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  [16]     By Notice of Reassessment No. 05EP118109081 dated April 22, 2004, the Minister considered this documentation and varied the original assessment as follows:   Net tax             $61,903.73 Interest $12,891.67 Penalties           $15,425.47   [17]     The Appellant filed a Notice of Appeal to the Tax Court.   ... They cannot succeed in that purpose unless they are considered to be mandatory requirements and strictly enforced. ...   [27]     I have carefully considered the evidence provided by Mrs. ...

  [3]               In reassessing tax for the 2000 taxation year of the appellant and in confirming that reassessment, the Minister assumed the following facts described in paragraph 8 of the reply to the notice of appeal:   a)      the Appellant and her ex-spouse, David Crone, have two (2) children of the marriage, Robert, born December 18, 1983 and Jordan, born June 10, 1986; [admitted] b)      the Appellant and David Crone, commenced living separate and apart due to their marriage breakdown on July 26, 1992, and the children’s primary residence was with the Appellant; [admitted] c)      pursuant to the Agreement, David Crone was required to pay to the Appellant periodic child support payments, in the amount of $1,200 per month/per child (with indexing), throughout the 2000 taxation year, and they were to be deductible by David Crone and they were to be included in the income of the Appellant; [admitted] d)      also pursuant to the Agreement, the Appellant and David Crone were to share extraordinary child-related expenses, and David Crone was required to pay an amount of $333 per month, in respect of both of the children, for such expenses, and such payments were to be considered periodic payments within the meaning of the Income Tax Act; [admitted] e)      the Agreement does not state that subsections 56.1(2) and 60.1(2) of the Income Tax Act R.S.C. 1985 (5 th supp.) c.1 (the “ Act ”) are to apply in respect of the extraordinary child-related expenses; [ignored] f)       the Appellant had discretion as to the use of the amounts, totalling $3,997, noted in subparagraph 8(d) above, even though she had to present the Appellant [sic] with a proposed budget for each coming year, and she had to submit, at the end of each year, the receipts and bills proving the reasons for the expenditures; and [denied as written because the appellant did not have discretion as to the use of the amounts and admitted for the rest of the paragraph] g)      David Crone paid amounts totalling $36,737 to the Appellant, in the 2000 taxation year, in respect of the child support payments noted in subparagraph 8(c) above and $3,997 for the extraordinary child-related expenses, and all of these said amounts are required to be included in the income of the Appellant. ...   (2)     The husband will pay on the first (1 st) day of May 1993 and on the first (1 st) day of each month hereafter the sum of $333.00 per month for both children such payments to be considered periodic payments within the meaning of the Income Tax Act. ...   [5]               The above-mentioned paragraph 9 contains no indication that the payments referred to therein would be deductible by the husband in computing his income and would be required to be included in the income of the appellant except for the reference to the fact that the payments for the children shall be considered periodic payments within the meaning of the Income Tax Act, R.S.C. 1985, c.1 (5 th suppl.) as amended (the “ Act ”) ...

  [2]      The facts on which the Minister relied in arriving at the decision are set in paragraph 5 of the Reply to the Notice of Appeal, as follows:   [TRANSLATION] a)         the Appellant was incorporated on March 1, 2000;   b)         the Appellant produced and sold pastry goods to a number of clients such as IGA, Métro and Sobeys;   c)         the Appellant employed an average of 26 workers in 2006;   d)         the worker had been in the Appellant's employ since 2000;   e)         the Appellant considered the worker self-employed, while the worker considered himself an employee;   f)          the worker was the Appellant's sales manager and was appointed Vice‑President in charge of sales in January 2006;   g)         the worker’s duties involved finding new clients, showing clients new products, providing client service, and handling complaints;    h)         up until September 2006, the worker was the only person working in sales for the Appellant;   i)          the worker had an office at the Appellant's place of business;   j)          the worker worked at the Appellant's place of business, on the road on clients' premises, or from home;   k)         the worker worked five days a week, between 9 a.m. and 8 p.m.;   l)          the worker did not keep a time sheet;   m)        the worker was paid on a commission basis;   n)         the worker received a 10 per cent commission for sales to Métro and 5 per cent for sales to other clients;   o)         the worker was paid by cheque every two weeks;   p)         the sole shareholder in the Appellant was Man Chor Wong;   q)         Mr. ... The attorney had given her what she had considered pat answers, and she had given more weight to the worker's account, which had seemed more genuine.   ...

