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(ii) a loss from the disposition of a debt or other right to receive an amount, unless the debt or right, as the case may be, was acquired by the taxpayer for the purpose of gaining or producing income from a business or property (other than exempt income) or as consideration for the disposition of capital property to a person with whom the taxpayer was dealing at arm’s length, SECTION 50: Debts established to be bad debts and shares of bankrupt corporation 50. (1) For the purposes of this subdivision, where (a) a debt owing to a taxpayer at the end of a taxation year (other than a debt owing to the taxpayer in respect of the disposition of personal-use property) is established by the taxpayer to have become a bad debt in the year, or (b) a share (other than a share received by a taxpayer as consideration in respect of the disposition of personal-use property) of the capital stock of a corporation is owned by the taxpayer at the end of a taxation year and (i) the corporation has during the year become a bankrupt, (ii) the corporation is a corporation referred to in section 6 of the Winding-up Act that is insolvent (within the meaning of that Act) and in respect of which a winding-up order under that Act has been made in the year, or (iii) at the end of the year, (A)     the corporation is insolvent, (B)     neither the corporation nor a corporation controlled by it carries on business, (C)     the fair market value of the share is nil, and (D)     it is reasonable to expect that the corporation will be dissolved or wound up and will not commence to carry on business and the taxpayer elects in the taxpayer’s return of income for the year to have this subsection apply in respect of the debt or the share, as the case may be, the taxpayer shall be deemed to have disposed of the debt or the share, as the case may be, at the end of the year for proceeds equal to nil and to have reacquired it immediately after the end of the year at a cost equal to nil. [16]         For taxpayers to be entitled to an ABIL, taxpayers must first establish that they suffered, in a given taxation year, a capital loss from the disposition of property, and the loss must be a particular kind of loss, that is, a business investment loss. [17]         A business investment loss is the amount, if any, by which the taxpayer’s capital loss for the year from a disposition after 1977 to which subsection 50(1) of the Act applies, or a debt by a Canadian-controlled private corporation that is a small business corporation. [18]         Subsection 50(1) of the Act sets out, in particular, that where a debt owing to the taxpayer at the end of a given taxation year is established by the taxpayer to have become a bad debt in the year, and the taxpayer elects in the taxpayer’s return of income to have this subsection apply in respect of the debt, the taxpayer is deemed to have disposed of the debt for proceeds equal to nil and to have reacquired it immediately after the end of the year at a cost equal to nil. [19]         To be entitled to a BIL under sections 38 and 39 of the Act, the appellant must demonstrate that he suffered a capital loss from the disposition of a property. ...

In assessing net tax to the Appellant, the Minister relied on, inter alia, the following assumptions: a)         the facts stated and admitted above; b)         during the period October 6, 2003 to December 31, 2004, the Appellant operated a business in a 50/50 partnership with another individual (the “Partnership”); c)         the Partnership’s business activities included roofing and handy-man jobs; d)         the Partnership is a GST registrant with GST Registration no. 87485 2908 RT0001; e)         the Partnership was required by the Act to file its GST returns on an annual basis; f)         the Partnership was required to charge and collect GST on the value of the consideration received from his customers for the supply of roofing services and handy-man jobs at the rate of 7% between October 6, 2003 and December 31, 2004; g)         between October 6, 2003 and December 31, 2004, the Partnership was required to charge and collect GST of not less than $16,745.75 from its customers; h)         neither the Appellant nor the Partnership maintained proper books and records for the business; i)          neither the Partnership nor the Appellant had any documentation to support input tax credits (“ITC’s”) claimed for the periods under the appeal; j)          Alpine Roofing was the Partnership’s major client; k)         Alpine Roofing supplied the Partnership with all of the materials needed to do the jobs; l)          the Partnership claimed ITCs for GST allegedly paid on expenses which were not incurred by it during the periods under appeal, or if incurred, were not incurred in relation to its commercial activities; m)        neither the Partnership nor the Appellant are entitled to ITC’s in excess of the amounts already allowed by the Minister, which is $824.23 in respect of the reporting period ended December 31, 2004 and $182.11 for the period ended December 31, 2003; and n)         the Partnership was required to remit net tax of not less than $11,745.20 for the period ended December 31, 2004 and $3,994.21 for the period ended December 31, 2003. GST charged and collected [29]         The respondent argued that the partnership had to charge and collect GST on the value of the consideration received form his customers for the supply of roofing services and handy man jobs at the rate of 7%. ...

As a result, he has not displaced the Minister’s assumption that there were no donations. [15]         I set out below some of the considerations which lead me to this conclusion; taken individually, these considerations might not lead to the same conclusion. ...

Justice Sopinka goes on to say: Other considerations enter into the decision as to admissibility. ... Evidence that does not meet all of the preconditions to admissibility must be excluded and the trial judge need not address the more difficult and subtle considerations that arise in the “gatekeeper” phase of the admissibility inquiry.   ...

