Date: 20020820
Docket: 2001-679-GST-I
BETWEEN:
JAMES TIMOTHY PETER BURKE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Angers, J.T.C.C.
[1] This is an appeal from an assessment under Part IX of the Excise Tax Act (the "Act"), dated December 13, 1999, where by the Minister of National Revenue (the "Minister") determined the Appellant's goods and services tax (GST) and harmonized sales tax (HST) liability for the period from January 1, 1997 to June 30, 1999.
[2] In so assessing the Appellant, the Minister relied on the following assumptions of fact which were either admitted or denied by the Appellant as indicated:
a) at all relevant times the Appellant was registered under Part IX of the Excise Tax Act (the "Act"), R.S.C. 1985, c.E-15, as amended, under registration number 12628 8968RT; (admitted)
b) the taxable supplies made by the Appellant were made in Nova Scotia; (denied)
c) the Appellant's principal activity was auto repairs; (denied)
d) in filing its quarterly GST/HST returns for the period from January 1, 1997 to June 30, 1999 the Appellant reported GST/HST Collectible and ITCs as detailed in Schedule "A" to this Reply to the Notice of Appeal and summarized as follows:
GST/HST Collectible: $ 217.28
Less: ITCs: (2,365.07)
Total Net Tax (Credit)`: $(2,147.79)
(admitted)
e) the Appellant underreported his GST/HST collectible by the amount of 162.16 for the period from January 1, 1997 to June 30, 1999, as detailed in Schedule "B" to this Reply to the Notice of Appeal; (denied)
f) in many instances, the Appellant calculated the tax collectible at the rate of 7%; (denied)
g) the Appellant overstated his ITCs by the amount of $1,859.12 for the period from January 1, 1997 to June 30, 1999, as detailed in Schedule "C" to this Reply to the Notice of Appeal; (denied)
h) the Appellant did not provide adequate documentation to support his claim for the ITCs referred to in the preceding subparagraph 5(d); (denied)
SCHEDULE "A"
Net Tax Reported by the Appellant
|
Period Ending |
Supplies |
GST/HST |
ITC's |
Net Tax |
|
March 31, 1997 |
$350.00 |
$22.89 |
$(75.60) |
$(52.71) |
|
June 30, 1997 |
100.00 |
7.00 |
(34.72) |
(27.72) |
|
September 30, 1997 |
542.00 |
37.94 |
(191.45) |
(153.51) |
|
December 31, 1997 |
280.00 |
19.60 |
(117.32) |
(97.72) |
|
March 31, 1998 |
225.00 |
15.75 |
(566.98) |
(551.23) |
|
June 30, 1998 |
350.00 |
24.50 |
(662.85) |
(638.35) |
|
September 30, 1998 |
380.00 |
26.60 |
(181.44) |
(154.84) |
|
December 31, 1998 |
150.00 |
10.50 |
(375.96) |
(365.46) |
|
March 31, 1999 |
200.00 |
30.00 |
(95.00) |
(65.00) |
|
June 30, 1999 |
150.00 |
22.50 |
(63.75) |
(41.25) |
|
Total |
$2,727.00 |
$217.28 |
$(2,365.07) |
$(2,147.79) |
SCHEDULE "B"
Adjustment to GST/HST collectible
|
Period Ending |
Supplies |
GST/HST Reported |
GST/HST Collectible |
Adjustment |
|
March 31, 1997 |
$350.00 |
$22.89 |
$22.89 |
$0 |
|
June 30, 1997 |
100.00 |
7.00 |
15.00 |
8.00 |
|
September 30, 1997 |
542.00 |
37.94 |
81.30 |
43.36 |
|
December 31, 1997 |
280.00 |
19.60 |
42.00 |
22.40 |
|
March 31, 1998 |
225.00 |
15.75 |
33.75 |
18.00 |
|
June 30, 1998 |
350.00 |
24.50 |
52.50 |
28.00 |
|
September 30, 1998 |
380.00 |
26.60 |
57.00 |
30.40 |
|
December 31, 1998 |
150.00 |
10.50 |
22.50 |
12.00 |
|
March 31, 1999 |
200.00 |
30.00 |
30.00 |
0 |
|
June 30, 1999 |
150.00 |
22.50 |
22.50 |
0 |
|
Total |
$2,727.00 |
$217.28 |
$379.44 |
$162.16 |
SCHEDULE "C"
Adjustment to ITC's
|
Period Ending |
ITC's claimed |
ITC allowed |
Adjustment |
|
March 31, 1997 |
$75.60 |
$21.86 |
$53.74 |
|