  [17]     In cross-examination, the appeals officer stated that she considered the hourly rate to be too high although she did not offer a basis for that statement such as some data on salaries for comparable work. ...   [18]     The appeals officer’s decision was based on a number of factors including what she considered as too high a rate of remuneration, [6] the fact that she had worked very little in the period, the Appellant’s complete control of her schedule and the admission that the salary was for income-splitting purposes ... Although this point was not raised, I considered whether for this reason I should disregard the prior inconsistent statements and simply accept the 25-hour average. ...

A new assessment was issued November 18, 2003, followed by a notice of objection dated December 2, 2003, and was ratified on October 7, 2004, maintaining the refusal to consider that the $39,707 was received as damages. [4]      To establish the new assessment for the 2002 taxation year, the Minister relied on the following presumptions of fact: [translation] (a)         the Appellant was hired by the Collège François-Xavier-Garneau as executive director on May 5, 1997, and his contract of employment was to conclude on June 30, 2002; (b)         at the request of the Collège François-Xavier-Garneau, the Appellant was considered on leave with pay from January 21, 2002; (c)         as a settlement between the Collège François-Xavier-Garneau and the Appellant, an out-of-court agreement dated February 15, 2002, set out the following measures, among others: (i)          from the date of this out-of-court agreement, all employment ties between the Appellant and the Collège François-Xavier-Garneau ended permanently; (ii)         the Collège François-Xavier-Garneau agreed, among other things, to pay the Appellant or his representative the following amounts: (a)         $48,907.03 representing his salary for the period of February 7, 2002, to June 30, 2002; (b)         $23,480.08 representing vacation owing or that could be owing to June 30, 2002; (c)         $8,000 as professional fees payable to the law firm Fasken Martineau; (d)         $5,000 for job search purposes; (e)         $76,077 as severance pay; (f)          $39,707, with no reason provided; (iii)        the parties gave each other full and final release of all amounts due and the Appellant waived all recourse or proceedings regarding the facts that led to the present agreement; (iv)        this transaction is made without any admission of the responsibilities of either party and constitutes a transaction within the meaning of articles 2631 et seq. of the Civil Code of Québec; (d)         further to the agreement mentioned at the above paragraph, Collège François-Xavier-Garneau issued a T4A slip in the Appellant's name, regarding the $39,707 as a retirement allowance. [5]      Following the breach of the contract of employment between the Appellant and his employer, the College, the two parties represented by counsel negotiated and accepted an agreement that was confirmed by a written agreement. [6]      The appeal essentially addresses subparagraph 3(c) of the agreement between the College and the Appellant; the paragraph in question states: [translation] 3.          ... He also stated that the College, on one hand, lacked discretion and, on the other, did nothing to prevent the leak of private and confidential information that was very prejudicial to the Appellant's good reputation and that could have devastating effects during a search for new employment. [12]     Jasmin Marcotte, counsel, also stated that the $39,707 could not in any way be considered a retirement allowance, since this would have been in violation of the regulations to which the College is subject. [13]     If this was a retirement allowance as the T4A slip showed, the finding would be that the College overstepped its powers and regulations by paying the Appellant an allowance that was higher than what he was entitled to receive under these regulations. [14]     Why did the parties, during the transaction, decide to word the text the way it was worded, when it would have been just as easy to write it according to the Appellant's claims? ... The effect of the Appellant's interpretation would be to completely modify the scope of this very clear text, which is inadmissible. [44]     Moreover, if the text did not have the desired clarity and certain elements needed to be considered to give it meaning, I would have undoubtedly relied on Ms. ...

