David G.T. Ingram v. Minister of National Revenue, [1992] 1 CTC 2741, 92 DTC 1458

Mogan, T.C.C.J.:—For the years 1979, 1980, 1981 and 1982, the appellant did not file his income tax returns within the time prescribed in the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). Under subsection 150(2) of the Act, the respondent made a demand that the appellant file returns for those years. In June 1983, when he did in fact file his returns for those years, he purported to use the net worth method to determine his income. I use the word "purported" because, in addition to using the net worth method, the appellant attempted to deduct significant amounts of capital cost allowance (“CCA”) for each year. He did not seem to realize that deducting CCA was inconsistent with the net worth method because a net worth statement would ordinarily list all depreciable property at depreciated values. A deduction for CCA is appropriate only when a taxpayer is using the overall scheme of the Act (as in sections 12, 18 and 20) to compute income from business.

The respondent did not accept the net worth method as a means of measuring the appellants income and the respondent disallowed the deduction of any CCA. By Notices of Assessment dated May 5, 1986 and Notices of Reassessment dated December 7, 1987, the respondent identified certain sources of income referable to the appellant's taxation years 1979, 1980, 1981 and 1982 and assessed tax, interest and penalties accordingly. Although the assessments show income for the three earlier years and a loss for 1982, there was a penalty assessed for 1982. All four years are the subject of the appeals herein but only the penalty is in dispute for 1982.

In Court, the appellant described himself as a tax consultant and an entrepreneur who operated as many as 35 offices in 22 cities. The appellant has become well-known in the Vancouver area as a tax consultant and has at various times had franchised offices under the name "David Ingram's Cen-Ta Tax Services" in other areas of British Columbia. It is difficult to reconcile the appellant's reputation as a knowledgeable tax consultant with his failure to keep records and books of account in a manner which would permit him to measure his own income. Whatever his reputation, the appellant either consciously ignored or had no knowledge of subsection 230(1) of the Income Tax Act which states in part:

230. (1) Every person carrying on business . . . shall keep records and books of account (including an annual inventory kept in prescribed manner) at his place of business or residence in Canada . . . in such form and containing such information as enable the taxes payable under this Act . . . to be determined.

There is no doubt that subsection 230(1) applies to the appellant because he was carrying on business as a tax consultant; he described himself as an entrepreneur; his attempt to deduct CCA in the years under appeal related to capital property which was used in his business; and his statement of personal net worth included assets described as" Business Equipment Class 8" valued at amounts exceeding $170,000. Also, his income tax returns stated that he was self-employed and showed that he had no employment income. Therefore, carrying on business was the thrust of the appellant's life and he was obliged to keep records and books of account in accordance with subsection 230(1). He failed to comply with that statutory requirement.

The appellant's attempt to use the net worth method to determine his income is a complete rejection of some fundamental law relating to income tax. Subsection 9(1) of the Act provides:

9. (1) Subject to this Part, a taxpayer's income for a taxation year from a business or property is his profit therefrom for the year.

A number of prominent cases like The Queen v. Metropolitan Properties Co. Ltd., [1985] 1 C.T.C. 169, 85 D.T.C. 5128 (F.C.T.D.) have held that income from a business being the profit therefrom should be determined according to generally accepted accounting principles ("GAAP") unless the Act requires a departure from such principles. A person carrying on business cannot measure the profit of his business according to GAAP if he does not keep adequate records and books of account. This is one of the appellant's problems in these appeals. His inability to measure his own business income using GAAP is a direct consequence of his failure to keep adequate records and books of account and his failure to comply with subsection 230(1) of the Act.

Before setting out the details of the assessments under appeal, I will comment briefly on the appellant's attempt to report income on a net worth basis. In Clayholt (K.) v. M.N.R., [1990] 2 C.T.C. 2163, 90 D.T.C. 1543 (T.C.C.), I reviewed the net worth method as a means of measuring income and made the following comments at page 2166 (D.T.C. 1545):

For obvious reasons, a statement of net worth is not the best way to measure annual income. In Urchyshyn v. M.N.R., [1971] Tax A.B.C. 307, 71 D.T.C. 234, W.O. Davis, Q.C. stated at page 313 (D.T.C. 238):

The employment of a net worth statement as a basis for an assessment to income tax is well recognized as a“ last-ditch” attempt to establish a fair basis on which to assess in the absence of acceptable bookkeeping records.

And in Djoboulian (E.) v. M.N.R., [1979] C.T.C. 2074, 79 D.T.C. 87 (T.R.B.), the late Honourable L.J. Cardin stated at page 2075 (D.T.C. 88):

The Minister, in the absence of reliable records, was justified in assessing the appellant by way of net worth assessments.

And in Zagumeny (J.) v. M.N.R., 33 Tax A.B.C. 100, 63 D.T.C. 718 (T.A.B.), J.O. Weldon, Q.C. stated at page 102 (D.T.C. 719):

It is conceded of course that the above method [“ net worth" type] of calculating income is in reality a makeshift method. However, the respondent in resorting to same does so in order to justify the assessment ultimately made and for the reason that records which could or should show the income for the period are either non-existent, destroyed, or otherwise not produced.

Although the above cases acknowledge the shortcomings of the "net worth" method as a means of determining annual income, the cases have accepted such method in circumstances where the taxpayer has not maintained adequate books and records.

The cases quoted above demonstrate that the Minister of National Revenue has been permitted to determine annual income by the use of net worth statements only in those circumstances where the taxpayer has not kept adequate books and records. The appellant appears to have concluded that, if he fails to comply with subsection 230(1) by not keeping adequate books and records, and if he cannot compute his business income in accordance with subsection 9(1) because his books and records are not adequate, then he too has the right to use net worth statements to measure his annual business income. I do not accept the proposition that a taxpayer like the appellant who is knowledgeable with respect to income tax matters can blatantly ignore the provisions of subsections 230(1) and 9(1) and then use a method which other judges have described as makeshift" and “last-ditch” to report his business income. In those cases where the Minister of National Revenue has been permitted to use the net worth method, the taxpayer was usually uneducated, unsophisticated and untutored in commerce and bookkeeping. Those words do not apply to the appellant and I totally reject his attempt to use the net worth method as a means of measuring his business income.

In any income tax appeal, it is the assessment which is the subject of the appeal and not the taxpayer's method of reporting income. Subsection 152(7) of the Act states:

152. (7) The Minister is not bound by a return or information supplied by or on behalf of a taxpayer and, in making an assessment, may, notwithstanding a return or information so supplied or if no return has been filed, assess the tax payable under this Part.