He has argued that the rules of hearsay evidence apply even though the appeal is governed by the informal procedure. [20]         The rule on evidence management in cases before the Court that are governed by the informal procedure is stated in subsection 18.15(3) of the Tax Court of Canada Act: [1] 18.15(3) Notwithstanding the provisions of the Act under which the appeal arises, the Court is not bound by any legal or technical rules of evidence in conducting a hearing and the appeal shall be dealt with by the Court as informally and expeditiously as the circumstances and considerations of fairness permit. 18.15(3) Par dérogation à la loi habilitante, la Cour n’est pas liée par les règles de preuve lors de l’audition de tels appels; ceux-ci sont entendus d’une manière informelle et le plus rapidement possible, dans la mesure où les circonstances et l’équité le permettent. [21]         This provision was recently interpreted by the Federal Court of Appeal in Madison v. ... Justice Malone stated that, in enacting section 18.15 of the Tax Court of Canada Act, parliament “did not intend to eradicate the normal rules of evidence under the Informal Procedure”. [5] He stated that, rather, the provision was intended “to provide Tax Court Judges with the necessary flexibility to enable them to deal as informally and expeditiously with an appeal as the circumstances of the case and considerations of fairness allow”. [6] [24]         Accordingly, to respond to the respondent’s argument, the rules of hearsay evidence clearly cannot be disregarded merely because the hearing was conducted under the informal procedure. ...

I note that, in reaching this conclusion, I have not given any consideration to Mr. ... I am not required to give it additional consideration. Prejudice [19]         The Respondent will be prejudiced in a way that cannot be compensated by costs if the extension of time is granted. ...

C-44);   (b)    during the period in question, the appellant was registered for the purposes of Part IX of the Excise Tax Act (hereinafter the ETA);   (c)                 the appellant operates a licensed restaurant doing business as the "Restaurant la Belle Province";   (d)                in its operations, the appellant offers quick meals for lunch and dinner at the counter, as well as breakfast with table service;   (e)                 the appellant's fiscal year begins on July 1 in a given year and finishes on June 30 the following year;   (f)                 all the supplies made by the appellant in the operation of the restaurant, a commercial activity, during the period in question were taxable supplies for which a tax, the GST, of 7% (before July 1, 2006) or 6% (after June 30, 2006) or 5% (after January 1, 2008) on the value of the consideration for the supply, was payable by the appellant's buyers, to be collected by the appellant;   (g)                since the appellant's accounting books and records, given to the Minister when required at the time of the audit, were incomplete and unclear, the Minister reconstructed the total amount of the supplies made by the appellant through an indirect audit method for the period in question;   (h)                In particular, the appellant did not retain the detailed sales registry (the "Z" tapes), there is no detailed record for the breakfasts, the bank statements were incomplete and significant gaps were detected with regard to purchases with many suppliers;   (i)                  since the books and records were hardly reliable, the Minister had to use an alternative method to reconstruct the appellant's taxable sales;   (j)                  since the cash register "Z" tapes were incomplete, the appellant's cash register was reprogrammed and the complete and detailed "Z" tapes were obtained for the period from March 29 to June 30, 2009;   (k)                these "Z" tapes were analyzed and inventoried, as shown in the auditor's worksheets attached to and included in this Reply, Annex A;   (l)                  for the audit period, the purchases from various suppliers were also analyzed:                 2007-07-01 to 2008-06-30 SUPPLIER PURCHASES NOTED CONFIRMED PURCHASES DIFFERENCE DIFFERENCE (%) Provigo $10,286.61 $10,288.61-- 0.00 Molson $433.84 $433.84-- 0.00 Multi-Marques $3,024.12 $21,530.00 $18,505.88 611.94 Agropur $1,921.18 $2,986.01 $1,064.83 55.43 Pepsi $11,603.22 $11,695.64 $92.42 0.80 Conan $13,238.17 $17,417.70 $4,179.53 31.57 Delstar $11,159.05 $19,105.46 $7,946.41 71.21 TOTAL: $51,666.19 $83,455.26 $31,789.07 61.53 2006-07-01 to 2007-06-30 SUPPLIER PURCHASES NOTED CONFIRMED PURCHASES DIFFERENCE DIFFERENCE (%) Provigo $8,217.93 $8,217.93-- 0.00 Molson $217.06 $217.06-- 0.00 Multi-Marques $6,870.08 $21,836.76 $14,966.68 217.85 Agropur $1,074.37 $3,227.69 $2,153.32 200.43 Pepsi $12,235.85 $12,299.49 $63.64 0.52 Conan $16,996.50 $36,160.03 $19,163.53 112.75 Delstar $4,755.22 $15,779.16 $11,023.94 231.83 TOTAL: $50,367.01 $97,738.12 $47,371.11 94.05 2005-07-01 to 2006-06-30 SUPPLIER PURCHASES NOTED CONFIRMED PURCHASES DIFFERENCE DIFFERENCE (%) Provigo $9,886.83 $9,886.83-- 0.00 Molson------ 0.00 Multi-Marques $5,928.18 $23,686.43 $17,758.25 299.56 Agropur $2,501.56 $3,842.94 $1,341.38 53.62 Pepsi $11,534.41 $12,442.10 $910.69 7.90 Conan $12,762.86 $28,124.79 $15,361.93 120.36 Delstar $11,433.51 $20,301.91 $8,868.40 77.56 Brasseurs GMT------ 0.00 AMD Fruits & Légumes $43.75 $43.75   0.00 TOTAL: $54,091.10 $98,331.75 $44,240.65 81.79   (m)              to reconstruct the appellant's taxable sales, three items were selected: hotdog, hamburger and submarine buns;   (n)                the resulting calculation revealed that there are significant differences between the sales reported by the appellant and the reconstructed sales, as shown in the worksheets attached to and included in this Reply, Annex B;   (o)                in the calculation of its net tax, the appellant thus failed to remit the following taxes:   PERIOD ENDING GST CALCULATED GST REPORTED GST DIFFERENCE 2009-06-30 $23,037.84 $12,219.47 $10,818.37 2008-06-30 $27,589.87 $12,462.60 $15,127.27 2007-06-30 $29,628.30 $14,701.73 $14,926.57 2006-03-30 $34,107.98 $17,174.33 $16,933.24 TOTAL $114,363.99 $56,558.13 $57,805.86   (p)                the appellant, knowingly or under circumstances amounting to gross negligence in the exercise of a duty under Part IX of the ETA, made a false statement or omission in its net tax return for the period in question by not including the amount of $57,805.86 in the calculation of the tax it reported during the period in question as GST collected or collectable;   (q)                the appellant therefore owes the Minister the amount of the adjustments made to its net tax reported for the period in question, plus interest and penalties;   [4]              The issues in this case are as follows: did the appellant fail to include GST it collected or was to collect in the amount of $57,805.86 in the net tax return filed with the Minister for the declaration periods included in the period in question and is the appellant subject to the penalty under section 285 of the ETA for $14,451.46, or 25% of $57,805.86?   ... Using the same inventory, the same number of days (93 days), the same base calculation used by the Minister and taking into consideration the 10 days the high school was closed, the average daily sales would have been $820 during the busiest period and $723 for the days included in the period that was least busy. ...