June 30, 1997 |
34.72 |
22.08 |
12.64 |
|
September 30, 1997 |
191.45 |
76.64 |
114.81 |
|
December 31, 1997 |
117.32 |
166.48 |
(49.16) |
|
March 31, 1998 |
566.98 |
28.81 |
538.17 |
|
June 30, 1998 |
662.85 |
22.51 |
640.34 |
|
September 30, 1998 |
181.44 |
68.04 |
113.40 |
|
December 31, 1998 |
375.96 |
82.13 |
293.83 |
|
March 31, 1999 |
95.00 |
0.55 |
94.45 |
|
June 30, 1999 |
63.75 |
16.85 |
46.90 |
|
Total |
$2,365.07 |
$505.95 |
$1,859.12 |
[3] The Appellant is in the engine rebuilding business in Halifax, Nova Scotia, and was the subject of an audit by the Canada Customs and Revenue Agency (CCRA) in the fall of 1999. On the auditor's first visit on October 26, 1999, the Appellant requested a week to get his records together for the audit. A further week was granted and, after attempted telephone contact failed, a letter was sent to the Appellant by the auditor on November 23, 1999. A telephone conversation between the auditor and the Appellant followed and some receipts were provided by the latter. As for other receipts, the Appellant had none.
[4] As a result, the auditor sent the Appellant a letter on December 7, 1999 advising him that his books and records were inadequate for the determination of his tax liabilities and obligations under the Act. The next day, the auditor sent the Appellant a further letter, enclosing a summary of the adjustments made to the GST and HST returns for the period in question. The adjustments are as reflected in the schedules reproduced above. The letter clearly states that only amounts supported by supplier invoices showing the GST registration number and the amount of GST paid had been allowed as input tax credits (ITCs). The other changes were referable to a miscalculation of the tax that became the HST on April 1, 1997. Those changes are reflected in Schedule "B" above and show an increase of $162.16 in taxes owed. A notice of assessment giving effect to the above adjustments was sent to the Appellant.
[5] The Appellant objected to the above-mentioned assessment on the basis that he had receipts to substantiate his position. Despite a written request sent to him on March 14, 2000 by the Chief of Appeals at the CCRA, the Appellant provided no additional documents. A further written request was made on July 10, 2000, but no documents were forwarded by the Appellant to the Appeals Officer. The Minister confirmed the assessment on September 28, 2000 and the Appellant appealed to this Court.
[6] At the hearing, the Appellant readily acknowledged that he had not kept proper books and records for his business and thus was unable to provide the necessary receipts to support the ITCs claimed for the period in question. As for the calculations in Schedule "B" above, he accepted them without modification during cross-examination.
[7] The issue left to be decided is whether the Minister properly disallowed the Appellant's ITCs for the period in question. Jacqueline Hughes, the Appeals Officer, testified that the Appellant's ITCs were disallowed because the auditor found no documentary evidence to support them. At trial, the Appellant produced six exhibits containing various receipts purporting to show amounts disallowed as ITCs by the auditor. I will deal with these separately.
(a) Exhibit A-2 is a receipt for the purchase of an automobile by the Appellant on January 24, 1996. The Appellant was unable to say if the GST paid on the purchase was claimed as an ITC in 1996. Since this receipt is outside the period in question, it cannot be considered.