Normally, the taxpayer's notice of appeal and the Minister's reply will identify those items in the assessment which are in dispute. In this case, there was no meeting of the minds in the pleadings because the appellant did not compute or report his income in the ordinary way whereas the respondent made a genuine attempt to find those sources of commercial activity which produced profit or loss to the appellant. To illustrate the different approaches of the appellant and respondent, I attach to these reasons for judgment Schedule A showing the amounts reported by the appellant in his income tax returns, and Schedule B showing the nine sources from which the respondent added income or deducted losses in the assessments for the four years under appeal. The nine sources shown in Schedule B are described on the face of the form T7W-C (explanation of changes) attached to the assessment notices. The notice of appeal is an unfocused document in the sense that it does not identify any particular item in the assessments which the appellant disputes but appears to be an attempt to justify the appellant's net worth method of reporting income. The notice of appeal is set out in full below:

I hereby appeal to the Tax Court of Canada for a formal decision of tax matters relating to my personal income tax returns for the years 1979, 1980, and 1981. I would also like a formal assessment of my loss for 1982.

Facts: In the heyday of Western Real Estate sales of 1980, and 1981, I had almost 50 offices open preparing tax returns and selling real estate. There was a full time chartered accountant looking after both corporate and personal accounting for myself.

In 1981 and 1982, the operation fell apart. Any conceivable profits were wiped out and then some. From a high of 60 offices, the operation fell to seven. Landlords seized records and documents when offices were seized for non-payment of rent. Properties were foreclosed on or quit-claimed. Employees walked out the door with furniture and clients.

Over thirty offices run by ex-employees are open today. It is impossible to survive successfully in the short term under this kind of pressure.

When it came time to file my personal returns, there was [sic]no records as such, available. Yes there were "some" but not all.

I used National Revenue "Ultimate Weapon" to file my returns. I did a NET WORTH Assessment on myself and filed my returns on that basis.

In the spring of 1984, co-inciding [sic] with the "very days" I was to appear before the Conservative Party's Task Force on Taxation, I received a visit for an audit. Although I managed to have them delay it for a couple of months (it was in the middle of what business we had left), when National Revenue's auditors did arrive, they picked on about 3 out of fifty filing cabinets that were available and ignored completely, other offices with records, and the information which was made available by the CA who was made available (the CA by the way was Iona Campagnola's campaign manager in the election which was on at the time).

I therefore appeal these assesments [sic] on the basis that I reported more income than I had; and that the employees of National Revenue erred in both their audit procedures and their follow-up. When I requested a meeting with Appeals, etc. Mrs. Browning refused to meet with me at my offices where some records were available. She insisted I bring my records to DNR. I told her it would take a 40 foot truck to tranport [sic] them there (and it would, they are presently stored in a 40 foot truck), and asked where I could send them for our meeting.

The reason is that there were over 1,300 real estate buys and sells in two provinces and two countries PLUS IN EXCESS OF ANOTHER 200,000 transactions in the years involved.

As I reported on a net worth basis, it is unreasonable to single out a supposed benefit conferred by the incorporated companies. In addition, supposed benefits which have not been identified to me by National Revenue, were undoubtedly business expenses particularly if with regard to expenses for travel, entertaining, advertising, or expenses of the house at 4466 Prospect Road, North Vancouver, B.C. In particular, the house on Prospect Road was being supplied to the members of the Allan Thicke Show on the CTV Network. As a regular guest on this and other CTV shows, its expenses clearly fell within the realm of advertising.

As I do not smoke or drink and abhor fancy restaurants, it is hard for me to imagine the so-called benefits conferred on me in this audit. My total clothing since 1979 might equal $3,000 and I wear no jewellry [sic] other than a $125 Seiko watch which was a Xmas present from my wife. My cars have company signs on them and I have" no" personal life much to the annoyance of those around me.

Today, I have one Visa Card and one Chevron Card and about $200,000 worth of judgements against me from 1982, 1983, 84, 85, 86 and 87.

When the appellant states in his notice of appeal: ‘’. . . I reported more income than I had", it can be seen from Schedule A that he reported net income of only $1,558 in 1980. The respondent's Final Amended Reply to Notice of Appeal is a 10-page document which describes in detail the amounts which were included in the computation of the appellant's income for assessment purposes. The appellant testified for approximately three days and his testimony covers about 515 pages of typed transcript. Much of that testimony was not focused on the sources of income or loss disclosed in the assessments. At the conclusion of the appellant's evidence, the respondent called two witnesses: Lynne Leong, a field auditor employed by Revenue Canada, Taxation who had spent 1,600 hours reviewing the appellant's documents before issuing the assessments on May 5, 1986; and Irene Browning, the appeals auditor who spent an additional 500 hours reviewing the appellant's Notices of Objection and adjusting his income before issuing the reassessments on December 7, 1987. It is necessary to describe the nine sources shown in Schedule B from which the respondent included items of income or loss. The appellant's corporation David Ingram's Dupli-Cat Services Ltd. will be referred to as Dupli-Cat", and Cen-Ta Operating Co. Ltd. will be referred to as” Cen-Ta”.

1. Shareholder Appropriations from Dupli-Cat

These are the amounts of $12,048 for 1979 and $1,400 for 1980 which appear in Schedule B. The 1979 amount had the following components:

Auto Expenses:

The amounts $290.57 and $300 were paid to auto finance companies with respect to vehicles not owned by Dupli-Cat but owned by the appellant himself. The appellant explained that the vehicles were owned by him personally because it was easier to obtain financing for vehicles in his name. He would have needed corporate financial statements to finance the purchase of a vehicle in the name of a company. Also, he stated that the vehicles were used for company purposes by providing employees with a means of travelling around. In these circumstances, the appellant argued that it was appropriate for the company to pay part or all of the financing costs connected with the vehicles. On balance, I am inclined to the view that these vehicles were used about half of the time for corporate purposes and would allocate the items identified as auto expense on a 50/50 basis between the appellant and Dupli- Cat. One half of these amounts ($290.57 and $300) is a deductible corporate expense of Dupli-Cat and one half is a shareholder appropriation by the appellant from Dupli-Cat under subsection 15(1) of the Act which provides:

15. (1) Where in a taxation year

(a) a payment has been made by a corporation to a shareholder otherwise than pursuant to a bona fide business transaction,

(b) funds or property of a corporation have been appropriated in any manner whatever to, or for the benefit of, a shareholder, or

(c) a benefit or advantage has been conferred on a shareholder by a corporation,

otherwise than

(d) on the reduction of capital, the redemption, cancellation or acquisition by the corporation of shares of its capital stock or the winding-up, discontinuance or reorganization of its business, or otherwise by way of a transaction to which section 88 applies,

(e) by the payment of a dividend or a stock dividend,

(f) by conferring on all holders of common shares of the capital stock of the corporation a right to buy additional common shares thereof, or

(g) by an action described in paragraph 84(1)(c.1) or (c.2),

the amount or value thereof shall, except to the extent that it is deemed to be a dividend by section 84, be included in computing the income of the shareholder for the year.

