98-537(GST)I
BETWEEN:
898673 ONTARIO INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on October 1, 1998, at Kingston, Ontario, by
the Honourable Judge A.A. Sarchuk
Appearances
Agent for the Appellant: G. Lee MacMillan
Counsel for the Respondent: Karen Cooper
JUDGMENT
The appeal from the assessment made under the Excise Tax Act (for goods and services tax), notice of which is dated May 15, 1997 and bears number 04DP0106156 is dismissed.
Signed at Ottawa, Canada, this 5th day of November, 1998.
|
"A.A. Sarchuk" |
J.T.C.C.
Date: 19981105
Docket: 98-537(GST)I
BETWEEN:
898673 ONTARIO INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Sarchuk, J.T.C.C.
[1] This is an appeal by 898673 Ontario Inc. (the Company) from an assessment of GST liability for the period of February 1, 1993 to August 1, 1996. The notice of reassessment was dated May 15, 1997 and made the following adjustments:
(a) reduced the GST by the amount of $3,206.00;
(b) reduced the Input Tax Credits (the "ITC") by the amount of $10,312.69;
(c) assessed penalty in the amount of $627.35; and
(d) assessed interest.[1]
[2] The Appellant takes the position, inter alia, that the Minister erred in concluding that the income reported as earned by the Appellant was generated through "employment" rather than "commercial activity". For the same reason, the Appellant also takes exception to the Minister's denial of expenditures and maintains that all income and expenditures occurring during the relevant periods of time did in fact arise from "commercial activity" and not from "employment". The Appellant also raised issues relating to whether the Minister exercised procedural fairness and questioned the manner in which the audit was conducted.
[3] During the course of the hearing, evidence was adduced, inter alia, from Ann Pratt, an audit officer with Revenue Canada. She met with G. Lee MacMillan in November 1996 and discussed the GST returns filed on behalf of the Appellant. In the course of her goods and services tax audit, certain adjustments were made for the period February 1, 1993 to August 1, 1996 based on information provided to her by MacMillan. This information, which she accepted, was that the GST had been remitted on what he described as his employment income. Accordingly, she advised MacMillan that it was unnecessary to have remitted GST on employment income and as a result, allowed an adjustment in the amount of $3,206 in the Appellant's favour.
[4] During the course of MacMillan's evidence, he stated that in fact, he operated a taxi run for a school which involved the driving of students from their homes to school and back. For each trip, the school board paid the fare plus GST. When apprised of this testimony, Pratt indicated that this was a taxable supply (apparently not disputed by the Appellant) and that had she been aware of that fact at the time of the reassessment, she would not have reversed that portion of the GST remitted which she believed reflected employment income.
[5] At the conclusion of the evidence and after due consideration, MacMillan considered the Appellant's position with respect to its appeal and informed the Court that given the circumstances: "I think you should throw it out, Your Honour".
[6] Accordingly, the appeal is dismissed.
Signed at Ottawa, Canada, this 5th day of November, 1998.
|
"A.A. Sarchuk" |
J.T.C.C.
COURT FILE NO.: 98-537(GST)I
STYLE OF CAUSE: 898673 Ontario Inc. and
Her Majesty the Queen
PLACE OF HEARING: Kingston, Ontario
DATE OF HEARING: October 1, 1998
REASONS FOR JUDGMENT BY: The Honourable Judge A.A. Sarchuk
DATE OF JUDGMENT: November 5th, 1998
APPEARANCES:
Agent for the Appellant: G. Lee MacMillan
Counsel for the Respondent: Karen Cooper
COUNSEL OF RECORD:
For the Appellant:
Name: N/A
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
[1] The net effect was to assess additional tax to the Company in the amount of $7,106.09 and interest of $518.68 in addition to the amount of the penalty.