Taylor,
T.CJ.:—These
are
appeals
heard
in
London,
Ontario,
on
October
23,
1990,
against
income
tax
assessments
for
the
years
1983,
1984
and
1985
in
which
the
Minister
of
National
Revenue
assessed
the
appellant
a
stand-by
charge
for
use
of
an
automobile,
and
also
a
benefit
for
the
personal
use
of
a
boat.
The
appellant
is
the
president,
a
director,
employee
and
shareholder
of
Central
Chevrolet-Oldsmobile
(London)
Inc.
(“Central
Chev")
an
Ontario
corporation,
engaged
in
the
business
of
a
General
Motors
car
dealership
in
the
City
of
London.
It
was
asserted
by
the
appellant:
—
as
a
secondary
activity,
the
corporation
is
engaged
in
the
sale
of
boats;
—
in
discharging
his
duties
and
responsibilities
as
an
officer,
director
and
employee
of
Central
Chev,
a
motor
vehicle
is
made
available
to
the
appellant
from
time
to
time;
—
any
motor
vehicle
made
available
to
the
appellant
by
Central
Chev
is
made
available
for
only
a
portion
of
any
calendar
year.
This
is
due
to
the
fact
that
the
appellant
vacations
in
the
State
of
Florida
during
the
winter
months
and
does
not
have
access
to
any
motor
vehicle
owned
By
Central
Chev;
—
in
October
1985,
the
corporation
purchased
a
fibreglass
and
wood
vessel
known
as
the
"Amberdance"
for
resale
purposes.
The
vessel
was
purchased
in
the
State
of
Florida
and
following
completion
of
certain
repairs,
was
brought
to
Canada
in
the
spring
of
1986.
While
the
vessel
is
in
Canada,
it
is
docked
at
a
marina
located
in
Keswick,
Ontario
known
as
Dawson's
Marina.
The
proprietor
of
this
Marina
has
been
the
agent/broker
for
Central
Chev
concerning
the
sale
of
this
vessel;
—
while
the
vessel
has
been
for
sale
it
has
also
been
used
to
promote
business
contacts
and
to
assist
in
obtaining
new
business
for
the
corporation;
—
the
personal
use
of
the
vessel
is
very
infrequent
and
does
not
in
any
manner
represent
the
personal
use
attributed
him
by
the
Minister.
The
position
of
the
respondent
was:
—
the
appellant
had
use
of
a
company
automobile
twelve
months
each
year;
—
the
boat
was
acquired
for
the
personal
use
of
the
appellant
and
his
family;
—
the
stand-by
charge
for
the
automobile
should
be
assessed
under
paragraph
6(1)(e)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
not
under
subsection
6(2)
of
the
Act;
—
the
benefit
from
the
use
of
the
boat
should
be
assessed
under
subsection
15(1)
of
the
Act.
Much
of
the
evidence
and
testimony
centred
around
the
use
Mr.
McCoy
made
of
the
automobile—whether
in
the
business
of
selling
cars
when
he
was
acting
as
a
salesman,
or
in
the
more
general
sense,
as
an
executive
of
Central
Chev.
There
was
considerable
discussion
also
about
the
time
and
length
of
stay
on
winter
vacation
in
Florida,
which
seemed
to
vary
from
year
to
year.
It
was
the
view
of
Mr.
McCoy
that
while
in
Florida
he
had
only
occasional
use
for
an
automobile
and
then
rented
one.
He
did
not
recall
ever
taking
one
of
the
company
automobiles
assigned
to
him
to
Florida.
The
documents
dealing
with
the
acquisition,
storage,
transportation
and
use
of
the
boat
"Amberdance"
were
entered,
and
these
included
a
“shiplog”
showing
dates,
times
and
when
applicable,
passengers.
Mr.
McCoy
stated
that
in
certain
instances
the
use
of
the
vessel
was
entirely
personal,
and
at
other
times
there
was
a
business
connotation,
due
to
the
guests
he
may
have
had
on
board
the
vessel.
Analysis
First
issue—automobile
In
my
view,
it
comes
down
to
the
purpose
for
which
Central
Chev
would
have
provided
an
automobile
to
the
appellant.
I
can
only
think
of
one
reason—
that
the
appellant's
use
of
the
automobile
in,
around
and
outside
of
the
dealership
directly
or
indirectly
would
have
had
a
beneficial
effect
on
the
main.
purpose
of
the
dealership—to
sell
automobiles.
Some
minor
part
of
the
time
and
effort
of
Mr.
McCoy
might
have
been
spent
on
the
activities
of
Central
Chev
related
to
the
repair
and
servicing
of
automobiles
and
certainly
he
did
have
some
administrative
duties,
but
that
does
not
affect
my
decision
on
this
point.
Mr.
McCoy
should
be
entitled
to
treatment
under
the
Act
similar
to
that
accorded
to
his
salesmen.
As
I
see
it,
he
would
have
been
the
prime
salesman,
probably
day
and
night,
whether
he
took
credit
for
specific
sales
or
not.
Therefore,
during
the
time
Mr.
McCoy
was
in
Canada,
I
am
satisfied
he
should
be
entitled
to
the
use
of
an
automobile
as
portrayed
under
subsection
6(2.1)
of
the
Act
as
requested
by
his
counsel
in
this
appeal.
Dealing
with
the
phrase
above
"the
time
Mr.
