Kempo
J.T.C.C.:-This
informal
procedure
appeal
concerns
the
appellant’s
1989,
1990
and
1991
taxation
years.
Mr.
Vazquez
testified
at
the
hearing
and
he
effectively
reiterated
those
facts
which
appeared
in
an
attachment
to
his
letter
dated
December
8,
1992
to
Revenue
Canada
which
formed
part
of
his
notice
of
appeal.
It
reads
as
follows:
Several
months
ago.
I
was
contacted
by
Revenue
Canada
Taxation
in
London,
Ontario
with
regards
to
an
outstanding
balance
owed
to
Canadian
Tree
Planters
Ltd.
At
that
time
I
explained
my
actions
and
provided
documentation
to
reduce
the
amount
of
the
outstanding
balance.
I
also
supplied
them
with
information
on
a
subsidiary
business
carried
out
on
behalf
of
the
corporation.
This
subsidiary
business
consisted
of
a
large
number
of
stock
market
transactions
aimed
at
increasing
the
net
worth
on
the
corporation.
I
used
two
brokerage
firms
during
much
of
this
period.
Gardiner
Group
Stockbrokers
Inc.
(later
to
become
Green
Line
Investor
Services
Inc.)
and
Bache
Securities
Inc.
Originally
I
tried
to
segregate
my
personal
involvement
with
the
corporate
account
by
operating
the
Gardiner
Group
account
under
CTP
Holdings,
but
since
this
corporation
wasn’t
recognized
by
the
Gardiner
Group
account
managers
I
transfered
all
the
assets
over
to
my
personal
account.
Most
of
my
transactions
were
of
a
seasonal
nature
because
I
was
attempting
to
compliment
my
work
load
with
the
corporation
(also
of
a
seasonal
nature).
All
my
transactions
were
of
a
short
term
nature,
sometimes
hours
rarely
over
several
weeks.
As
the
corporation
required
funds
to
meet
obligations
I
would
withdraw
from
the
stock
market
accounts
to
meet
these
demands.
This
investment
strategy
began
in
the
third
quarter
of
1986
and
ended
in
the
first
quarter
of
1988.
I
have:
statements
of
accounts,
tickets
and
letters
verifying
my
actions.
Unfortunately
this
strategy
came
to
an
untimely
end
with
the
stock
market
crash
in
1987.
Most
of
the
investment
was
lost
and
with
it
the
equity
that
the
corporation
had
built
up.
The
position
of
the
respondent
was
reflected
in
the
reply
to
notice
of
appeal
thusly:
1.
He
admits
that
the
stock
market
transactions
referred
to
in
the
notice
of
appeal
were
of
a
business
nature
but
states
that
these
were
conducted
personally
by
the
appellant
and
were
not
business
transactions
carried
on
by
Canadian
Tree
Planters
Ltd.
2.
He
denies
any
other
allegations
of
fact
in
the
notice
of
appeal.
3.
In
computing
income
for
the
1989,
1990
and
1991
taxation
years,
the
appellant
did
not
include
in
income
any
amounts
on
account
of
interest
benefits
received
from
Canadian
Tree
Planters
Ltd.
(the
"corporation’’)
as
a
result
of
an
outstanding
loan
balance
owing
by
the
appellant
to
the
corporation.
4.
By
notices
of
assessment
mailed
on
June
19,
1990,
May
2,
1991
and
July
15,
1992,
the
Minister
of
National
Revenue
(the
"Minister")
assessed
the
appellant’s
income
for
the
1989,
1990
and
1991
taxation
years,
respectively.
5.
In
reassessing
the
appellant
for
the
1989,
1990
and
1991
taxation
years,
the
Minister,
by
concurrent
notices
of
reassessment
mailed
on
December
4,
1992,
included
the
amounts
of
$5,351.73,
$5,861.45
and
$4,667.34
on
account
of
interest
benefits
(the
“benefits")
received
from
the
corporation.
6.
In
so
reassessing
the
appellant,
the
Minister
made
the
following
assumptions
of
fact:
(a)
at
all
material
times,
the
appellant
was
the
sole
shareholder
of
the
corporation;
(b)
by
virtue
of
such
shareholding
in
the
corporation,
the
appellant
received
loans
from
or
otherwise
incurred
a
debt
to
the
corporation
amounting
to
$43,698.62
as
at
January
1,
1989
(outstanding
shareholder’s
loan
balance
carried
forward
from
the
1988
taxation
year,
net
of
amounts
paid
personally
by
the
appellant
on
behalf
of
the
corporation.