The interest expense of $3,457.44 paid to Fidelity Trust was in connection with condominiums in New Westminster registered in the appellant's own name. Similarly, interest of $4,000 paid to Commerce Capital Trust was in connection with the Glenco Estate condominiums in Surrey, B.C. also in the appellant's own name. He stated that Dupli-Cat and Cen-Ta (at various times) were property managers for these condominiums; and all rents received from tenants were paid either to Dupli-Cat or Cen-Ta. He argued that it was appropriate for Dupli-Cat or Cen-Ta to pay part or all of the operating expenses if they were receiving all of his rents. The appellant's argument in this regard is not acceptable for two reasons. Firstly, according to the appellant's own testimony, he traded the condominiums in New Westminster and Surrey to Commerce Capital Trust in exchange for certain condominiums on West Third Avenue in North Vancouver which were registered in the names of the appellant and his wife. This fact confirms his personal ownership of all these condominiums. And secondly, he had no record of the rents received in respect of these condominiums against which he could match the expenses paid by Dupli-Cat and Cen-Ta. Here, the appellant is a victim of his own sloppy bookkeeping because he was unable to prove that the rents received on his behalf by Dupli-Cat or Cen-Ta exceeded the expenses paid out on his behalf by those two companies. In my view, the appellant has failed to discharge the onus upon him of proving that the assessing decision on these two items was wrong. I conclude that the interest expenses paid by Dupli-Cat to Fidelity Trust and Commerce Capital Trust were appropriations by the appellant from Dupli- Cat.

The remaining interest expense of $2,800 was paid to the North Shore Credit Union with respect to its mortgage on the house at 4466 Prospect Road, North Vancouver. That house is the appellant's personal residence. The appellant purchased this property before 1972 at a price of $42,000 and owned it throughout the period under appeal. He still owned it at the time of the hearing. He claimed that the proceeds from the mortgage on the Prospect Road house were used to finance his various enterprises and that, therefore, the interest paid on the mortgage should be deductible. That claim would be valid if he could prove that the proceeds from the mortgage were used for business purposes. Unfortunately for the appellant, neither he nor the two witnesses for the respondent was able to trace the proceeds from any mortgage on the Prospect Road house to a business use. And even if the funds could have been traced to a business use, the interest would be deductible to the appellant but not necessarily to Dupli-Cat. On the evidence, Dupli-Cat was simply making payments to the mortgagee of the appellant's personal residence. In those bare circumstances, the $2,800 was an appropriation by the appellant from Dupli-Cat.

The payments for dentistry in the amount of $1,200 in 1979 and $1,400 in 1980 were determined by the cheque registers of Dupli-Cat showing a number of payments made to the appellant's dentist. Following his notice of objection, the appeals officer (Ms. Browning) made a further review of the appellant's records and, in particular, in connection with his claim that he had a corporate dental plan for which these amounts were only the excess. She stated categorically that she could find no record of any such dental plan. This is only one of a number of instances where the respondent's witnesses were able to contradict categorically bland statements made by the appellant. In my view, the payments of $1,200 and $1,400 to the appellant’s dentist were shareholder appropriations.

2. Shareholder Appropriations from Cen-Ta

These are the amounts which appear in Schedule B as $8,086 for 1979, $48,434 for 1980, $131,198 for 1981 and $31,541 for 1982. The components of those amounts appear in the following table:

The various amounts in the above table were explained by the witness Ms. Leong who performed the field audit preceding the first assessment. I should note that the above total of the 1982 components ($26,145.93) is different from the 1982 amount ($31,541) in Schedule B but the difference is not significant because the determination of the appellant's income or loss for 1982 is not in dispute. Salary and Repairs were amounts paid by Cen-Ta to third parties for work done on and materials supplied to the appellant's personal residence at 4466 Prospect Road including drapes, carpets, new paved driveway, cobblestone retaining wall, alarm system and various appliances. The amounts are not in dispute.

The appellant's basic claim is that the house on Prospect Road was used directly or indirectly as an advertising vehicle in connection with his business as a tax consultant. He claims that his reputation as an individual knowledgeable in tax matters is indistinguishable from many of the corporations which he controls and that a large measure of his public persona is achieved through the exposure he gets by being a guest on radio hotline shows and appearing from time to time for interviews on television. He states that his house on Prospect Road was in effect a hostel for a number of media personalities who stayed there free of charge when visiting Vancouver. Through this connection with the media, he claims he gained access to the various radio and television shows on which he appeared; and this would justify his corporations expending money to improve the home on Prospect Road. He acknowledged that he had no register or log of the persons who stayed there from time to time.

The appellant views himself as a celebrity and appears to enjoy that selfimage. Referring to the Prospect Road house, he stated: “It was mainly used in an advertising sense. It was a venue to my persona with Hollywood and California . . .” (transcript page 1316). He also stated: "So the reason people were paying me $52,000 for franchises and $200,000 in franchise fees were to maintain this golden-boy image. It was necessary." (transcript page 1230). Referring to his writing on income tax matters, he said: ”. . . in 1975, I started a column for B.C. Business Magazine and by the time I was finished I was published in over 50 different publications as a tax guru.” (transcript page 105). And he continued a few minutes later: ” . . . I was a Colonel Saunders, if that's the right word for it. There was an image of me like this, if I can be so bold, in these flyers.” (transcript page 107). There is no doubt that the appellant seeks publicity. He described his postal revolt caravan (transcript page 445) as follows:

. . . it was also at the time of the mail strike if you—the postal strike of 1981. . . at that time I hauled a mailbox that was eight feet tall. . . six feet wide and four feet deep, across the country in what was called the "Postal Revolt Caravan". And I won't bore you with the articles. There were over 450 newspaper articles about it. You know, the front page of the "London Mirror” in London, England, ABC, NBC televisions, CBS.