(b) Exhibit A-3 is an invoice sent to the Appellant by the Department of Finance for the Province of Nova Scotia. As it is for a period in 1996, this invoice is not relevant for the determination of this appeal.
(c) Exhibit A-4 contains four accounts that the Appellant was unable to collect in 1997 and 1998. The Appeals Officer testified that the ITCs on the Appellant's purchases shown on these invoices were allowed and properly credited during the audit, even though the documents do not identify the vendors and their GST registration numbers. I am satisfied that the ITCs have been properly allowed.
(d) Exhibit A-5 is a small booklet of receipts which do not identify the vendors and their HST registration numbers or the amount of HST actually paid by the Appellant. These receipts are therefore of no assistance to the Appellant and cannot be considered as establishing a valid claim to ITCs.
(e) Exhibit A-6 is a receipt dated June 23, 1998 for professional services rendered to the Appellant as a result of a personal injury claim by him following a motor vehicle accident in which he was involved. The Appeals Officer rejected that receipt - and rightly so - on the grounds that it had nothing to do with the Appellant's commercial activity. It therefore cannot be considered as establishing a valid claim to an ITC for the purposes of the Act.
(f) Exhibit A-7 consists of the last receipts produced by the Appellant. They are for cash purchases and the Appellant is not identified thereon. One receipt is for $35.37 with $4.61 in HST and the other is for $712.48 with $92.93 in HST. At trial, the Appeals Officer allowed the $4.61 but disallowed the $92.93 on the basis that the receipt does not meet the requirements set out in paragraph 3(c) of the Input Tax Credit Information Regulations under the Act, and I agree. That amount is therefore not an allowable ITC.
[8] The Appellant did not provide any other receipts or documentary evidence and by his own admission did not keep proper books or records regarding his commercial activities. The Act is quite clear as to the obligation of a person who carries on a business or is engaged in a commercial activity in Canada. Subsection 286(1) reads as follows:
286. (1) Keeping books and records - Every person who carries on a business or is engaged in a commercial activity in Canada, every person who is required under this Part to file a return and every person who makes an application for a rebate or refund shall keep records in English or in French in Canada, or at such other place and on such terms and conditions as the Minister may specify in writing, in such form and containing such information as will enable the determination of the person's liabilities and obligations under this Part or the amount of any rebate or refund to which the person is entitled.
[9] It is obvious that the Appellant's own neglect of this obligation has caused him to become the author of his own misfortune. The auditor did what he could with what he had, and the Appellant, who had the onus of disproving the auditor's findings, was unable to do so. In fact, the Appellant did not bring forward any evidence that could allow this Court to vary the assessment made by the Minister, with the exception of one of the last receipts produced, which showed an HST amount of $4.61 that, at the hearing, the Minister allowed as constituting a valid ITC for the period in question. All the other receipts produced at trial with respect to which ITCs were disallowed were therefore properly rejected by the Minister.
[10] For the above reasons, the appeal is allowed and the Minister shall reassess the Appellant to credit him with the amount of $4.61. In all other respects, the assessment shall remain unchanged.
Signed at Edmundston, New Brunswick, this 20th day of August 2002.
|
"François Angers" |
J.T.C.C.
COURT FILE NO.: 2001-679(GST)I
STYLE OF CAUSE: JAMES TIMOTHY PETER BURKE
and Her Majesty the Queen
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: June 24, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge François Angers
DATE OF JUDGMENT: August 20, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Cecil Woon
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-679(GST)I
BETWEEN:
JAMES TIMOTHY PETER BURKE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on June 24, 2002, at Halifax, Nova Scotia, by
the Honourable Judge François Angers
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Cecil Woon
JUDGMENT
The appeal from the assessment made under the Excise Tax Act for the period from January 1, 1997 to June 30, 1999 is allowed, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the Appellant should be credited with the amount of $4.61. In all other respects, the assessment shall remain unchanged.
Signed at Edmundston, New Brunswick, this 20th day of August 2002.
|
"François Angers" |
J.T.C.C.