Lamarre T.C.J.:
1 These are appeals under the informal procedure from the assessments made by the Minister of National Revenue (“Minister”) against the appellant for the 1991, 1992 and 1993 taxation years. By these assessments, the Minister disallowed the appellant's deduction for net business losses in the amounts of $3,644 for 1991 and $4,940 for 1992. The Minister also disallowed the appellant a married equivalent tax credit for the 1992 and 1993 taxation years in the amount of $5,380 for each of these years. Lastly, the Minister disallowed the appellant a tuition fees tax credit in the amount of $752 and an education tax credit in the amount of $400 for the 1992 taxation year.
2 In making his assessments, the Minister relied on the facts described in paragraph 10 of the Reply to the Notice of Appeal which reads as follows:
[TRANSLATION]
10. Net business losses:
Married equivalent tax credit
(g) for the 1992 and 1993 taxation years, the Spouse's net income was $14,243 and $8,053 respectively;
Tuition fees tax credit:
Education tax credit:
3 However, in paragraph 11 of the Reply to the Notice of Appeal, the Minister now concedes that the appellant was entitled to $5,380 in computing the married equivalent tax credit for 1992.
4 The appellant and Georges Desroches, an investigator with Revenue Canada, testified at the hearing.
Net business losses
5 The Minister argued that the appellant did not operate a business during the 1991 and 1992 taxation years. The appellant did not claim any loss in the 1993 taxation year.
6 The appellant claimed that he operated a business during these years under the name Maxi Cleaning Services Ltd. He stated that the business had been in existence since July 20, 1990. In support of his testimony, he filed in evidence a form registering his business with the name “Maxi Cleaning” (Exhibit A-2) under the Business Names Act. I noted that this form is dated November 1, 1996 and that, in response to question No. 1 on the form, it is indicated that this is a new registration. The appellant argued in his testimony that this was a renewal.
7 Counsel for the Minister filed in evidence three documents (Exhibits I-4, I-5 and I-6) which show that the appellant obtained financing to start a new business under the name “Maxi Cleaner” (Exhibit I-4) on July 12, 1994. In order to obtain this funding, the appellant was required to complete a small business training course, which he did on October 1, 1994 as shown by the certificate issued by the Association of Colleges of Applied Arts and Technology of Ontario (Exhibit I-5). The appellant allegedly obtained a second loan on November 4, 1994 for this business (Exhibit I-6).
8 All of these documents clearly show that the appellant could not have operated a business under the name of “Maxi Cleaning” during 1991, 1992 and 1993 since the financing to operate it was not obtained until 1994. Although the appellant claimed that he had remitted all of the vouchers associated with the operation of his business for the years at issue to Georges Desroches, the investigator for Revenue Canada, who denied having received this evidence, it appears clear to me that the appellant could not deduct business losses since the business in question, “Maxi Cleaning”, did not yet exist. It is my view that the appellant did not show on the balance of probabilities that he incurred expenses for the purpose of earning business income during the 1991 and 1992 taxation years. Therefore, the appeals relating to this point cannot be allowed.
Married equivalent tax credit
9 Since the Minister no longer challenges the granting of this credit for the 1992 taxation year, I have only to determine whether the appellant was entitled to this credit for the 1993 taxation year. The appellant would be entitled to this credit if he met the conditions set forth in paragraph 118(l)(b) of the Income Tax Act (“Act”), which reads as follows:
118: Personal credits.
(1) For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A × B
whereA is the appropriate percentage for the year, and
B is the aggregate of,
(b) Wholly dependent person— in the case of an individual not entitled to a deduction by reason of paragraph (a) who, at any time in the year,(i) is an unmarried person or a married person who neither supported nor lived with his spouse and is not supported by his spouse, and
- (ii) whether by himself or jointly with one or more other persons, maintains a self-contained domestic establishment (in which the individual lives) and actually supports therein a person who, at that time is
(A) except in the case of a child of the individual, resident in Canada,
(B) wholly dependent for support on the individual, or the individual and such other person or persons, as the case may be,
(C) related to the individual, and
(D) except in the case of a parent or grandparent of the individual, either under 18 years of age or so dependent by reason of mental or physical infirmity,
an amount equal to the aggregate of(iii) $6,000, and
(iv) an amount determined by the formula
$5,000 - (D - $500)
where
D is the greater of $500 and the income for the year of the dependent person;
10 The appellant admitted that, in 1993, he was married to Marie-Josée Joseph, he lived with her and the latter had a net income of $8,053 during the 1993 taxation year. He did not show that he supported her during that year. For these reasons, the appellant is not entitled to the married equivalent tax credit for his daughter Barbara for 1993 because he does not meet the conditions set forth in paragraph 118(1)(b) of the Act.