The licence was obtained by a person he knew, to whom the appellant paid a consideration for obtaining and holding the liquor licence. The same was true for the Loto-Québec video poker machines: as the appellant could not obtain the licences, someone else obtained them and the appellant paid a consideration to that person ...

The net proceeds from the sale of the immovable were also deposited in her own bank account. [12]         Sabrina Dallaire also submitted that she never received any remuneration or consideration for performing the [translation] “small service” for Alexandre St‑Pierre. [13]         During the audit, Sabrina Dallaire indicated to the Canada Revenue Agency (the CRA) that there was no nominee agreement while her agent subsequently submitted such an agreement. ... Analysis [23]         The witnesses gave contradictory and irreconcilable versions of the facts, including the consideration obtained by Sabrina Dallaire and Simon Pépin for having acted as nominees, the identity of the person who negotiated the terms of the hypothec with the bank and the identity of the person who managed the immovable. [24]         The testimony of Alexandre St-Pierre was particularly unclear and imprecise and was inconsistent with the documentary evidence such as the purchase price of the immovable, the amount of the hypothec, the amount of the monthly rents, the identity of the person who signed the leases and who collected the rents, the selling price of the immovable and the amount of the profit realized upon the sale of the immovable. [25]         No explanation was provided as to why the notary handling the sale of the immovable only issued one cheque made payable Sabrina Dallaire when she only had an undivided 50% interest in the immovable. ...

The net proceeds from the sale of the immovable were also deposited in her own bank account. [12]      Sabrina Dallaire also submitted that she never received any remuneration or consideration for performing the [Translation] “small service” for Alexandre St‑Pierre. [13]      During the audit, Sabrina Dallaire indicated to the Canada Revenue Agency (the CRA) that there was no nominee agreement while her agent subsequently submitted such an agreement. ... Analysis [23]      The witnesses gave contradictory and irreconcilable versions of the facts, including the consideration obtained by Sabrina Dallaire and Simon Pépin for having acted as nominees, the identity of the person who negotiated the terms of the hypothec with the bank and the identity of the person who managed the immovable. [24]      The testimony of Alexandre St-Pierre was particularly unclear and imprecise and was inconsistent with the documentary evidence such as the purchase price of the immovable, the amount of the hypothec, the amount of the monthly rents, the identity of the person who signed the leases and who collected the rents, the selling price of the immovable and the amount of the profit realized upon the sale of the immovable. [25]      No explanation was provided as to why the notary handling the sale of the immovable only issued one cheque made payable to Sabrina Dallaire when she only had an undivided 50% interest in the immovable. ...