It went from coast to coast and internationally, because I led a revolt. I parked in front of Parliament Hill for two weeks with my mail box while people came out and wrote angry letters to Mr. Trudeau. Again, it was part of the public relations or publicity that we did, which dragged people out to seminars and so on.

The expenses or the money that I had taken in, I can only say again, was spent totally on business and persona and I believe I was, at that time, not any more, a totally unique individual.

The appellant sees himself as a larger-than-life persona and has engaged in publicity stunts like towing a large replica of a postal box across Canada as described in his testimony above. On more than one occasion, he ran for mayor of Vancouver—all unsuccessful campaigns. He also sought (unsuccessfully) the nomination of a national party to try to win a seat in Parliament. And he made a much publicized wager of $2,000 with a Vancouver media personality concerning that person's ability to give up smoking. The appellant has a public image on which he expends considerable energy in an attempt to promote. His use of old Cadillacs and (on one occasion) a Lear Jet were all in support of his own ego—his image of himself as a person larger-than-life”. In my view, the use of his residence on Prospect Road as a centre for entertaining media personalities had more to do with the appellant's ego and his image of himself than any commercial enterprise with which he was connected. The amounts described above as Salary and Repairs are shareholder appropriations.

A third item Promotion" includes principal and interest paid by Cen-Ta to finance the appellant's purchases of at least one luxury automobile and certain shares in resource companies. It also included the cost of jewellery and personal purchases for the appellant. The jewellery consisted of little mementoes which the appellant gave to a number of media people at Christmas time with the following inscription ‘name’, with thanks David Ingram”. The appellant argued that these expenses were valid business expenses of Cen-Ta and that, when the resource shares were sold in 1984 or 1985, the proceeds went into Cen-Ta accounts; but he was unable to produce records to support this claim. In my view, the cost of jewellery was a justifiable business expense of Cen-Ta but the amounts paid as principal and interest to finance the purchase of a luxury automobile and shares in resource companies are not justifiable business expenses of Cen-Ta. On a somewhat arbitrary basis, I hold that two- thirds of the promotion amounts were shareholder appropriations and one- third can be regarded as justifiable business expenses of Cen-Ta.

The next heading "Travel" included the cost of shares purchased by the appellant, his personal travel costs and the cost of his Kung Fu lessons. The travel related to the appellant's trips to California, New Zealand and Australia. He claimed that his travelling was directly connected to his businesses because he was attempting to solicit persons in California, New Zealand and Australia who might come to Canada and thereby become clients of his tax consulting and travel businesses. I find the connection between his personal travelling to California, New Zealand and Australia so remote from the business which he carried on in Vancouver that I have no hesitation in dismissing his claim as having no merit. It is preposterous to think that a person as undisciplined as the appellant in matters of record keeping and bookkeeping with his inability to put together any sensible financial statement showing what his real revenue and expenses were in any taxation year should be able to deduct the cost of trips to distant but attractive locations on the basis that he was hoping to find clients.

The "Advertising" item of $2,000 in 1982 is the amount paid as the result of the wager he made with a media personality concerning that person's ability to quit smoking. I do not have to deal with it as an appropriation item because there is no dispute in 1982 as to the quantum of the appellant's profit or loss for that year. The only issue for 1982 is the penalty levied on expenses in the amount of $13,695 which is part of the costs of repairs to the Prospect Road house; and I will deal with all penalty items as a separate matter at the end of these reasons.

The last item in the above table is the “ Rental Loss" of $8,184.01 for 1980 and $78,783.43 for 1981. For 1980, Cen-Ta reported certain revenue and expenses in connection with properties registered in the name of the appellant and showed a rental loss in the amount of $8,184 for that year. Similarly for 1981, Cen-Ta showed a rental loss in the amount of $78,783.43 in connection with the same kind of properties. The appellant's defense for this item is similar to his argument with respect to Dupli-Cat in which he claimed that it was appropriate for the corporation to pay expenses relating to properties for which it received all the rental revenue. On this matter, I reach the same conclusion that the appellant is a victim of his own sloppy bookkeeping because he is unable to show any reason why Cen-Ta should suffer a loss in operating or maintaining properties which he owns personally; and there is no documentary evidence that he was holding the properties as agent for or in trust for Cen-Ta.

There might have been some merit in the appellant’s defence if he could have produced his own books and records to show that the properties were held by him as agent or trustee for Dupli-Cat or Cen-Ta and that any proceeds of disposition would be reported by one of those corporations. Also, he might have been able to show that the revenue paid into his companies exceeded the expenses which they paid out but the rental losses claimed by Cen-Ta appear to negate that possibility. The appellant's inadequate bookkeeping undermines any argument he might have in this regard. Although the appellant's witnesses (Gloria Sikora and Blanche Howard) testified that virtually all revenue was deposited in his corporate accounts; and it appears that virtually all expenses were paid out of corporate accounts, there is a real distinction between property owned by the appellant personally and property owned by his corporations. The appellant tends to cloud or fudge this distinction because he intermingled his own affairs (including his personal residence) so freely with the affairs of his corporations. When a shareholder causes his corporation to make payments that are personal to the shareholder, he has an obligation to ensure that the corporation maintains good records and books of account so that he can prove that he has not achieved a personal benefit from such payments.

Notwithstanding the appellant's inability to overcome these amounts added as appropriations from Cen-Ta, the respondent acknowledged in his pleading that the amount of $8,184.01 added as a Cen-Ta appropriation for 1980 should be reduced by the amount of $3,369.84 as the result of a mathematical error.

3. Loss from Cen-Ta Travel

This was a proprietorship for which there were books and records. The two amounts of $17,268 for 1981 and $25,304 for 1982 are not in dispute because they are losses acknowledged by the respondent in the computation of the appellant's income for those two taxation years; and there was nothing in the appellant's presentation which indicated that he was challenging the quantum of the losses.

The appellant did state both in evidence and argument that he found it surprising that the Minister would give him the benefit of the losses in Cen-Ta Travel in 1981 and 1982 when he had losses from other travel operations and tax consulting proprietorships in other locations outside Vancouver for which the Minister would not give him the benefit of a deduction. The appellant's difficulty in this regard is his constant handicap of not being able to produce any books and records which would demonstrate that he had in fact suffered operating losses in other businesses. The absence of books and records is again the appellant's burden.