Tuition fees tax credit and education tax credit
11 The appellant would be entitled to this credit for the 1992 taxation year if he met the conditions set forth in paragraph 118.5(1)(a) and subsection 118.6(2) of the Act which read as follows:
118.5: Tuition credit.
(1) For the purpose of computing the tax payable under this Part by an individual For a taxation year, there may be deducted,- (a) where the individual was during the year a student enrolled at an educational institution in Canada that is
(i) a university, college or other educational institution providing courses at a post-secondary school level, or
(ii) certified by he Minister of Employment and Immigration to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improves a person's skills in, an occupation,
(i.1) are paid to an educational institution described in subparagraph (i) in respect of courses that are not at the post-secondary school level,
- (ii.2) are paid to an educational institution described in subparagraph (ii), if
(A) the individual had not attained the age of 16 years before the end of the year, or
(B) the purpose o the individual's enrolment at the institution cannot reasonably be regarded as being to provide the individual with skills, or improve the individual's skills, in an occupation,
- (iii) are paid on his behalf by his employer and are not included in computing his income,
(iii.1) are fees in respect of which the individual is or was entitled to receive a reimbursement or any form of assistance under a program of Her Majesty in right of Canada or a province designed to facilitate entry or re-entry of workers into the labour force, where the amount of the reimbursement or assistance is not included in computing the individual's income, or
(iv) were included as part of an allowance received by his parent on his behalf from an employer and are not included in computing the income of his parent by reason of subparagraph 6(1)(b)(ix);
118.6(2) Education credit. For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula
A × $80 × B
whereA is the appropriate percentage for the year, and
B is the number of months in the year during which the individual is enrolled in a qualifying educational program as a full-time student at a designated educational institution, if such enrolment is proven by filing with the Minister a certificate in prescribed form issued by the designated educational institution and containing prescribed information and, in respect of a designated educational institution described in subparagraph (a)(ii) of the definition “designated educational institution” in subsection (1), the student is enrolled in the program to obtain skills for, or improve his skills in, an occupation.
12 The appellant filed in evidence “two monthly progress reports” from the pre-college school level for 1992 (Exhibit A-1). He also filed a copy of a letter from the Cité Collégiale dated April 10, 1992 indicating that the appellant had completed certain levels or modules in Level IV mathematics. Level IV French and Level III sciences. He also filed with the Registry of the Court, the day after the hearing, at my request, an education deduction certificate (Form T2202A) issued by the Cité Collégiale, dated February 24, 1992, indicating the periods of study and tuition fees paid for 1991 (“Certificate”).
13 The Certificate does not indicate that the appellant was taking courses in 1992. No other certificate was filed for 1992 and no proof of payment of tuition fees was adduced for that year. Moreover, the monthly reports (Exhibits A-l) filed by the appellant relate to high school studies which do not entitle him to the credit under the terms of paragraph 118.5(1)(a) of the Act.
14 For these reasons, the appellant is not entitled to the tuition fees tax credit nor the education tax credit for the 1992 taxation year. However, I noted that the appellant did not claim this credit for the 1991 taxation year. Counsel for the respondent informed the Registry of the Court by letter dated February 7, 1997 that he consented to judgment being rendered declaring that the appellant is entitled to the tuition fees tax credit and education tax credit for the 1991 taxation year in the amount and for the periods specified in the Certificate filed by the appellant.
15 The appeal from the assessment made for the 1993 taxation year is therefore dismissed. As for the assessment for 1992, the appeal is allowed solely with respect to the fact that the appellant is entitled to the married equivalent tax credit in the amount of $5,380. In all other respects, the assessment made for the 1992 taxation year will not be varied. As for the assessment made for the 1991 taxation year, the appeal is allowed to the extent that the appellant is entitled to the tuition fees tax credit and the education tax credit in the amount and for the periods specified in the Certificate filed by the appellant. In all other respects, the assessment issued for the 1991 taxation year will not be varied.
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