Date: 20020723
Docket: 2001-4454-GST-I
BETWEEN:
BRENDA DIANN WARREN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for judgment
Little, J.
A. FACTS
[1] The Appellant is the spouse of Dennis Michael Warren ("Dennis").
[2] Dennis operated a trucking business as a proprietorship ("The Business"). Commencing in 1992 Dennis changed the nature of his business from a trucking business to the business of a logging contractor. Dennis operated as a logging contractor from 1992 until serious financial problems forced him to discontinue The Business in 1998.
[3] Until August 1, 1998 the Appellant and Dennis owned, as joint tenants, homes located at the following addresses:
- 1695 Pine Grove Street, Lillooet, B.C.
- 6490 Jones Road, Savona, B.C.
(the homes noted above are referred to as "The Properties").
[4] The Appellant provided various services to The Business. The Appellant operated the office, prepared the payroll, maintained the books, picked-up parts required to repair the extensive logging equipment, provided cooking and housekeeping to employees of The Business and provided other assistance to The Business.
[5] The Appellant reported employment income from The Business as follows:
1992 $32,000.00
1993 $7,500.00
1994 $7,500.00
1995 $15,000.00
1996 $10,000.00
1997 --
1998 $6,000.00
The Appellant testified that after the tax was paid on this income, the amount remaining was lent by the Appellant to Dennis for use in The Business.
[6] The Appellant testified that she also lent additional money from her personal funds to The Business.
[7] Dennis testified that on August 5, 1998 he repaid the loan that he owed to the Appellant by transferring his equity in The Properties to the Appellant.
[8] As a result of a series of financial problems beyond the control of Dennis, The Business was unable to pay the applicable Goods and Service Tax ("GST").
[9] On March 28, 2000, the Minister of National Revenue (the "Minister") reassessed the Appellant to impose GST of $85,669.83 pursuant to subsection 325(1) of the Excise Tax Act (the "Act"). The GST imposed by the Minister on the Appellant was later reduced to $71,500.00. In issuing the Notice of Assessment the Minister determined that at the time of the transfer by Dennis of his equity in The Properties to the Appellant, the value of the equity owned by Dennis in The Properties was not less than $71,500.00.
B. ISSUE
[10] The issue is whether the Appellant is jointly and severally liable with Dennis pursuant to subsection 325(1) of the Act for the GST in the amount of $71,500.00.
C. ANALYSIS
[11] The sworn testimony of the Appellant and Dennis supported by the testimony of the accountant, Mr. Sellmer, C.A., establishes that in the years indicated the Appellant made the following loans to Dennis and received the indicated repayments from Dennis.
Loan
Year Amount Repayments Amount Owing
1992 $28,166.34 $10,735.17 $17,431.17
1993 $ 8,678.14 $15,120.51 < $6,442.37 >
1994 $24,465.03 $14,882.15 $ 9,582.88
1995 $38,806.80 $25,592.68 $13,214.12
1996 $11,800.00 $18,256.11 < $6,456.11 >
1997 $40,359.60 $ 6,445.86 $33,913.74
1998* $11,310.98 $34,337.51 < $23,026.53 >
Balance $38,216.90
*to August 5th, 1998
[12] I have carefully considered the testimony of the Appellant, the testimony of Dennis, the testimony of Mr. Sellmer and the supporting documents filed with the Court. I have concluded that Dennis owed the Appellant at least $38,216.90 prior to the transfer by Dennis of his equity in The Properties to the Appellant.
[13] The appeal is to be allowed and the Minister is instructed to reduce the G.S.T. of $71,500.00 assessed against the Appellant by deducting therefrom the amount of $38,216.90. There will be no further adjustments to the Notice of Reassessment.
Signed at Toronto, Ontario, this 23rd day of July 2002.
|
"L.M. Little" |
J.T.C.C.
COURT FILE NO.: 2001-4454(GST)I
STYLE OF CAUSE: Brenda Diann Warren and
Her Majesty the Queen
PLACE OF HEARING: Kamloops, British Columbia
DATE OF HEARING: June 10, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge L.M. Little
DATE OF JUDGMENT: July 23, 2002
APPEARANCES:
Counsel for the Appellant: Kenneth R. Hauser
Counsel for the Respondent: Michael Taylor
COUNSEL OF RECORD:
For the Appellant:
Name: Kenneth R. Hauser
Firm: Kenneth R. Hauser Law Corporation
Kamloops, British Columbia
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-4454(GST)I
BETWEEN:
BRENDA DIANN WARREN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on June 10, 2002 at Kamloops, British Columbia, by
the Honourable Judge L.M. Little
Appearances
Counsel for the Appellant: Kenneth R. Hauser
Counsel for the Respondent: Michael Taylor
JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated September 18, 2001 and bears number 76809, is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Toronto, Ontario, this 23rd day of July 2002.
|
"L.M. Little" |
J.T.C.C.