Guy
Tremblay:—This
case
was
heard
in
Toronto,
Ontario,
on
June
26,
1979.
1.
The
Point
at
Issue
The
problem
is
whether
the
appellant
is
correct
in
claiming
against
rental
income
the
total
amounts
of
$4,162.99
for
1972,
$3,723.81
for
1973
and
$4,131.70
for
1974.
The
respondent
disallowed
$2,241.63
for
1972,
$2,119.20
for
1973
and
$1,059.36
for
1974.
The
appellant
owned
rental
properties
in
Toronto.
Moreover,
for
1973
the
appellant
claimed
a
capital
loss
on
the
sale
of
a
rental
property.
2.
Burden
of
Proof
The
burden
is
on
the
appellant
to
show
that
the
respondent’s
assessments
are
incorrect.
This
burden
of
proof
results
particularly
from
several
judicial
decisions,
including
the
judgment
delivered
by
the
Supreme
Court
of
Canada
in
R
IV
S
Johnston
v
MNR,
[1948]
CTC
195;
3
DTC
1182.
3.
The
Facts
3.01
The
appellant,
during
the
years
1972
and
1973
while
an
inspector
for
Massey-Ferguson
Industries
Ltd,
owned
rental
apartments
at
204
Sunnyside
Avenue
and
in
1974
at
65
Southport
Street,
both
in
Toronto.
3.02
In
filing
his
income
tax
return
for
the
years
under
appeal
the
appellant
claimed,
against
his
income,
the
following
expenses:
|
1972
|
$4,162.99
|
|
1973
|
$3,723.81
|
|
1974
|
$4,131.70
|
3.03
At
the
hearing,
the
appellant
withdrew
his
appeal
concerning
the
year
1974.
3.04
For
the
years
1972
and
1973
he
said
he
had
incurred
expenses
of
$11,886.19
and
$15,339.35
respectively,
but
that
in
fact
he
claimed
only
$4,162.99
(1972)
and
$3,723.81
(1973).
3.05
He
also
admitted
that
his
main
mistake
was
that
he
was
negligent
by
not
keeping
vouchers.
3.06
He
also
said
that
in
filing
his
income
tax
return,
he
had
increased
his
own
rental
income
without
reasons,
“just
because
he
was
like
that”.
However,
he
did
not
give
evidence
concerning
the
amount
of
that
increase.
3.07
In
1973,
the
appellant
sold
the
property
at
204
Sunnyside
Avenue.
In
his
appeal
he
alleged
he
spent
$80,000
for
this
property.
He
sold
it
for
$54,000.
He
claimed
a
capital
loss.
During
the
hearing
it
was
proven
that
the
property
was
purchased
in
1968.
According
to
the
appellant’s
appraiser,
the
fair
market
value
on
December
31,1971
was
$50,000.
This
fair
market
value
was
accepted
by
the
respondent.
3.08
It
was
proven
that
the
main
part
of
the
disallowed
expenses,
$2,241.63
in
1972
and
$2,119.20
in
1973,
were
capital
expenses,
especially
repairs
to
the
roof
and
the
basement.
The
amount
of
$4,000,
including
$417
in
legal
fees,
was
included
to
increase
the
capital
cost
of
$50,000
to
$54,000
so
that
there
was
no
capital
gain
and
no
terminal
loss.
In
the
first
new
reassessment,
the
respondent
had
calculated
a
capital
gain
of
$2,858
but
a
new
reas-
essment
which
applied
capital
expense
to
the
capital
cost
annulled
the
capital
gain.
The
respondent
had
not
taken
into
account
depreciation
of
the
building
and,
consequently,
there
was
not
recapture.
3.09
As
Exhibits
A-1
and
A-2
the
appellant
filed
vouchers
in
support
of
what
he
said,
$11,886.19
(1972)
and
$15,339.35
(1973).
4.
Comments
4.01
The
Board
agrees
with
the
appellant
that
he
was
very
negligent
not
to
keep
the
vouchers
for
$11,886.19
and
$15,339.35.
After
a
study
of
Exhibits
A-1
and
A-2,
it
appears
that
the
greatest
part
or
amount
of
the
vouchers
filed
were
the
ones
he
claimed
in
his
return.
The
Board
has
a
serious
doubt
on
the
correctness
of
the
affirmation
of
the
appellant
to
the
effect
that
he
had
spent
so
much
money
in
two
years
on
only
one
building.
The
only
important
repairs
indeed
he
remembered
were
the
repairs
to
the
roof
and
the
repairs
to
the
basement
for
about
$2,000
each.
The
adduced
evidence
showed
that
the
greatest
part
of
the
disallowed
expenses
were
included
in
the
capital
cost
of
the
property
(paragraph
3.08).
4.02
The
appellant,
in
his
testimony,
has
not
reversed
the
burden
of
proof
he
had
on
his
shoulders.
On
the
contrary,
the
evidence
proved
that
the
assessments
issued
by
the
respondent
were
correct
and
they
must
be
maintained.
5.
Conclusion
The
appeal
is
dismissed
in
accordance
with
the
above
reasons
for
judgment.
Appeal
dismissed.
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