(z)        The Minister considered this total of $4,285 for the 2000 taxation year to be a taxable benefit received from the corporation by the Appellant.   ... (ff)        The Minister considered this amount to be salary received by the Appellant for his 2000 taxation year and therefore added it to his income, considering that the amount of $15,000 was paid to the Appellant (see Appendix I, page 16 of this Reply).     ... In fact, the Court did not understand why the Appellant did not call the accountant as a witness given how important he considered this factor ...

I have considered the situation further and I have concluded that the wording of the Ontario statute is clear and that the evidence of the field officer should be excluded. ... Since the evidence indicates that the business of Tea Lovers was much less than the Appellant anticipated I am not convinced that the so-called " industry standard " should be applied in this case. [19]     The appeal is allowed without costs and the Appellant is considered to have had the following sales: Year Amount of Sales as Determined by Minister Amount of Sales As Determined by Court 2000 $20,024.58 $5,006.14 2001 $79,104.02 $27,500.00 2002 $81,782.79 $27,500.00 2003 $78,436.79 $13,750.00 [20]     Before closing I wish to state that the Appellant seriously damaged his chance of success by failing to testify at the hearing on January 19, 2006 and the Appellant or his agent should have called the manager of Tea Lovers to testify. ... That case considered subsection 163(2) of the Income Tax Act, R.S.C. 1985, c. 1 (5 th Supp.), which is parallel to section 285 of the Act. [24]     I have therefore concluded that the penalty imposed under section 285 should not be applied. ...

The cheque stubs were prepared at Mario's request, but I didn't make any remittances or issue a record of employment because I considered that I was helping him. ... No payroll was kept, since the Appellant was not considered an employee. ... He provided him with work and paid him, even though he was considered a volunteer. ...

Certainly an opposite-sex couple may, after many years together, be considered to be in a conjugal relationship although they have neither children nor sexual relations. Obviously the weight to be accorded the various elements or factors to be considered in determining whether an opposite-sex couple is in a conjugal relationship will vary widely and almost infinitely.... ... Jessica is Eric's child, since paternity has not been effectively challenged, and she was, at the relevant times, under 18 years of age. [19]     The phrase "wholly dependent for support" has been considered by the Court. ...

In so varying the reassessment of the Appellant's income tax return for the 2003 taxation year, the Minister relied on the following assumptions of fact:             (a)         during the 2002 taxation year, the Appellant received a lump sum payment of $78,611 from the Government of Canada;             (b)         of the amount of $78,611 referred to in subparagraph 16(a) herein, a total of $73,075 applied to the years 1990 to 2001 and the amount applicable to each of the said taxation years is stated on the attached Schedule A;             (c)         the Minister considered the provisions of sections 110.2 and 120.31 of the Act in calculating tax payable with respect to the lump sum payment of $73,075 referred to in subparagraph 16(b) herein and determined that the application of said sections were beneficial to the Appellant;             (d)         the Appellant was in receipt of Wage Loss Replacement Plan Benefits (the "Benefits") from "The Maritime Life Assurance Company" as a result of an illness and was issued a T-4A slip in the amount of $179,335 with respect to said Benefits for the 2003 taxation year;             (e)         the entire amount of Benefits was paid with respect to the year 1990 and period 1992 to 2002 as show on the attached Schedule A;             (f)          the amount of federal tax computed as reflected in the Notice of Reassessment dated August 27, 2004 for the 2003 taxation year as referred to in paragraph 13 herein did not take into account the lump sum payment of $73,075 with respect to the 2002 taxation year as stated in subparagraph 16(a) to 16(c) herein; and             (g)         the application of sections 110.2 and 120.31 of the Act in calculating tax payable with respect to the lump sum payment of $179,335 referred to in subparagraph 16(d) was determined to be beneficial to the Appellant as computed in accordance with the Notice of Reassessment dated March 22, 2005 referred to in paragraph 15 herein and stated on the attached Schedule A. [7]      The Appellant's predominant request is with respect to the tax adjustment or interest calculated under section 120.31. ... I have no power to reverse the interest charged provided it is properly calculated. [15]     During the hearing, I asked the Respondent's counsel whether the Minister had considered that all or part of the lump sum amounts could be considered capital. ...