1999-3828(IT)I
BETWEEN:
F. BARRY YARDLEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on September 28, 2000 at London, Ontario, by
the Honourable Judge D. Hamlyn
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Carole Benoit
JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 1993 and 1994 taxation years are dismissed.
Signed at Ottawa, Canada, this 3rd day of October 2000.
|
"D. Hamlyn" |
J.T.C.C.
Date: 20001003
Docket: 1999-3828(IT)I
BETWEEN:
F. BARRY YARDLEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hamlyn, J.T.C.C.
[1] These are appeals with respect to the 1993 and 1994 taxation years.
[2] In reassessing the Appellant for his 1993 and 1994 taxation years, the Minister of National Revenue ("the Minister") included "unexplained bank deposits" of $6,508 and $12,996 respectively in the Appellant's income.
[3] During the 1993 and 1994 taxation years, the Appellant operated a retail store "Bargain Bee", and carried on a commission jewellery sales business. The Minister submits that the Appellant did not keep adequate books and records to substantiate the gross commission income and the expenses from the jewellery sales business and that the Appellant operated that business through his personal bank account.
[4] The Minister states that, in reporting his gross commission income for the 1993 and 1994 taxation years, the Appellant failed to include "unexplained deposits" of $6,508 and $12,996 respectively. These amounts were calculated as the difference between the total bank deposits deposited into the Appellant's personal bank account for each taxation year in question, and the gross commission income reported by the Appellant for those years. The Minister also advances that the Appellant did not purchase inventory in the amount of $6,900, and thus could not claim such expense against his gross commission income in his 1993 taxation year. The Minister contends that a memorandum dated September 1, 1992 from Importer Diamonds & Italian Gold Jewellery in the amount of $6,900 did not constitute proof of purchase, as the memorandum stated that "This is not an invoice or bill of sale".
[5] The Appellant appeals the reassessments of his 1993 and 1994 taxation years. He maintains that the Minister erred in the calculation of the "unexplained deposits" for the 1994 taxation year. The Appellant contends that this miscalculation is based on the Minister mistakenly using the wrong amount regarding the Appellant's reported income for his 1994 taxation year, and that he has brought this to the attention of the Minister to no avail. The Appellant also contends that he did in fact purchase inventory in the amount of $6,900 and that he properly claimed this amount as an expense in his 1993 taxation year, when he sold the said inventory. To substantiate this purchase, the Appellant has produced a memorandum dated September 1, 1992 from Importer Diamonds & Italian Gold Jewellery.
[6] The memorandum filed by the Appellant as proof of purchase of the inventory in question has endorsed on its face the following:
The merchandise described herein is delivered to you on MEMORANDUM only, at your risk ... The said merchandise is and shall remain in OROGEM (the supplier) and is to be returned to us on demand. [...] The undersigned (the Appellant) has no right to transfer the said merchandise to any other person, firm or corporation, whether on memorandum or otherwise, without the written permission of OROGEM. Sale of this merchandise can only be affected and title will pass only if and when OROGEM the said owner, shall agree to such sale ... All above is binding on me/us regardless of prior transactions.
ANALYSIS
[7] The Appellant filed his tax returns for the said years as follows:
Bargain Bee Jewellery Sales
Business Income Commission Income
Gross Net Gross Net
1993 168,642 (19,034) 15,000 (1,371)
1994 631,074 18,973 8,200 Nil
[8] The Appellant operated a jewellery sales business through his personal bank account.
THE UNEXPLAINED DEPOSITS
[9] In reporting his gross commission income for the 1993 and 1994 taxation years, the Appellant did not include "unexplained deposits" of $6,508 (the difference between total bank deposits of $21,508 into his personal bank account and the gross commission income reported of $15,000) and $12,996 (the difference between total bank deposits of $21,196 into his personal bank account and the gross commission income reported of $8,200) respectively in income.
[10] From the facts presented, the Appellant has not provided any evidence or explanation to contradict the Minister's contention that the "unexplained deposits" were income earned by the Appellant in his 1993 and 1994 taxation years. Thus, the Appellant has not met his onus to prove, on a balance of probabilities, that the "unexplained deposits" were not income earned in his 1993 and 1994 taxation years.
[11] The Minister properly included the amounts of $6,508 and $12,996 respectively in the income of the Appellant for the 1993 and 1994 taxation years, pursuant to sections 3 and 9 of the Income Tax Act.
THE JEWELLERY MEMORANDUM
[12] From the terms on the face of the memorandum presented, it would appear that the inventory in question had not passed to the Appellant, and that the Appellant did not have an ownership interest in that inventory.
[13] Without a sales invoice or some other convincing evidence, the Appellant has not met his onus, on a balance of probabilities, of proving that title to the inventory in question passed to his business, and thus any corresponding inventory expense for his 1993 taxation year cannot be substantiated.
[14] The Appellant failed to prove that he incurred expenses in the amount of $6,900, a deduction prohibited pursuant to paragraph 18(1)(a) of the Income Tax Act.
AUTOMOBILE EXPENSES
[15] The Appellant also contested the allocation of automobile expenses. While the log record for kilometres was well maintained, the expense claim at the audit stage did not match the kilometre log in terms of personal use. The Appellant did not offer any evidence to the contrary.
[16] The Appellant did not dislodge the automobile expense allocation of the assessment.
DECISION
[17] The appeals are dismissed.
Signed at Ottawa, Canada, this 3rd day of October 2000.
|
"D. Hamlyn" |
J.T.C.C.
COURT FILE NO.: 1999-3828(IT)I
STYLE OF CAUSE: F. Barry Yardley and
Her Majesty the Queen
PLACE OF HEARING: London, Ontario
DATE OF HEARING: September 28, 2000
REASONS FOR JUDGMENT BY: The Honourable Judge D. Hamlyn
DATE OF JUDGMENT: October 3, 2000
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Carole Benoit
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada