top soil. The cost for upgrading the land to meet the
requirements of the Department of Health amounted to $8,050.
[8] The work was done in the spring of 1995. The tenants
rented the house in September, 1995 as it could not be rented
before the work was completed.
[9] Paragraph 20(1)(aa) refers specifically to
landscaping of grounds primarily for the purpose of gaining or
producing income. Landscaping is for the purpose of embellishing
the property, making it more attractive to the public. The neat
appearance would be more conducive to produce a high rent.
[10] In this particular case, the Appellant stated the work
done was for sewage purposes to meet the requirements imposed by
the Department of Health. The Appellant stated that he had to put
50 loads of gravel to elevate the land and 10 loads of
backfill. He added that he had to put four loads of top soil for
the completion of the land.
[11] For the taxation year of 1995, the Minister allowed
$2,000 for landscaping expenses. In the circumstances, the
Minister gave the right interpretation to paragraph
20(1)(aa) of the Act.
[12] The appeal is dismissed.
Signed at Ottawa, Canada, this 8th day of October 1999.
"J.F. Somers"
D.J.T.C.C.
Email this Content