Beaubier,
T.C.CJ.:—This
appeal
was
heard
in
Saskatoon,
Saskatchewan
on
October
6,
1992.
It
is
an
appeal
pursuant
to
the
informal
procedure
of
this
Court.
The
appeal
relates
to
the
deduction
of
$36,000
paid
by
the
appellant
to
Florentine
Enterprises
Ltd.
(F.E.L.)
in
1989.
The
appellant
was
the
only
witness.
He
is
now
the
president
of
Saskatchewan
Power
Corporation.
F.E.L.
is
a
Saskatchewan
corporation
which
during
the
year
in
question
was
engaged
in
farming,
real
estate,
consulting
and
various
other
activities
arising
in
part
out
of
the
appellants
multi-faceted
career,
as
a
farmer,
politician,
royal
commissioner,
cabinet
minister,
and
corporate
officer.
Its
original
activities
were
farming
and
gardening.
In
1989
the
appellant
was
retained
by
the
Saskatchewan
New
Democratic
Party
to
manage
its
coming
Saskatchewan
election
campaign
for
a
fee
of
$63,000
per
year
and
some
small
additional
amounts.
In
turn
Mr.
Messer
agreed
to
pay
F.E.L.
$36,000
in
1989.
In
a
director's
minute
of
F.E.L.
dated
March
13,
1989
the
reason
for
payment
by
the
appellant
to
F.E.L.
was
phrased
as
follows:
It
was
moved
and
seconded
that
the
Company
allow
John
R.
Messer,
a
principal
of
the
Company
and
principal
source
of
income
generation
for
the
Company,
be
allowed
to
direct
significant
time
to
the
New
Democratic
Party
for
an
unspecified
period
of
time.
It
is
further
agreed
that
the
sum
of
$36,000
per
year
be
paid
to
the
Company
to
offset
the
loss
of
income
that
his
circumstance
will
incur
for
the
Company.
In
fact
the
$36,000
was
paid
to
FE.L.
in
five
instalments
from
May
15
to
September
5,
1989.
F.E.L.
also
agreed
to
provide
and
did
provide
services
to
the
appellant
in
respect
to
his
contract
with
the
N.D.P.
in
1989.
The
included
the
majority
of
time
spent
by
Joanne
Messer,
the
appellant's
wife,
as
an
employee
of
F.E.L.
in
1989.
She
compiled
names
for
contributions,
solicitations,
lists
of
potential
N.D.P.
candidates;
priorized
constituencies;
assisted
in
monitoring
provincial
political
activities
and
in
assessing
matters;
and
assisted
in
matters
relating
to
polling.
All
of
these
tasks
related
to
the
appellant's
position
and
contract
with
the
New
Democratic
Party
in
1989
and
the
Court
finds
that
they
were
necessary
to
that
contract.
The
issue
before
the
Court
is
whether
the
$36,000
paid
to
F.E.L.
by
the
appellant
was,
in
the
words
of
paragraph
18(1)(a)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act"),
paid
for
the
purpose
of
gaining
or
producing
income
from
a
business
or
property.
The
appellant
was
paid
business
income
by
the
New
Democratic
Party
in
1989
in
consideration
of
the
position
he
accepted
(Exhibit
R-1).
He
paid
F.E.L.
$36,000
in
the
words
of
the
minute
"to
offset
the
loss
of
income
that
his
circumstance
will
incur
for
the
company".
But
the
uncontested
evidence
is
also
accepted
to
the
effect
that
in
1989
the
appellant
and
F.E.L.
agreed
to,
and
the
company
did
certain
things
for
the
appellant,
which
helped
him
earn
that
income.
These
things
were
the
activities
involving
Mrs.
Messer.
The
contract
with
the
N.D.P.
was
a
year-to-year
contract
and
the
evidence
is
that
the
contract
was
renewed
until
the
election
which
occurred
more
than
a
year
thereafter.
It
should
be
noted
that
the
first
draft
of
the
minute
was
dated
April
1989
and
the
first
payment
on
account
of
the
$36,000
was
on
May
15,
1989.
The
Court
accepts
as
fact
that
the
parties
had
two
purposes
for
the
payment
of
the
$36,000
and
that
one
of
the
purposes
was
for
FE.L.
to
assist
the
appellant
to
earn
his
fee
from
the
New
Democratic
Party.
The
exact
time
when
this
second
purpose
was
agreed
to
is
not
in
evidence
except
only
to
the
extent
that
Joanne
Messer
spent
more
than
one
half
her
time
in
1989
on
the
tasks
for
the
appellant.
This
indicates
that
she
began
her
work
before
July
1.
At
that
time
only
$5,000
had
been
paid
by
the
appellant
to
F.E.L.
The
appellant's
counsel
limited
the
amount
of
appeal
to
the
sum
of
$18,000
or
$20,000.
The
Court
finds
that
the
sum
of
$18,000
of
the
total
of
$36,000
was
paid
by
the
appellant
to
FE.L.
for
the
purpose
of
gaining
income
from
a
business
in
1989.
This
matter
is
referred
back
to
the
Minister
of
National
Revenue
for
reconsideration
and
reassessment
on
that
basis.
There
is
no
order
as
to
costs.
Appeal
allowed
in
part.
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