(c)
as
of
December
31,
1991,
the
balance
of
the
shareholder’s
loan
and/or
debts
owing
by
the
appellant
to
the
corporation
amounted
to
$43,416.74;
(d)
as
of
December
31,
1991,
no
interest
had
been
paid
by
the
appellant
to
the
corporation
on
the
shareholder’s
loan
and/or
debt;
(e)
during
the
1989,
1990
and
1991
taxation
years,
interest
on
the
outstanding
balances
in
the
shareholder’s
loan
account
at
prescribed
rates
was
as
set
out
in
Schedule
A
attached
hereto;
[Schedule
A
is
omitted]
(f)
at
no
relevant
time
was
the
corporation
engaged
in
the
buying
and
selling
of
securities
on
the
stock
exchange,
and
any
such
transactions
were
personal
transactions
of
the
appellant
which
do
not
reduce
the
balance
in
the
shareholder’s
loan
account.
7.
The
issue
is
whether
the
deemed
interest
benefits
of
$5,351.73,
$5,861.45
and
$4,667.34
were
properly
included
in
the
appellant’s
income
for
the
1989,
1990
and
1991
taxation
years,
respectively.
Mr.
Vazquez
admitted
the
accuracy
of
Schedule
A
to
the
reply.
Mr.
Vazquez
was
a
credible
and
forthright
witness.
He
said,
and
I
agree
with
him,
he
was
just
an
ordinary
citizen
trying
to
do
his
best
and
that,
after
giving
all
the
relevant
papers
to
an
accountant,
he
had
simply
signed
all
the
financial
statements
and
documents
drawn
up
by
them.
However
the
Court
must
infer
that
discussions
as
to
accounting,
business
and
financial
matters
must
have
occurred
between
Mr.
Vazquez
and
this
accountant
as
corporate
records
and
documents
are
not
drawn
in
a
vacuum
and
in
the
absence
of
some
sort
of
consultation.
No
records
or
documents
were
produced
at
the
hearing
today.
Mr.
Vazquez’
evidence-in-chief
and
cross-examination
was
complimentary
and
consistent,
was
worthy
of
belief,
and
is
accepted.
Notwithstanding
this,
however,
it
does
not
necessarily
follow
that
his
intentions
to
follow
a
certain
course
to
achieve
a
certain
end
was
actually
achieved.
Canadian
Tree
Planters
Ltd.
(the
’’company")
was
not
the
named
customer
at
the
brokerage
firms,
and
one
attempt
to
have
an
unincorporated
holding
company
reflected
as
the
trading
customer
failed.
Mr.
Vazquez
quite
frankly
acknowledged
his
awareness
of
matters
relating
to
separate
corporate
entities
whether
by
way
of
parent
or
subsidiaries,
that
he
knew
there
were
different
ways
of
doing
business
via
different
entities
for
different
purposes
but
that,
instead,
he
simply
had
treated
all
as
one.
When
a
taxpayer
seeks
to
do
business
on
behalf
of
another
entity,
and
seeks
to
derive
the
benefits
and
advantages
which
a
separate
entity
may
offer,
it
is
obviously
incumbent
upon
him
or
her
to
ensure,
to
some
degree,
that
their
relationship
and
business
matters
are
in
fact
kept
separate
and
distinct.
Here
the
company’s
financial
statements
signified
shareholder
loans
to
Mr.
Vazquez
which
was
the
source
of
the
funds
out
of
which
the
share
transactions
were
made.
I
recognize
that
this,
alone,
would
not
be
conclusive
evidence
against
Mr.
Vazquez
because
in
the
normal
course
of
things
recordkeeping
merely
reflects
arrangements
and
relationships
rather
than
creating
them.
However,
as
against
this,
the
appellant
did
use
corporate-
-sourced
funds
for
the
share
trading,
he
failed
to
record
the
trading
transactions
in
the
corporate
name
in
any
way,
he
did
approve
the
financial
statements
signifying
corporate
loans
to
him
of
considerable
sums
of
money
and,
at
the
time
he
could
have
recorded
the
company’s
name
as
the
investor
he
instead
submitted
the
name
of
a
proprietorship
which
the
company
was
to
own
and
operate.
This,
apparently,
never
happened.
Conclusion
Given
the
factual
evidence
in
this
case
as
a
whole,
it
is
my
opinion
the
appellant
has
failed
in
his
evidentiary
onus
of
establishing,
on
the
balance
of
probabilities,
that
he
was
simply
an
agent
or
nominee
of
the
company.
Therefore,
and
regrettably
for
him,
the
appeal
fails
and
is
dismissed.
Appeal
dismissed.
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