Hamlyn T.C.J.:
1 These are appeals for the 1988, 1989 and 1990 taxation years.
2 In computing income for the 1988, 1989 and 1990 taxation years, the Appellant deducted business losses in the amounts of $2,327, $12,460 and $12,431 respectively and deducted professional losses in the amounts of $4,951, $7,014 and $3,189 respectively.
3 In assessing the Appellant for the 1988, 1989 and 1990 taxation years, Notices of Assessment thereof mailed August 1, 1989, July 24, 1990 and September 9, 1991 respectively, the Minister of National Revenue (the “Minister”) allowed the business losses and professional losses as filed.
4 In reassessing the Appellant for the 1988, 1989 and 1990 taxation years, concurrent Notices of Reassessment thereof mailed December 18, 1992, the Minister disallowed the business losses and professional losses.
5 In further reassessing the Appellant pursuant to subsection 165(3) of the Income Tax Act (the “Act”) for the 1989 and 1990 taxation years, concurrent Notices of Reassessment thereof mailed April 24, 1995 the Minister allowed business losses in the amount of $220 and $7,666.
6 In reassessing the Appellant, the Minister made the following assumptions of fact:
Business Losses
(d) in the 1988, 1989 and 1990 taxation years, the Appellant reported gross business income and deducted expenses arising out of the Business, as follows:
| 1988 | 1989 | 1990 | |
|---|
| Gross Income | $ 900 | $ 1,952 | $ 4,990 |
| Expenses | ( 5,851) | (14,412) | (17,421) |
| Net Business Loss | ($4,951) | ($12,460) | ($12,431) |
(f) in the 1988, 1989 and 1990 taxation years, the Appellant incurred expenses in respect of the Business totalling $2,285.53, $2,173.00 and $12,656.56,...
(g) the expenses, in excess of the amounts i.e. $2,285.53, $2,173.00 and $12,656.56 allowed by the Minister in the 1988, 1989 and 1990 taxation years, were not made or incurred, or if made or incurred, were not made or incurred for the purpose of gaining or producing income from a business or property but were personal or living expenses of the Appellant;
Professional Losses
(j) in the 1988, 1989 and 1990 taxation years, the Appellant reported gross income and deducted expenses arising out of the Activity, as follows:
| 1988 | 1989 | 1990 | |
|---|
| Gross Income | $ 5,849 | $ 4,687 | $ 2,426 |
| Expenses | (8,176) | (11,701) | (5,615) |
| Net Loss | ($2,327) | ($7,014) | ($3,189) |
(l) in the 1988 taxation year, the Appellant incurred expenses in respect of the Activity totalling $3,196.47,...
(n) the disallowed expenses in respect of the Activity were not made or incurred, or if made or incurred, were not made or incurred for the purpose of gaining or producing income from a business or property but were personal or living expenses of the Appellant.
Issues
7 The issues are:(i) whether the Appellant was entitled to deduct expenses in respect of North Force Kennels in excess of $2,285.53, $2,173.00 and $12,656.56 in the 1988, 1989 and 1990 taxation years, respectively;
(ii) whether the Appellant had a reasonable expectation of profit from North Force Sales and Service in the 1988, 1989 and 1990 taxation years;
(iii) whether the disallowed expenses in respect of North Force Sales and Service were incurred for the purpose of gaining or producing income from a business or property, or were personal or living expenses of the Appellant; and
(iv) in the alternative, whether the disallowed expenses in respect of North Force Kennels and North Force Sales and Service were reasonable in the circumstances.
The Evidence
8 Essentially, the Appellant's evidence focussed on statements by the Appellant as to his training, character and hard working history. The Appellant also stated he hired professionals to prepare the tax returns as records and record keeping were not his strength. Further, the Appellant stated that certain personal events delayed his responses to Revenue Canada's request for information and documentation. The conclusion of the responses to Revenue Canada is that documentation to support several of the expenses could not be produced for whatever reason. Moreover, it would appear that from the Appellant's point of view the faith and trust he placed in the tax return preparers and other consultants was misplaced and he was badly served. In summary, notwithstanding the deficiencies in evidence, the Appellant assured the Court that his intention was to operate his businesses as businesses and he expected to earn income from his endeavours.
Observation
9 The Minister's pleaded assumptions, when at variance with the Appellant's view, must be met with specifics to support the Appellant's position. Unfortunately, those specifics have not been provided by the Appellant to the Court in relation to the operation of North Force Kennels or North Force Sales and Service.
Conclusion
10 A basic feature of the Canadian tax system is that taxpayers are relied upon to voluntarily report their income for each taxation year and to estimate the tax payable thereon. One of the results of this self-assessing system is that the taxpayer has the burden of proving that an assessment is incorrect because it is assumed that the taxpayer has all of the basic data under his or her control upon which a correct assessment can be made. This rule has been reinforced by subsection 230(1) of the Act which clearly states that the onus is on the taxpayer to keep records and books of a business in such form that the Minister can properly determine taxes payable under the Act.
11 My response to the material filed by the Appellant and the evidence presented to this Court is that it shows that the Appellant is an upstanding citizen and in no way implies that he was attempting to defraud Revenue Canada. However, I have seen nothing that objectively proves the disputed expenses or the disputed assumptions claimed by the Appellant.
12 It is obvious that neither the Appellant nor his agent are accountants and that they, like many people, put their trust and faith in people that held themselves out to be experts in the field. It was the advice received from these experts that the Appellant followed in filing his tax returns and upon which he has based his appeals. However, on appeal to this Court, the Appellant did not or could not call upon those advisors and consultants to give evidence which may have helped substantiate his claims. As I have stated earlier, Canada has a self-assessing tax system and therefore certain responsibilities are placed on the taxpayer. In the present appeals Revenue Canada made numerous requests for books and records relating to the Appellant's tax returns. Although I understand and have sympathy for the Appellant's predicament, based on the evidence brought before me, there is no basis which would allow me to alter or adjust the Appellant's latest tax reassessment.
Decision
13 Therefore, I have no choice but to dismiss the appeals.
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