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Docket: 2002-2721(GST)I |
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BETWEEN: |
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JUN MING YEUNG, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeal heard on February 26, 2003 at Kelowna, British Columbia
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Before: The Honourable Judge L.M. Little |
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Appearances: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
Nadine Taylor Pickering |
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JUDGMENT
The appeal from the assessment made under Part IX of the Excise Tax Act, notice of which is dated April 11, 2002 and bears number 64761, is allowed, without costs, 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 Vancouver, British Columbia, this 31st day of March 2003.
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"L.M. Little" |
J.T.C.C.
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Citation: 2003TCC169 |
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Date:20030331 |
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Docket: 2002-2721(GST)I |
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BETWEEN: |
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JUN MING YEUNG, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Little, J.
A. FACTS
[1] The Appellant is a seamstress employed by Far West Industries Ltd.
[2] The Appellant married Victor York Fong Yeung ("Husband") at Vernon, British Columbia on the 12th day of September 1992.
[3] Village Garden Restaurant Ltd. ("Village Garden") was incorporated under the laws of the Province of British Columbia on the 15th day of August 1995.
[4] The main business of Village Garden was owning and operating a restaurant in Vernon that served Chinese food.
[5] Village Garden was registered under Part IX of the Excise Tax Act (the "Act") and was required to file Goods and Services Tax ("GST") returns on a quarterly basis.
[6] On or about the 15th day of August 1995 the Appellant and her Husband were appointed directors and officers of Village Garden.
[7] On or about the 1st day of June 1999 the Appellant and her Husband separated.
[8] On the 14th day of October 2000 the landlord seized the goods and chattels belonging to Village Garden to cover the arrears of rent. Village Garden ceased to operate following the seizure of its assets.
[9] The Minister of National Revenue (the "Minister") was unable to obtain the GST from Village Garden since Village Garden had no assets.
[10] On the 3rd day of October 2001 the Minister assessed the Appellant pursuant to section 323 of the Act for the failure by Village Garden to remit to the Receiver General an amount of net tax as required by subsection 228(2) of the Act plus interest and penalties.
[11] On November 16, 2001 the Appellant filed GST returns at the request of an official of the Canada Customs and Revenue Agency for the reporting period March 1, 1998 to July 31, 1999 (the "Period") reporting GST of $11,972.77, input tax credits ("ITC") of $3,504.72 and net tax of $8,468.05.
[12] By Notice of Decision and Notice of Assessment (Third Party) dated April 11, 2002 the Appellant was reassessed for the amount of $7,578.15 representing net tax, interest and penalties in respect of the failure by Village Garden to remit tax pursuant to subsection 228(2) of the Act. The amounts involved are:
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Net tax |
$5,772.99 |
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Interest |
820.62 |
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Penalty |
984.54 |
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Total |
$7,578.15 |
B. ISSUES
[13] The issues to be decided are whether:
(a) the Minister assessed the Appellant within the time prescribed under subsection 323(5) of the Act in respect of the Appellant's failure to remit GST as required by subsection 228(2) of the Act;
(b) the Minister properly satisfied the requirements of subsection 323(2) of the Act; and
(c) the Appellant exercised the degree of care, diligence and skill to prevent the failure to remit that a reasonably prudent person would have exercised in comparable circumstances.
C. ANALYSIS
[14] (1) Was the Notice of Reassessment issued within the time specified by the Act?
Subsection 323(1) of the Act reads as follows:
323. (1) Where a corporation fails to remit an amount of net tax as required under subsection 228(2) or (2.3), the directors of the corporation at the time the corporation was required to remit the amount are jointly and severally liable, together with the corporation, to pay that amount and any interest thereon or penalties relating thereto.
Subsection 323(5) reads as follows:
323. (5) An assessment under subsection (4) of any amount payable by a person who is a director of a corporation shall not be made more than two years after the person last ceased to be a director of the corporation.
According to the Register of Directors the Appellant resigned as a Director of Village Garden on November 30, 1999. The Notice of Assessment was issued on October 3, 2001. In other words, the Notice of Assessment was issued within the two-year period provided by the Act.
(2) Is the Appellant subject to tax under the Act by reason of wording contained in section 323.1?
[15] As noted above the Appellant was a Director of Village Garden in the relevant time and she is therefore subject to the tax liability imposed on a Director by subsection 323(1).
[16] The Appellant noted in her testimony that the restaurant which was owned and operated by Village Garden had failed because he had lost money in gambling.
[17] The Appellant cooperated fully with officials of the CCRA when she was advised that her husband had failed to ensure that GST was paid by Village Garden.
[18] The above facts indicate that the Appellant (a passive director) has been reassessed because of her husband's failure to ensure that GST was paid by Village Garden. The Appellant is therefore caught by a technical provision of the Act which makes directors liable for GST assessed against a company.
[19] In my opinion this is not a situation where a penalty should be imposed. I therefore find that the penalty of $984.54 should be waived.
[20] I do not have the authority to waive the interest that has been imposed. However, the Minister has the authority to waive the interest and I recommend that in this unfortunate situation the Minister exercise his discretion and waive the interest.
[21] The appeal is allowed, without costs, to permit the Minister to waive the penalty of $984.54. In all other respects the appeal is dismissed.
Signed at Vancouver, British Columbia, this 31st day of March 2003.
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"L.M. Little" |
J.T.C.C.
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CITATION: |
2003TCC169 |
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COURT FILE NO.: |
2002-2721(GST)I |
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STYLE OF CAUSE: |
Jun Ming Yeung and Her Majesty the Queen |
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PLACE OF HEARING: |
Kelowna, British Columbia |
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DATE OF HEARING: |
February 26, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Judge L.M. Little |
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DATE OF JUDGMENT: |
March 31, 2003 |
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APPEARANCES: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
Nadine Taylor Pickering |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |