Date: 20090310
Docket: A-338-07
Citation: 2009 FCA 70
CORAM: EVANS
J.A.
PELLETIER J.A.
RYER
J.A.
BETWEEN:
PETER V.
ABRAMETZ
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR
JUDGMENT
RYER J.A.
[1]
Mr.
Peter Abrametz (the “appellant”) appeals the decision of Justice Sheridan (the
“Tax Court Judge”) of the Tax Court of Canada (2007 TCC 316) dismissing his
appeal against an assessment by the Minister of National Revenue (the
“Minister”) under subsection 323(1) of the Excise Tax Act, R.S.C. 1985,
c. E-15 (the “Act”). That assessment imposed a liability upon the appellant in
his capacity as the sole director of Mada Construction Company Ltd. (the
“Company”) for goods and services tax (“GST”) that it failed to remit to the
Canada Revenue Agency during the period from May 1, 1991 to October 31, 1994,
as well as interest and penalties.
[2]
The
Tax Court Judge found that the appellant had failed to discharge his onus of
proving that the assessment against the Company was incorrect. In so doing, she
considered the evidence of the appellant’s witness, Mr. Reid McLeod, a
chartered accountant who had been retained by the appellant to review the
assessment, and found that his evidence did not establish that there were
errors in the Minister’s assessment of the GST liability of the Company.
[3]
The
issue in this appeal is the proper characterization, for the purposes of the
Act, of six amounts, more particularly described on page 38 of the Appeal Book,
that were deposited into bank accounts of the Company at the Prince Albert
Credit Union and the Royal Bank in Prince Albert, Saskatchewan. The appellant
contends that the uncontradicted evidence of Mr. McLeod establishes that these
amounts, which totalled $166,250, were loan proceeds and inter-account
transfers. Accordingly, the appellant argues, none of these deposits were
amounts that included GST or in respect of which GST should have been collected
by the Company.
[4]
The
respondent, at the hearing, conceded that if the appellant’s characterization
of the amounts is correct, then none of those amounts should have been subject
to GST. Nonetheless, the respondent urges this Court to uphold the decision of
the Tax Court Judge that Mr. McLeod’s evidence was insufficient to demonstrate
that the assessment was incorrect.
[5]
In
paragraph 6 of her reasons, the Tax Court Judge found that Mr. McLeod “was not
in a position to say whether the GST returns filed by the Company were
correct.” With respect, the issue before the Tax Court of Canada was not the
correctness of the Company’s GST returns but the correctness of the assessment,
which, in the circumstances, turns on the proper characterization of the six
amounts in issue. Accordingly, in my view, Mr. McLeod’s inability to comment on
the correctness of the returns filed by the Company does not detract from his
evidence as to the nature of the six amounts in issue.
[6]
The
evidence that was tendered by Mr. McLeod was aimed at demonstrating the nature
of the six deposits in question. In concluding that those amounts were loan
proceeds and inter-bank transfers, Mr. McLeod reviewed banking documents of the
Company. At pages 9 and 10 of the transcript, Mr. McLeod testified as follows:
I was able to
examine certain records of the corporation, namely bank statements of the – of
the corporate account and also some loan statements from a different financial
institution, Prince Albert Credit Union, and I was able to compare those
documents. From my comparison it appeared to me that certain loans, advances or
transfers between the two accounts were included in the revenue of the
corporation for GST-taxable purposes, and in fact it appeared to me that GST
was assessed on those transfers, which is an error.
[7]
The
Tax Court Judge found, at paragraph 6 of her reasons, that Mr. McLeod “was not
given the Company’s financial statements or other corporate records to compare
to the bank statements.” With respect, I do not see how these items would have
been of more assistance to Mr. McLeod than the bank records and loan statements
that were provided to him. Those materials were sufficient to enable him to
determine the nature of the six amounts in question. Based upon his review of
those materials, Mr. McLeod concluded that the six amounts were loan proceeds
and inter-account transfers.
[8]
Having
found Mr. McLeod to be a credible witness whose evidence was uncontradicted, the
Tax Court Judge must have accepted his conclusion that the six amounts in
question were loan proceeds and inter-bank transfers, none of which should have
been subject to GST. In those circumstances, the only legal conclusion that she
could draw was that the assessment should be reduced by the amount of GST
attributable to those amounts. In failing to draw that conclusion, she erred in
law, an error which justifies our intervention.
[9]
For
these reasons, I would allow the appeal, with costs in this Court and in the
Tax Court of Canada, set aside the judgment of the Tax Court of Canada and
refer the matter back to the Minister for reassessment in accordance with these
reasons.
“C.
Michael Ryer”
“I
agree
John
M. Evans J.A.”
“I
agree.
J.D.
Denis Pelletier J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-338-07
(APPEAL FROM A JUDGMENT OF MADAM JUSTICE
SHERIDAN OF THE TAX COURT OF CANADA, DATED JUNE 5, 2007, (2007 TCC 316))
STYLE OF CAUSE: PETER
V. ABRAMETZ v.
HER MAJESTY THE QUEEN
PLACE OF HEARING: SASKATOON
DATE OF HEARING: MARCH 3, 2009
REASONS FOR JUDGMENT BY: RYER J.A.
CONCURRED IN BY: EVANS J.A.
PELLETIER J.A.
DATED: MARCH 10, 2009
APPEARANCES:
|
James Sanderson
|
FOR THE APPELLANT
|
|
Lyle Bouvier
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Sanderson Balicki Parchomchuk
Prince
Albert,
Saskatchewan
|
FOR THE APPELLANT
|
|
John H. Sims, Q.C.
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
Email this Content