4. Profit from Phase I Real Estate Joint Venture

5. Profit from Phase II Real Estate Joint Venture

In 1981 and 1982, the appellant participated in two significant real estate joint ventures which engaged in the sale of real estate interests (MURBS) in the Province of Ontario. The portion of Phase I which the respondent included in income was known as the"ROBRON Joint Venture”. Ms. Leong found among the appellant's documents a financial statement for the ROBRON Joint Venture as at July 31, 1981 (Exhibit R-66) including a statement of the members' equity as follows:

PHASE I—ROBRON JOINT VENTURE Operated by

DAVID INGRAM & ASSOCIATES INC.

MEMBERS’ EQUITY

JULY 31, 1981

			Intrepid	R.H. Dunlop
	David T.		Charter	Management
	Ingram	Satco	Corp.	Ltd.	Total
Balance Jan. 1,1981	$205,801	82,320	82,320	41,160	411,601

The notes to the ROBRON financial statements are as follows:

1. ORGANIZATION

Phase I—Robron Joint Venture is an unincorporated joint venture dealing in residential real estate. The operation of the joint venturers is carried out by David Ingram & Associates Inc. which conducts the business in trust for the joint venturers.

2. INCOME TAXES

As the joint venture is an unincorporated entity the liability for income taxes is the responsibility of each joint venturer and hence is not included in these financial statements.

There is no dispute concerning the amounts in Exhibit R-66 because it came from the appellant's own documents. It is apparent from the statement of members' equity that the appellant was a 50 per cent participant in the ROBRON Joint Venture and that his equity at January 1, 1981 was $205,801. On this basis, the respondent included $205,800 in the appellant's income for 1980.

The appellant entered Exhibit A-32 which was a set of financial statements for Phase II of the Ontario Joint Venture as at December 31, 1981. The state- ment of members’ equity shows that the appellant (in trust) was a 33 per cent participant in Phase II. Exhibit A-32 is a set of financial statements as at December 31, 1981 and the statement of members' equity is as follows:

DAVID INGRAM & ASSOCIATES (ONTARIO) INC. Phase II Joint Venture

Statement of Joint Venturers' Equity

		David
		Towers	Jaylin	R.H. Dunlop	Intrepid
		Ingram	Sales	Management	Charters
		(In Trust)	Ltd.	Ltd.	Ltd.
Net Income	$1,109,205	369,735	369,735	184,867	184,868

The notes to the Phase II financial statements are as follows:

1. Joint Venture (Phase II)

These financial statements reflect the operations of an unincorporated joint venture of David Towers Ingram (In Trust), Jaylin Sales Ltd., R.H. Dunlop Management Ltd. and Intrepid Charters Ltd. The company David Ingram & Associates (Ontario) Inc. formerly David Ingram & Associates Inc. purchased and sold the properties in Trust for the joint venture.

2. Income Taxes

As these statements reflect the operations of an unincorporated joint venture no provision for income taxes has been made as it is the responsibility of each joint venturer to reflect their own tax liability.

In Phase II, there is also no dispute as to the amounts. Exhibit A-32 shows that the appellant's share of the Phase II net income for 1981 was $369,735 which is the amount included in his 1981 income by the respondent. The appellant argued strongly that the amounts included in his income for 1980 and 1981 from Phase I and Phase II of the real estate joint ventures should not be in his income because he participated in those joint ventures in trust for his companies. Although this statement was not corroborated by any of the appellant's documents, Ms. Leong referred to Exhibit R-70 to show that most of the draws which the appellant received from Phase I or Phase II were deposited into the corporate accounts of Cen-Ta or Dupli-Cat or David Ingram & Associates Ltd. The respondent argued, however, that there were no documents to support any trust relationship between the appellant and his companies in connection with his participation in the joint ventures.

The appellant was not able to prove that any of his companies recorded the profits from Phase I or Phase II or reported any of those profits for income tax purposes. Even Exhibit R-70 which was introduced by the respondent to show that most of the amounts drawn from the joint venture were in fact deposited in the accounts of the three companies does not show any consistent pattern between Phase I or Phase II and any particular corporation. In other words, it is impossible to determine that any one of the three companies receiving the deposited drawings was participating in either Phase I or Phase II with any identifiable percentage.

I am of the view that the appellant's conduct in depositing the amounts which he drew from Phase I and Phase II into the accounts of his three companies is consistent with the evidence of his own witnesses (Ms. Sikora and Ms. Howard) that money was simply deposited into the account of whichever corporation needed it most. The deposits do not prove that he participated in Phase I or Phase II as a trustee or agent for any corporation.

The appellant's other argument was that the seminars conducted by Cen-Ta were operated at a loss but that one of the major objectives of the seminars was to sell the MURBS to those attending. Therefore, the profits derived from the real estate joint ventures would logically belong to Cen-Ta to offset the losses from the seminars which the appellant regarded as marketing costs for the MURBS. This argument was contradicted by the evidence of Ms. Browning who was able to identify among the appellant's books and records a separate set of records for the seminars conducted by Cen-Ta. She concluded that Cen- Ta operated the seminars at a profit because there were adequate records in Cen-Ta to show that the revenue derived from these seminars exceeded the expenses. I accept her evidence and, in doing so, reject the appellant's argument that the profits from the joint venture were to offset losses from seminars.

Lastly, the appellant argued that if the income from the joint ventures is to be regarded as his income, then he should be able to deduct the expenses of operating the seminars because they were important marketing operations to sell the MURBS which were offered by the joint ventures. Those expenses have already been paid by Cen-Ta and matched against revenue from the seminars. The appellant has to live with the fact that certain commercial operations were conducted in his name and others were conducted in the name of his corporation, Cen-Ta. The appellant's failure to keep adequate books and records for his own business interests or the businesses of his companies makes it difficult for him to prove how he accounted to his companies for what he did and how they accounted to him. The onus of proof was on the appellant and I see no reason to disturb the amounts which the respondent has included in his income as derived from Phase I or Phase Il of the joint venture.

6. Profit from Chilliwack Properties

7. Profit from Comox Properties

Ms. Leong produced her own working paper as Exhibit R-65 showing the manner in which she determined a profit of $17,275 from the sale of the Chilliwack properties. Exhibit R-65 shows the sale of 5 lots (Lots 2, 18, 20, 21, 22) with the amount of profit derived from each sale. Ms. Leong performed searches at the Land Registry Office and relied on documents in the appellant's own files to determine his ownership of those lots. She also relied on sales agreements, title documents and tax notices. The properties were sold by the appellant soon after their purchase with no holding period and the profit was determined by a comparison of the purchase and sale agreements. She concluded that these properties could not be treated as investments resulting in capital gains because of the short holding period. Therefore, the profits were regarded as income.

