Rip
J.T.C.C.:—On
or
about
June
20,
1990,
Blue
Turtle
Enterprises
Inc.
("Blue
Turtle")
was
served
with
a
requirement
to
pay
in
accordance
with
subsection
224(1.1)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
with
respect
to
payments
made
to
or
on
behalf
of
David
Perlmutter
who
had
an
employment
contract
with
Blue
Turtle.
Perlmutter
was
indebted
to
the
Crown
under
the
Act
as
a
result
of
an
assessment
issued
against
him
under
section
227.1
of
the
Act
on
April
22,
1988.
Blue
Turtle
purportedly
made
payments
on
behalf
of
Perlmutter
after
receiving
the
requirement
to
pay
and
was
assessed
pursuant
to
subsection
224(4.1)
of
the
Act.
Blue
Turtle
objected
to
four
payments
made
by
it
to
or
on
behalf
of
Perlmutter
and
subsequently
appealed
the
assessment,
electing
to
proceed
under
the
informal
procedure
provisions
of
the
Tax
Court
of
Canada
Act.
At
trial
I
reviewed
all
four
payments
and
gave
reasons
why
two
of
the
four
payments
contravened
the
requirement
to
pay
and
one
which
did
not.
I
advised
Perlmutter,
who
acted
as
agent
for
Blue
Turtle,
and
counsel
for
the
respondent,
that
I
wished
to
consider
further
Perlmutter’s
representations
with
respect
to
his
Royal
Bank
Visa
statements
that
were
paid
by
Blue
Turtle.
Blue
Turtle
is
in
the
business
of
’’developing"
motion
picture
films.
During
1990
Perlmutter
travelled
to
Los
Angeles,
California
on
behalf
of
Blue
Turtle.
He
incurred
air
travel,
hotel
and
related
expenses
and
charged
the
expenses
to
the
Royal
Bank
Visa
charge
card
in
his
name.
Blue
Turtle
paid
the
amounts
due
on
the
Visa
statements,
which
included
expenses
laid
out
for
its
account,
to
the
Royal
Bank.
Perlmutter
argued
that
Blue
Turtle
paid
the
Royal
Bank
debt
incurred
by
him
for
the
benefit
of
Blue
Turtle
and
not
his
own
benefit.
He
submitted
that
when
a
tax
debtor,
referred
to
in
subsection
224(1),
incurs
expenses
for
a
third
party’s
benefit,
any
payment
by
the
third
party
is
not
a
"payment
on
behalf
of,
a
tax
debtor"
within
the
meaning
of
paragraph
224(1.
l)(b)
of
the
Act.
Paragraph
224(1.
l)(b)
reads:
Without
limiting
the
generality
of
subsection
(1),
where
the
Minister
has
knowledge
or
suspects
that
within
90
days
(b)
a
person,
other
than
an
institution,
will
loan
or
advance
moneys
to,
or
make
a
payment
on
behalf
of,
a
tax
debtor
who
the
Minister
knows
or
suspects
(i)
is
employed
by,
or
is
engaged
in
providing
services
or
property
to,
that
person
or
was
or
will
be,
within
90
days,
so
employed
or
engaged,
or
(ii)
where
that
person
is
a
corporation,
is
not
dealing
at
arm’s
length
with
that
person,
he
may,
by
registered
letter
or
by
a
letter
served
personally,
require
the
institution
or
person,
as
the
case
may
be,
to
pay
in
whole
or
in
part
to
the
Receiver
General
on
account
of
the
tax
debtor’s
liability
under
this
Act
the
moneys
that
would
otherwise
be
so
loaned,
advanced
or
paid
and
any
moneys
so
paid
to
the
Receiver
General
shall
be
deemed
to
have
been
loaned,
advanced
or
paid,
as
the
case
may
be,
to
the
tax
debtor.
The
French
language
version
of
paragraph
224(1.
l)(b)
reads,
for
the
words
"make
payment
on
behalf
of...a
tax
debtor"
the
words
"effectuera
un
paiement
au
nom
d’un
débiteur
fiscal....”
The
Visa
statements
were
addressed
to
Perlmutter
and
he
was
liable
to
the
Royal
Bank
for
the
payments
of
the
amounts
due.
The
payments
were
made
by
Blue
Turtle
"in
the
name
of
the
tax
debtor",
Perlmutter.
There
is
no
doubt
as
to
the
meaning
of
paragraph
224(1.
l)(b).
The
definition
of
the
word
"behalf"
in
the
Shorter
Oxford
English
Dictionary
on
Historical
Principles
includes
"in
the
name
of".
Any
payment
made
by
Blue
Turtle
to
the
Royal
Bank
in
the
name
of
the
tax
debtor
is
caught
by
paragraph
224(1.
l)(b),
even
if
the
debt
of
the
tax
debtor
was
originally
incurred
for
the
benefit
of
the
payer,
Blue
Turtle.
The
appeal
will
be
allowed,
without
costs,
but
only
to'reduce
the
assessment
by
$1,630
with
respect
to
premiums
paid
to
North
American
Life
Insurance
Company
on
the
life
of
Renée
Perlmutter.
Appeal
allowed.
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