The
Chairman
(orally):—This
is
an
appeal
by
Gottfried
Pfisterer
from
a
reassessment
of
the
Minister
for
the
taxation
year
1969
wherein
the
Minister
has
made
a
substantially
different
interpretation
and
ap-
lication
of
paragraph
27(1
)(e)
than
has
the
taxpayer
in
computing
his
taxable
income
for
that
taxation
year.
The
appellant
produces
a
very
ingenious
argument
and
one
that
gives
the
Board
much
concern.
The
sections
dealt
with
under
the
various
arguments
by
the
Minister’s
counsel
are
section
3,
being
the
closest
thing
to
a
definition
of
“income”
in
the
Act,
and
paragraph
139(1)(x),
which
is
the
statutory
definition
of
“loss”
contained
in
the
Act,
and
the
interpretation
which
the
Minister
places
on
clause
27(1
)(e)(iii)(A).
The
situation
arises
out
of
the
fact
that
the
appellant
apparently
is
engaged
in
ventures
that
provide
him
with
two
sources
of
income,
one
as
a
sole
proprietor
and
the
other
as
a
partner
in
a
partnership
known
as
Conestoga
Sales
Acceptance
Syndicate.
Only
his
loss
in
that
partnership
is
in
question
and
no
dispute
arises
as
to
the
figures
contained
in
the
calculations.
The
appellant
is
represented
by
his
son,
who
presents
the
argument
as
an
accountant,
and,
as
I
have
said,
in
a
very
persuasive
manner.
To
try
and
sum
up
his
case,
he
says
that
one
must
first
determine
the
income
under
Division
B
of
the
Income
Tax
Act,
and
not
bring
into
play
Division
C,
a
computation
of
taxable
income,
until
this
computation
under
Division
B
has
been
completed.
I
think
it
is
trite
law
to
say
that
“income”
means,
as
section
3
says,
all
income
from
all
sources,
or
world
income
as
it
is
usually
referred
to,
and
by
applying
to
it
certain
deductions
provided
in
the
Act
and
any
losses
that
may
be
incurred
in
the
taxation
year.
The
point
in
question
here
is
whether
or
not,
by
paragraph
27(1)(e),
the
taxpayer
can
“net
out”,
as
the
expression
is,
the
income,
or
if
he
must
apply
the
loss
that
he
has
available
to
carry
forward
only
to
the
income
or
positive
income
that
he
has
earned
in
the
taxation
year.
He
refers
to
clause
27(1
)(e)(iii)(A),
and
if
one
looks
at
that,
and
I
quote,
it
says:
(iii)
no
amount
is
deductible
in
respect
of
losses
from
the
income
of
any
year
except
to
the
extent
of
the
lesser
of
(A)
the
taxpayer’s
income
for
the
taxation
year
from
the
business
in
which
the
loss
was
sustained
and
his
income
for
the
taxation
year
from
any
other
business
.
.
.
In
this
situation
before
the
Board
one
of
the
ventures
of
the
taxpayer
is
making
money,
one
of
them
is
showing
a
loss.
The
taxpayer
appellant
says
that
in
computing
the
taxpayer’s
income
for
the
taxation
year
one
should
subtract
from
the
profitable
business
the
loss
from
the
unprofitable
business
before
applying
the
loss
available
for
carry
forward.
In
other
words,
he
says
that
“income”
where
it
is
used
in
clause
27(1
)(e)(iii)(A)
must
be
taken,
and
I
paraphrase
his
argument,
as
what
is
left
in
the
taxpayer’s
hands
after
he
has
taken
his
profit
from
one
business
and
deducted
his
loss
from
another
business.
The
Minister,
on
the
other
hand,
says
that
that
would
in
effect
give
rise
to
the
taxation
of
negative
income,
which,
of
course,
would
be
contrary,
in
my
view,
to
the
purpose
of
the
Act.
I
think
it
is
quite
clear
that
Parliament,
in
assembling
the
Income
Tax
Act
and
its
various
amendments
from
time
to
time,
had
in
mind
taxing
the
moneys
in
the
hands
of
the
taxpayer
after
certain
specific
deductions
and
exemptions
were
allowed
to
the
taxpayer
as
specified
in
the
Income
Tax
Act.
It
is
also
trite
law
to
say
that
a
taxpayer
is
entitled
to
avoid
the
payment
of
tax,
and
it
is
quite
legal
to
do
so,
as
distinguished
from
evading
the
payment
of
tax,
provided
he
can
bring
himself
within
the
confines
of
the
sections
upon
which
he
relies.
In
my
view,
ingenious
although
the
argument
of
the
appellant
is
in
this
case,
and
logical
though
it
may
seem
on
presentation
and
on
reflection,
it
is
in
my
view
not
sufficient
to
disturb
the
obvious
intent
of
Parliament
in
taxing
positive
income
in
the
hands
of
the
taxpayer.
In
my
view
there
could
be
no
interpretation
of
section
3,
or
any
section
for
that
matter
in
the
Income
Tax
Act,
to
mean
that
Parliament
intended
the
taxation
of
a
minus
figure
in
the
hands
of
the
taxpayer
for
a
given
year.
I
think,
therefore,
the
interpretation
of
clause
27(1
)(e)(iii)(A)
means
exactly
what
it
says,
and
that
the
second
reference
to
“income”
in
that
section
refers
to
a
positive
income,
and
that
the
taxpayer
has
not
discharged
the
onus
upon
him
to
show
that
the
Minister’s
assessment
is
wrong
in
law
or
in
fact.
The
appeal
for
these
reasons
must,
therefore,
be
dismissed.
Appeal
dismissed.
Email this Content