Freddy Yousfan v. Her Majesty the Queen, [1996] 3 CTC 2818 (Informal Procedure)

St-Onge J.T.C.C. (orally): - The appeal of Freddy Yousfan was heard on the twenty-ninth (29th) of July nineteen ninety-six (1996) in the city of Montreal, province of Quebec, and the issue is to know if the appellant can prove his expenses of three thousand eight hundred and eighty-five dollars ($3,885), three thousand six hundred and twenty dollars ($3,620) and four thousand eight hundred and fifteen dollars ($4,815) for the nineteen ninety- one (1991), ninety-two (’92) and ninety-three (’93) taxation years respectively.

The Minister did refuse these expenses and in his reply made the following assumptions of facts.

On July 6th 1995, the Minister of National Revenue (the “minister”) reassessed the Appellant for the 1991, 1992 and 1993 taxation years by adding to income employment income of $12,940, $12,044 and $13,750 respectively, disallowing taxable capital gains of $17,625 and $16,406 for the 1991 and 1993 taxation years respectively and reducing the capital gain deduction to $0 for the 1991 and 1993 taxation years.

3. On September 6th 1995, the Appellant filed a Notice of Objection to the notice of reassessment dated July 6th 1995, by claiming motor vehicle expenses and entertaining expenses for a total of $3,885, $3,620 and $4,815 which had not originally been declared as a deduction from income for the 1991, 1992 and 1993 taxation years respectively.

4. On December 21st 1995, the Minister confirmed that the expenses claimed of $3,885, $3,620 and $4,815 for the 1991, 1992 and 1993 taxation years respectively are not allowed as a deduction from income.

5. The minister takes note that the appellant’s appeal of 22nd January 1996 concerns only the expenses claimed as mentioned above in paragraph 3 for the 1991, 1992 and 1993 taxation years.

6. In refusing to allow the expenses claimed in the Notice of Objection on September 6th 1995, as mentioned above in paragraph 3, the Minister made the following assumptions of fact :

(a) the Appellant worked for a company called “Vitalizing Dry Cleaner’s Inc.” preparing cash receipts and disbursements;

(b) the Appellant was not able to provide any invoices in order to support the expenses claimed;

(c) the Appellant admits that he did not keep invoices to support the expenses claimed;

(d) the Appellant did not demonstrate that the expenses mentioned above in paragraph 3 were incurred in order to earn employment income under paragraphs 8(1 )f), 8(1 )h. 1 ) and 8(1 )j) of the Income Tax Act (the “Act”).

At the hearing, the Appellant admits paragraph 2 to paragraph 5 inclusive and denies paragraph 6 of the reply.

According to the evidence adduced, the Appellant did receive twelve thousand nine hundred and forty dollars ($12,940), twelve thousand forty- four dollars ($12,044) and thirteen thousand seven hundred and fifty dollars ($13,750) for the years nineteen ninety-one (1991), ninety-two (’92) and ninety-three (’93) respectively, and was unable to provide any invoices to show that the expenses were incurred to earn income under paragraph 8(1 )f), 8(1 )h. 1) and 8(1 )g) of the Income Tax Act.

The Appellant testified that he did work for his father with his personal vehicle and his principal occupation was to deliver to customers of Vitalizing Dry Cleaners Inc. and to get parts to repair the machinery of the company.

René Gagné, one of the four (4) employees of the company was preparing cash receipts and disbursements. The Appellant’s father and his accountant, did prepare the Appellant’s income tax returns that he signed without any question.

There was no T-2200 form prepared as required by subsection 8(10) of the Act. The Appellant had the onus to prove his expenses and did not even recall having signed documents that were shown to him.

He knew that he had to declare his non-taxable capital gain and did not declare his income.

The Appellant’s father testified that he did not show any income in the Appellant’s income tax returns because the Appellant incurred more expenses than income in every year, but there is no evidence whatsoever in that respect, except their testimonies that are not too convincing.

The Appellant who was twenty-five (25) years old in nineteen ninety- one (1991) went to McGill University to follow a business and accounting course, and signed three (3) income tax returns and other documents without any discussion.

The amounts claimed as expenses are just from memories, far from accurate and were not even incurred in the case of hotel and meal expenses. The evidence has also shown that the father, during the year under discussions, was the owner of a van and some eight hundred dollars ($800) a month were deducted as expenses for that van.

It is more logical to think that the van was used for delivery and not the Appellant’s car, it is why it was impossible to comply with subsection 8(10) of the Act and that the Appellant who had the onus to prove his expenses for his car failed to do so.

In his appeal, the Appellant did not contest the penalties, consequently the Appellant remains penalized on his total amount of undeclared incomes. For all these reasons, the appeal is dismissed.

Appeal dismissed.