McCoy
spent
in
Canada"
brings
into
play
the
fact
that,
as
I
see
it,
he
spends
on
the
average
about
four
months
of
each
year
in
Florida.
His
testimony
is
that
he
does
not
require
an
automobile
down
there,
and
when
he
needs
one,
he
rents
one.
There
is
some
limited
evidence—receipts
for
gasoline
purchases—that
one
of
his
automobiles
was
used
on
a
trip
in
the
U.S.A.,
possibly
even
in
Florida
in
April
1984.
It
is
possible,
maybe
likely,
that
in
the
year
1984
Mr.
McCoy
did
have
his
automobile
in
Florida
during
even
the
four
winter
months
when
he
was
on
vacation.
But
that
is
not
certain,
and
in
any
event
I
would
not
be
surprised
that
even
during
that
period
of
time
he
was
engaged
to
some
degree
in
attempting
to
interest
his
Canadian
friends
and
acquaintances
in
buying
cars
from
him.
The
end
result
is
that
Mr.
McCoy
should
be
assessed
on
the
basis
that
for
the
years
1983,
1984
and
1985
he
was
provided
with
an
automobile
from
Central
Chev
for
periods
of
eight
months
in
each
year,
as
a
salesman
covered
by
subsection
6(2.1)
of
the
Act.
There
should
be
no
charge
made
for
personal
use
of
any
of
the
company's
vehicles
for
the
other
four
months
when
he
was
in
Florida.
Second
issue—vessel
Turning
then
to
the
second
part
of
this
appeal—the
charges
made
for
the
personal
use
of
the
vessel
"Amberdance",
it
seems
to
me
that
question
deserves
little
more
attention
than
was
required
for
the
automobile
issue
above.
The
proposition
of
the
appellant
was
that
the
vessel
was
acquired
for
the
purpose
of
selling
it—a
business
venture
with
the
reasonable
expectation
of
profit.
I
do
not
agree.
There
is
no
serious
evidence
that
this
was
really
the
purpose
of
the
acquisition,
and
indeed
if
there
was
the
slightest
reason
to
consider
such
a
venture
as
a
viable
one,
it
was
not
demonstrated
to
me.
That
leaves
only
two
possible
purposes
for
the
acquisition—as
an
asset
of
Central
Chev,
presumably
for
the
purpose
of
entertaining
clients—allegedly
business
clients;
or
as
a
personal
asset,
albeit
paid
for
out
of
corporation's
funds,
and
at
least
at
certain
times
listed
in
the
corporate
name.
I
am
quite
satisfied
that
there
was
no
"Central
Chev"
business
purpose
worthy
of
note
for
the
vessel—
even
though
some
effort
was
made
at
the
trial
to
highlight
the
"business"
use
of
the
vessel.
Rather,
it
is
my
view
that
the
vessel
was
acquired
as
a
personal
use
asset—even
though
its
operation
and
utility
were
somewhat
clouded
by
the
asserted
attempts
to
sell
it
or
use
it
in
Central
Chev.
Any
valid
deductions
for
its
use
for
business
corporate
purposes
would
have
been
minimal
indeed.
I
have
already
expressed
my
view
with
regard
to
the
use
of
corporate
funds
for
largely
personal
purposes
in
the
case
of
Houle
v.
M.N.R.,
[1982]
C.T.C.
2218;
82
D.T.C.
1208
at
page
2225
(D.T.C.
1213):
As
I
see
it,
when
a
corporate
expenditure
is
of
value
only
to
a
shareholder,
it
is
the
capital
cost,
not
an
annual
charge
related
to
that
capital
cost
which
is
at
issue
under
section
15
of
the
Act.
In
a
similar
situation
where
the
asset
was
of
value
primarily
to
the
shareholder
as
contrasted
with
the
corporation
the
same
result
might
well
obtain.
I
find
no
merit
in
an
argument
that
where
there
is
little
utilization
of
the
asset
by,
either
party
(and
the
proportionate
numbers
in
this
case
would
be
an
example),
the
tax
impact
of
the
capital
cost,
the
return
on
investment,
or
the
depreciation
charges,
as
the
case
may
be,
for
the
idle
time,
should
automatically,
be
borne
by,
the
corporation
rather
than
by,
the
shareholder.
Section
15
of
the
Act
is
designed
to
prevent
benefits
to
shareholders,
not
to
provide
them,
as
I
read
the
words.
That
case
was
dealt
with
on
appeal
to
the
Federal
Court
in
The
Queen
v.
Houle,
[1983]
C.T.C.
406;
83
D.T.C.
5430,
but
no
comment
was
apparently
required
by
the
learned
judge
at
that
time
regarding
the
above
opinion.
In
my
view,
the
charge
of
$4,667
made
in
the
year
1985
for
use
of
the
vessel
by
the
appellant
is
modest
indeed,
and
should
not
be
disturbed
by
this
Court.
In
the
end
result
the
appeal
is
allowed
in
order
that
the
stand-by
charge
as
covered
under
subsection
6(2.1)
of
the
Act
applies
to
Mr.
McCoy
for
periods
of
eight
months
in
each
of
the
three
years
under
appeal.
In
all
other
respects
the
appeals
are
dismissed.
The
appellant
is
entitled
to
total
costs
in
the
amount
of
$500.
Appeal
allowed
in
part.
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