Ms. Leong also produced Exhibit R-61 which was a document taken from the files of the appellant. R-61 shows that 43 of the 53 units at Comox had been sold with the profit allocated two-thirds to the appellant and one-third to Ray Dunlop. According to this document, only the appellant and Ray Dunlop were the joint venturers in the Comox property although Jaylin Ltd. was the agent for the sale of the Comox units. In a separate document Exhibit R-44, Ted Bradshaw of Jaylin Sales reported to the appellant on March 8, 1981 that 43 units had been sold and that the amount of $96,750 was due to the appellant subject to his down payment on two of the units which he had bought for his own personal use. The amount of $96,750 was obtained by multiplying the appellant's share ($2,250) of the proceeds of sale from each unit by the number of units sold (43). The allocation of $2,250 to the appellant appears in Exhibit R-61 and the profit of $96,750 is shown in Exhibit R-44.

The appellant's defense against the inclusion of these amounts in his 1980 income is similar to his defense against the inclusion of the profits from Phase I and Phase II of the Ontario Joint Venture. He maintains that his participation in the selling of the Chilliwack and Comox properties was as trustee or agent for some of his companies and that any profit derived from the sale of those properties should be included in the income of his companies and not in his own personal income. As with the Ontario Joint Venture (Phase I and Phase Il), the appellant is unable to prove that the profits from Chilliwack and Comox were recorded in the books and records of any of his companies and reported by any of those companies for income tax purposes. As I have stated previously, the appellant is a victim of his own sloppy bookkeeping because he failed to keep proper records and books of account of these very substantial commercial operations. He has so intermingled his personal business affairs with the affairs of his companies that he is not able to untangle the relevant amounts and prove that properties registered in his name and commercial operations conducted in his name belong to a particular corporation.

The evidence concerning the sales of properties at Chilliwack and Comox in British Columbia is in my view conclusive against the appellant and he has no effective defence against the inclusion of these amounts in his income for 1980.

8. Rental Guarantee Fund

The amount of $154,278 included in the appellants income for 1981 is not in dispute. What is in dispute is whether the amount should be in his 1981 income or his income for 1982 or 1983. The amount arose in the following circumstances.

A memorandum from Jaylin Realty Ltd. (Ted Bradshaw) to the appellant dated March 1, 1981 (Exhibit R-74) identified a rent guarantee fee of $1,500 for the sale of each Comox unit and $2,000 for the sale of each unit from Phase I and Phase II of the joint venture. When the joint venture sold a MURB unit, a portion of the purchase price was allocated to a rental contingency pool. Apparently, the joint venture (as vendor) promised each purchaser that the MURB could be rented at some minimum amount. If the joint venture was able to rent the MURB, and if the flow of rent met the minimum amount which the vendor had guaranteed to the purchaser, then the amount allocated to the rental guarantee pool with respect to that unit could be released to the vendor after a two-year period. But if the flow of rent from the MURB did not meet the minimum amount which the vendor had guaranteed, then the joint venture would draw a portion or all of the funds from the rental guarantee pool to pay to the purchaser to ensure that he would receive the minimum amount guaranteed as a return on the rental of his unit.

The appellant believed that no amount from the rental guarantee pool was required to be included in computing his income until such time as he actually could retain his share of those funds upon the expiration of the two-year waiting period after the sale of a unit. The respondent takes the position that the rental guarantee pool was an unauthorized contingency reserve which could not be deducted in computing income under the provisions of paragraph 18(1)(e) of the Income Tax Act. If the respondent is correct, then each amount allocated to the rental guarantee pool would have to be recorded as income of the joint venture at the time of each sale in accordance with paragraph 12(1)(a) of the Act. The amounts allocated to the rental guarantee pool were not connected with any unpaid portion of the selling price of a MURB unit but were connected only with the amount of rent guaranteed to the purchaser of a unit. I have no difficulty in finding that the rental guarantee pool is a contingency reserve within the meaning of paragraph 18(1)(e) of the Act and, therefore, not deductible in computing the income of the joint venture. On that basis, there is no reason to defer including in the income of the joint venture any amounts allocated to the rental guarantee pool. In effect, that was an internal allocation of profit to guarantee the performance of the covenant they gave to their purchasers with respect to a flow of rent from the MURB units. I am satisfied that the amount of $154,278 was properly included in computing the appellant's income for 1981.

9. Net Profit from Sale of Condominiums

This item is included only to complete the overall picture of items in Schedule B that were included in the computation of income or loss of the appellant for the four years under appeal. The actual computation of the appellant's loss for 1982 is not in dispute. The only matter in dispute for 1982 is the penalty imposed under subsection 163(2) of the Act on the amount of $13,695 (identified above as "Repairs") which was, in turn, part of the gross amount of $31,541 regarded as an appropriation by the appellant from Cen-Ta.

Assessment of Penalties

The appellant was assessed penalties under the Income Tax Act (Federal) and the Income Tax Act of British Columbia in the following amounts:

*These amounts appear on the face of the reassessment for 1982 but the appropriate box for penalties shows a sum of $807.88.

The only penalties which are in dispute are the penalties levied under subsection 163(2) of the Federal Act. Subsection 163(2) provides in part:

163. (2) Every person who, knowingly, or under circumstances amounting to gross negligence in the carrying out of any duty or obligation imposed by or under this Act, has made or has participated in, assented to or acquiesced in the making of, a false statement or omission in a return, form, certificate, statement or answer (in this section referred to as a" return") filed or made in respect of a taxation year as required by or under this Act or a regulation, is liable to a penalty of. . . .

The respondent's witnesses explained that the penalties under subsection 163(2) were assessed only in respect of certain amounts which were part of the shareholder appropriations from Cen-Ta appearing as Source No. 2 in Schedule B. When considering Source No. 2 in the above reasons, I set out a table listing six different categories of amounts paid by Cen-Ta. The only amounts in that table which were used as a basis for the penalty were those amounts identified as "salary" and "repairs". Ms. Leong recommended penalties under subsection 163(2) because of the substantial renovations to the appellant's home on Prospect Road including drapes, carpets, new paved driveway, cobblestone retaining wall, alarm system and various appliances all paid by Cen- Ta. She explained that the appellant had prepared a personal balance sheet for 1982 (Exhibit R-40) in which he valued the Prospect Road house at $72,000 for purposes of obtaining a bank loan. In the same year, the appellant prepared a net worth statement for Revenue Canada, Taxation (Exhibit A-35) in which he listed the Prospect Road house at a value of $42,000. In the mind of Ms. Leong, this discrepancy indicated that the appellant was aware of the fact that the amounts expended by Cen-Ta on the Prospect Road house had increased its value by $30,000. The question arises as to whether that awareness brings the appellant within the words of subsection 163(2) as a person who" knowingly, or under circumstances amounting to gross negligence . . . has made or has participated in . . . the making of, a false statement or omission in a return. . . ."

