Bowman T.C.J.:
1 I signed and issued the judgment in this matter on the assumption that no further submissions would be received from counsel for the appellant on the question of the amount to be deleted from Mr. Molinaro's income as the result of $1,500,000 having been included twice. Counsel for the appellant communicated with the court and explained that, for a number of reasons, he had been delayed in preparing written submissions and that he intended to do so. I accept that the delay was understandable. Counsel sent his written submissions to the court.
2 I do not think that I am entitled to re-open my judgment. The matter does not fall with the slip rule contained in sections 168 or 172 of the Tax Court Rules. In deference, however, to counsel I shall deal briefly with his submissions.
3 Even if it were open to me to amend my judgment, I would not be prepared to do so simply because I am in respectful disagreement with counsel's submissions. I do not consider it necessary to call upon counsel for the respondent.
4 Counsel for the appellant argues as follows in support of his contention that the amount to be deleted from Mr. Molinaro's income should be $750,000 and not $1,500,000, as suggested by the respondent:(a) the $1,500,000 in question was recognized by Bluevest as proceeds of disposition;
(b) Bluevest performed a capital gains calculation on the basis that the proceeds of disposition (less, I assume, its costs) were 50% income and 50% were to be included in its capital dividend account;
- (c) if the $1,500,000 paid by Catelli to Mr. Molinaro is not proceeds of disposition but rather salary paid by Catelli it follows that:
(i) Bluevest has $1,500,000 less as proceeds of disposition;
(ii) there is $750,000 less in Bluevest's capital dividend account;
(iii) there is $750,000 less to bonus to Mr. Molinaro;
(iv) if there is $750,000 less to bonus to Mr. Molinaro, then his income should only be reduced by $750,000;
(d) therefore, it is contended that to reverse $1,500,000 of the appellant's income, it would decrease Bluevest's bonus paid by $1,500,000 and therefore increase Bluevest's income by $1,500,000. For this to be true, it would mean that Bluevest would have had to have received $3,000,000 in proceeds, not $1,500,000.
5 With respect, I do not think that either the logic or the economics of this reasoning holds water. Many of the consequences are substantially those set out in paragraph 34 of my reasons. The fact of the matter is Mr. Molinaro received $1,500,000 in salary from Catelli and he is being taxed on it in the three years in question. Originally, he was taxed on a bonus of $4,000,000 from Bluevest, but the deletion of $1,500,000 from this amount reduces the amount taxable from Bluevest to $2,500,000, thereby eliminating the element of double taxation in Mr. Molinaro's hands.
6 The premise of counsel's argument is that the result of $1,500,000, in effect, bypassing Bluevest reduces its proceeds of disposition, its capital gain, its taxable capital gain and its capital dividend account. It reduces as well the amount deductible as bonus. I daresay this is true, but it is an inevitable effect on Bluevest, which is not before me. It cannot affect the calculation of Mr. Molinaro's income. To delete only $750,000 from Mr. Molinaro's income, rather than $1,500,000 is an obvious detriment to the appellant, but it does not accord with the facts and is, I presume, intended to have an overall beneficial effect on Bluevest's various accounts, the calculation of which was originally based upon an erroneous assumption that Mr. Molinaro's salary was proceeds of disposition. That is not a reason to distort Mr. Molinaro's income.
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