Beaubier
J.T.C.C.:
-
This
matter
was
heard
at
London,
Ontario
on
May
24,
1996
pursuant
to
the
Informal
Procedure.
The
Appellant
was
the
only
witness.
The
Appellant
was
reassessed
for
his
1992
and
1991
taxation
years.
Paragraphs
5
and
6
of
the
Reply
read:
5.
By
concurrent
Notices
of
Reassessment
mailed
August
9,
1994,
the
Minister
reassessed
the
Appellant’s
1991
and
1992
taxation
years
by
disallowing
the
business
losses
and
by
adding
in
income
the
amounts
of
$1,612.00
and
$812.00
respectively
as
Goods
and
Services
Tax
refunds
received
in
the
said
years
in
respect
of
the
purported
business.
6.
In
so
reassessing
the
Appellant,
the
Minister
made
the
following
assumptions
of
fact:
(a)
the
facts
admitted
hereinbefore;
(b)
at
all
material
times,
the
Appellant
worked
at
a
full
time
position
with
Budd
Canada
Inc.;
(c)
at
all
relevant
times,
the
Appellant’s
spouse
also
worked
at
a
full
time
position;
(d)
in
the
1991
and
1992
taxation
years,
the
Appellant
reported
gross
sales
of
$12,791.25
and
$20,663.13,
respectively
arising
out
of
a
purported
part
time
restaurant
business
operating
from
his
house,
primarily
on
weekends;
(e)
in
the
1991
and
1992
taxation
years,
the
Appellant
also
reported
other
income
from
the
Activity
as
follows:
|
1991
|
1992
|
|
Rent
|
$9,200.00
|
$9,200.00
|
|
Food-Personal
|
$1,500.00
|
$1,500.00
|
(f)
in
the
1991
and
1992
taxation
years,
the
Appellant
reported
expenses
of
$41,894.44
and
$51,091.60,
respectively
resulting
in
losses
of
$18,303.19
and
$19,628.47;
(g)
in
the
1991
and
1992
taxation
years,
the
income
did
not
cover
the
fixed
expenses
of
the
Activity;
(h)
on
a
consistent
basis,
since
1971
the
Appellant’s
income
has
not
covered
the
fixed
expenses
of
the
Activity
and
therefore
the
Appellant
has
incurred
losses;
(i)
in
the
1991
and
1992
taxation
years,
the
Appellant
did
not
have
a
reasonable
expectation
of
profit
from
the
Activity;
(j)
expenses
in
excess
of
the
gross
income
from
the
Activity
were
not
incurred
for
the
purpose
of
gaining
or
producing
income
from
a
business
or
property;
(k)
expenses
in
excess
of
the
gross
income
from
the
Activity
were
personal
or
living
expenses
of
the
Appellant;
(l)
in
the
alternative,
the
claimed
expenses
were
not
reasonable
in
the
circumstances;
(m)
in
the
1991
and
1992
taxation
years,
the
Appellant
received
government
assistance
in
the
form
of
GST
refunds
in
the
amounts
of
$1,612.00
and
812.00,
respectively;
None
of
the
statements
quoted
were
refuted
by
the
Appellant
excepting
only
that
he
stated
to
the
Court
that
there
was
a
recent
hearing
before
the
Court
respecting
GST
and
that
he
was
liable
for
an
amount
in
excess
of
$1,000
as
a
result
of
that.
The
evidence
also
established
that
in
1991
the
Appellant
deducted
capital
payments
on
a
mortgage,
personal
household
costs
for
property
taxes,
insurance,
hydro,
telephone,
heat,
and
other
items.
His
alleged
vehicle
expenses
incurred
for
business
are
excessively
high.
He
used
repetitive
round
numbers
over
a
series
of
years
in
filing
his
business
statements
attached
to
his
income
tax
return.
The
Appellant
began
his
restaurant
“business”
attached
to
his
home
in
1971.
He
had
no
net
profit
until
1994.
No
depreciation
has
yet
been
charged
that
is
in
evidence.
To
use
the
words
of
the
Federal
Court
of
Appeal
in
Tonn
v.
R.,
[1996]
1
C.T.C.
205,
96
D.T.C.
6001
at
6013,
the
extent
of
the
deductions
are
questionable
on
their
face.
There
is
a
personal
element
in
evidence
and
everything
about
the
Appellant’s
financial
statements
in
these
years
is
suspicious.
On
the
evidence
before
the
Court,
the
Appellant
was
deducting
amounts
paid
on
account
of
capital
as
a
business
expenses,
he
was
deducting
personal
expenses
as
business
expenses,
and
many
of
his
figures
are
not
accepted
by
the
Court.
Upon
a
review
of
the
statements
of
business
expenses
filed
in
the
years
in
question,
the
evidence,
and
the
demeanour
and
conduct
of
the
Appellant,
it
is
the
Court’s
view
that
the
Appellant
is
fortunate
that
he
was
merely
reassessed
in
the
manner
he
was.
The
appeals
are
dismissed.
Appeals
were
dismissed.
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