I propose to take a broader view of whether the appellant knowingly made a false statement. It was brought out in evidence that the appellant had been assessed in 1977 in connection with a shareholder appropriation under subsection 15(1) of the Act for his 1972 or 1973 taxation year and a penalty, imposed at that time, was later removed because a subsequent reassessment in 1979 reduced the appellant's 1972 or 1973 income. I infer from this evidence that the appellant had knowledge of the provision in the Income Tax Act (subsection 15(1)) which brings into income any amount paid by a corporation for the personal benefit of a shareholder. In other words, I think the appellant knew that there would be income tax consequences if he caused one of his companies to disperse money on his own behalf. Even without the prior experience of 1972-73, I must take into account the appellant's acknowledged status as an income tax consultant in the Vancouver area. The appellant has held himself out to the public as a person knowledgeable in income tax matters, advising the public on different methods of reducing tax. It seems fair to infer that he would know about the problems involved with a controlled corporation and the use of a corporation to disperse money which a shareholder really should pay out of his own pocket. Without considering the evidence described below, I would be inclined to uphold the penalties under subsection 163(2).

There is other evidence which I should review, however, because it goes to the appellant's state of mind concerning whether he "knowingly" recorded certain amounts or reported certain amounts for income tax purposes with a view to reducing his tax. I refer to certain net worth statements prepared by the appellant and one net worth statement prepared by a Mr. Mulberry, a senior auditor of Revenue Canada, Taxation. A brief review of these net worth statements indicates that the appellant knew that if he could establish a high personal net worth at the commencement of a period of years, it would be difficult in any subsequent year within the period to demonstrate that he had any significant increase in net worth over his high personal net worth at the commencement of the period.

Exhibit R-35 is a net worth statement of the appellant as at December 31, 1978 prepared by Mr. Mulberry who was responsible for auditing the appellant's income tax returns for the years immediately preceding the years under appeal. Exhibit R-35 shows assets in the aggregate amount of $252,890; liabilities in the aggregate amount of $260,600; and a negative net worth of $7,710 as at December 31, 1978. Mr. Mulberry presented this document to the appellant who signed it on February 13,1979 indicating his acceptance of its accuracy.

Exhibit A-35 is the appellant's own statement of net worth for the period 1978 to 1983. This is probably the most important exhibit filed by the appellant from his own point of view because it was the basis on which he determined his income using the "net worth method" for the years under appeal. In Exhibit A-35, the appellant was required to show his net worth at the end of 1978 because he had to compare that amount with his net worth at the end of 1979 in order to determine whether there had been an increase or decrease in his net worth through the calendar year 1979. In Exhibit A-35 prepared in 1983, the appellant shows a personal net worth of $468,900 as at the end of 1978. Comparing Exhibit R-35 with Exhibit A-35, there is a discrepancy of $476,610 in the appellant's net worth according to documents he either prepared (as in A-35) or acknowledged (as in R-35). Exhibit A-35 prepared more than four years after the appellant signed Exhibit R-35 shows a significant increase in his net worth as at the end of 1978; an increase which assisted the appellant when reporting on the net worth method for the years 1979 to 1982.

Still referring to Exhibit A-35, the appellant shows a net worth at the end of 1982 in the amount of $594,500 by subtracting liabilities of $1,674,500 from assets of $2,269,000. It should be remembered that 1982 is the last year under appeal. Around 1987, the respondent again issued a demand to the appellant to file returns for the years after 1982. When he filed returns for the years 1983, 1984, 1985 and 1986, he again determined his income using the net worth method and filed with those returns a net worth statement for the period 1982 to 1987, marked as Exhibit R-38 in this appeal. In Exhibit R-38, the appellant was required to show his 1982 net worth because he had to compare that amount with his 1983 net worth in order to determine whether there had been an increase or decrease in his net worth in 1983. For some unexplained reason, the net worth in R-38 was determined at April 30 rather than December 31.

Although the prior net worth statement in Exhibit A-35 was prepared as at the end of calendar years and R-38 was prepared as at April 30 for each year, I do not attach much significance to that change in date because there is only a four month gap between December 31, 1982 and April 30,1983. In Exhibit R-38 prepared in 1987 or 1988, the appellant shows a net worth of $180,000 as at April 30, 1983 (just four months after the net worth of $594,500 at December 31, 1982 shown in A-35) by subtracting liabilities of $226,000 from assets of $406,000. Also, Exhibit R-38 shows that the appellant's net worth according to his own determination declined after 1982 leaving him with no income in the years 1983, 1984, 1985 and 1986. There is a significant inconsistency between the net worth which the appellant shows in Exhibit A-35 as at December 31,1982 being $594,500 and his net worth of $180,000 four months later at April 30, 1983 as shown in Exhibit R-38.

Exhibit R-40 is a personal balance sheet of the appellant prepared in April 1982 as of April 30, 1982. This document is different from his net worth statements because they were all prepared on the cost basis whereas the balance sheet in R-40 is prepared on the basis of current values. Nevertheless, there is an interesting contrast between the appellant's estimation of his net worth on a current value basis in R-40 at April 30, 1982 and the statement of his net worth on a cost basis in R-38 as at April 30, 1982. In R-40, the appellant shows assets with an aggregate current value of $6,136,900 and liabilities of $1,371,100 leaving him with what he calls "proprietor's equity” of $4,765,800. According to a note which appears on Exhibit R-40 in the appellant's own handwriting, he acknowledges that it was prepared during the month of April 1982 as an estimate of his personal worth. By contrast, Exhibit R-38 was prepared in 1987 or 1988 and showed his net worth at cost as at April 30,1982 in the amount of $184,500. His personal balance sheet (R-40) at current values shows liabilities in the amount of $1,371,100 at April 30, 1982 whereas the net worth statement (R-38) at cost shows liabilities of only $155,000 at April 30, 1982. Liabilities do not usually vary much between a net worth statement based on cost and a net worth statement based on current values. It is difficult to reconcile the appellant's statement made in 1982 that his liabilities as at April 30, 1982 were $1,371,100 with the net worth statement he prepared in 1987 or 1988 showing his liabilities at April 30, 1982 in the amount of only $155,000. The discrepancy between the appellant's net worth at cost (R-38) in the amount of $184,500 as at April 30, 1982 and his net worth at current values (R-40) in the amount of $4,765,800 is also difficult to reconcile given the appellant's statement that he had no income in the years preceding 1982.

My purpose in reviewing Exhibits A-35, R-35, R-38 and R-40 is to show the significant inconsistencies in the amounts which the appellant recorded himself or, in the case of R-35, acknowledged to a senior auditor from Revenue Canada. Those inconsistencies in Exhibits A-35, R-35 and R-38 indicate at least gross negligence within the meaning of subsection 163(2) of the Income Tax Act in documents which the appellant delivered to or acknowledged to Revenue Canada, Taxation. Similarly, the appellant was grossly negligent when he caused Cen-Ta to pay for all those improvements to his house and failed to report any corresponding amount in his income. I conclude that the penalties were justified in all four years but, because the penalty under subsection 163(2) appears to depend upon the amount of tax payable, there may be no tax that can be levied for the 1982 taxation year because the respondent has acknowledged that the appellant did not have any taxable income for that year. I have no hesitation, however, in sustaining the penalties for the years 1979,1980 and 1981.

There is one final matter to be determined concerning capital cost allowance ("CCA") with respect to the appellant’s assets. The appellant's claim for CCA in his returns was of course rejected because a deduction for CCA is not consistent with reporting on a net worth basis. And in the assessments under appeal, the respondent did not deduct any amount with respect to CCA because the respondent could not verify the cost of any depreciable property.

There was, however, a wealth of evidence (including pictures) about the mobile home and its use by the appellant in connection with his tax consulting business. In the appellant's net worth statement for the years under appeal (Exhibit A-35), he shows the mobile home as acquired in 1980 at a cost of $58,000. Although the respondent could not verify that cost, there does not appear to be any dispute over the fact that the appellant owned a mobile home and, in my view, it was used in part for his business. I have concluded that it was used approximately two-thirds for business purposes and one-third for personal convenience. Because the cost of the mobile home was not proved, I shall on an arbitrary basis permit the deduction of CCA on the mobile home in the following amounts: $10,000 for 1980; $8,000 for 1981; and $6,000 for 1982 if the appellant wishes to deduct any CCA for 1982 which appears to be a non- taxable year.

The appellant claims that he is entitled to deduct CCA with respect to various rental properties which he had purchased as MURBS. At no time, did he produce the required certificate for any one of these properties proving that it qualified as a MURB. When I consider that Ms. Leong spent 1,600 hours on her field audit and Ms. Browning spent an additional 500 hours on her appeals audit, the appellant had ample opportunity to find and produce the required certificates. Although the respondent acknowledges that the appellant was the owner of a significant number of rental properties some of which are listed in paragraph 5(o) of the Reply to Notice of Appeal, the respondent did not deduct any amount of CCA with respect to those properties because the respondent could not verify their cost. The appellant should be able to deduct CCA even at the lower (non-MURB) rates on his rental properties but it is essential to prove the cost of depreciable properties before any depreciation allowance can be deducted in respect of such cost. Reluctantly, I must hold that the appellant has failed to prove the cost of his rental properties and is, therefore, not entitled to deduct any CCA with respect to such properties. Similarly, the appellant did not prove the cost of any business furniture or equipment which otherwise might have qualified for CCA.

In summary, the appeal is allowed in part, without costs, and the appellant is entitled to relief on the following matters but not entitled to any further relief:

For 1979:

(i) the shareholder appropriations from Dupli-Cat should be reduced by $295.29 (being one-half of $290.57 plus $300); and

(ii) the shareholder appropriations from Cen-Ta should be reduced by $820.53 (being one-third of $2,461.60).

For 1980:

(i) the shareholder appropriations from Cen-Ta should be reduced by $2,257.75 (being one-third of $6,771.75) and by a further amount of $3,369.84 being a mathematical error in the determination of "rental loss"; and

(ii) deduct capital cost allowance of $10,000 for the mobile home.

For 1981:

(i) the shareholder appropriations from Cen-Ta should be reduced by $3,928.03 (being one-third of $11,784.10); and

(ii) deduct capital cost allowance of $8,000 for the mobile home.

For 1982 (although the only issue was the penalty under subsection 163(2)):

(i) delete the penalty under subsection 163(2);

(ii) the shareholder appropriations from Cen-Ta should be reduced by $2,872.59 (being one-third of $8,617.78) (if relevant); and

(iii) there is an optional deduction of $6,000 as capital cost allowance for the mobile home (if relevant).

SCHEDULE A

DAVID INGRAM v. THE MINISTER OF NATIONAL REVENUE INCOME TAX APPEALS

Amounts Reported in Appellant's
Income Tax Returns	1979	1980	1981	1982
Increase (decrease) in personal
net worth within calendar year	$27,800	$151,900	$65,400	($119,500)
Capital Cost Allowance claimed	52,225	77,653	64,274	—
Income (loss) after CCA	(24,425)	74,247	1,126	(119,500)
Deduct Non-Capital Losses from
other years	—	69,275	—	—
Personal Deductions, CPP, etc.	—	3,414	3,170	—
Net Income (loss) Reported	($24,425)	$1,558	—	($119,500)

SCHEDULE B

DAVID INGRAM v. THE MINISTER OF NATIONAL REVENUE INCOME TAX APPEALS

Income according to assessments

issued by M.N.R. on May 5, 1986,

and December 7, 1987.	1979	1980	1981	1982
1. Shareholder appropriations
from Dupli-Cat	$12,048 $ 1,400			—
			—
2. Shareholder appropriations
from Cen-Ta	8,086	48,434	$131,198	$31,541*
3. Loss from Cen-Ta Travel	—	—	(17,268)	(25,304)
4. Profit (loss) from Phase I real
estate joint venture	—	205,800	(3,836)	—
5. Profit (loss) from Phase II real
estate joint venture		—	369,735	(30,514)
6. Profit from Chilliwack proper
ties	—	17,275	—	—
7. Profit from Comox properties	—	96,751	—	—

Income according to assessments

issued by M.N.R. on May 5, 1986,

and December 7, 1987.	1979	1980	1981	1982
8. Rental Guarantee Fund			154,278	—
		—
	—
9. Net profit from sale of Condo
miniums	—			17,595
		—
			—
Total Income (Loss)	$20,134	$369,660	$634,107	(6,682)

*Penalty of $545.77 levied under subsection 163(2) of the Income Tax Act on only $13,695 of this amount.