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Citation: 2004TCC455 |
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Date: 20040916 |
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Docket: 2003-4377(IT)I |
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BETWEEN: |
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LESLIE GILLIS, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
AMENDED REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the Informal Procedure was heard at Calgary, Alberta, on June 17, 2004. The Appellant testified. The Respondent called Mike Simmerson, auditor respecting this matter.
[2] Paragraphs 7 to 19 of the Reply to the Notice of Appeal outline the matters in issue. They read:
7. In computing income for the 2001 taxation year, the Appellant reported:
(a) income from employment received from Houlihans Restaurant (1993) Ltd. (the "Employer") in the amount of $7,431.29; and
(b) income from tips received through her employment with the Employer in the amount of $743,00, being 10% of the employment income received from the Employer.
8. The original Notice of Assessment for the 2001 taxation year was dated and mailed to the Appellant on April 8, 2002.
9. By letter dated January 16, 2003, the Appellant was requested to disclose the full amount of tips received by her in the 2001 taxation year.
10. By letter dated January 26, 2003, the Appellant submitted a letter stating she received additional tips in the amount of $5,555.00 for the 2001 taxation year, being in addition to tips in the amount of $743.00 previously reported.
11. In reassessing the Appellant for the 2001 taxation year on July 14, 2003, the Minister of National Revenue (the "Minister") increased income from tips received through her employment with the Employer by $9,703.00, from $743.00 to $10,446.00.
12. On August 11, 2003, the Appellant served on the Minister a Notice of Objection to the reassessment dated July 14, 2003.
13. By Notification of Confirmation dated September 26, 2003, the Minister confirmed the reassessment dated July 14, 2003.
14. In so reassessing the Appellant for the 2001 taxation year and in so confirming the reassessment, the Minister made the following assumptions of fact:
(a) during the 2001 taxation year, the Appellant was employed in the hospitality industry with the Employer;
(b) the Worker was employed as part of the service of staff of the Employer;
(c) the Appellant was paid at a rate of $6.75 per hour during the 2001 taxation year;
(d) the Appellant received employment income from the Employer in the amount of $7,431.29 for the 2001 taxation year;
(e) included in the Appellant's employment income was vacation pay calculated at a rate of 6% of $420.67;
(f) the Appellant worked 1,039 hours for the Employer during the 2001 taxation year, calculated as follows:
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Employment Income |
$7,431.29 |
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Less: Vacation Pay |
420.67 |
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Employment Income Before Including Vacation Pay |
$7,010.62 |
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Divided By: Hourly Rate of Pay |
6.75 |
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Hours Worked in 2001 (rounded) |
1,039 |
(g) during the 2001 taxation year, the Employer made cash or debit cards sales in the amount of $56.65 per hour and credit card sales in the amount of $54.00 per hour for each hour worked by one of its service staff;
(h) during the 2001 taxation year, the service staff of the Employer received tips from customers at a rate of 10.49% on credit card sales and 10% on cash or debit card sales;
(i) the Appellant paid a charge of 2.5% on credit card tips in respect of paperwork, extra money for the cooks on weekends and a walkout fund;
(j) 10% of the tips received by the Appellant were paid out to the support workers of the Employer;
(k) the Appellant received net tips through her employment with the Employer in the amount of $10,446.00 in the 2001 taxation year as calculated in Schedule A attached to and forming part of the Reply to the Notice of Appeal;
(l) in computing her income for the 2001 taxation year, the Appellant did not include into income tips received through her employment with the Employer in the amount of $9,703.00; and
(m) the amount of tip income received by the Appellant as determined by the Minister was reasonable.
B. ISSUE TO BE DECIDED
15. The issue to be decided is whether the Minister properly reassessed the Appellant for the 2001 taxation year to include into income addition income from tips in the amount of $9,703.00, being in addition to the tip income originally reported by the Appellant in the amount of $743.00.
C. STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
16. He relies on section 3 and subsection 5(1) of the Income Tax Act, R.S.C. 1985 (5th Supp.) c. 1, (the "Act") as amended for the 2001 taxation year.
17. He submits that the Appellant received income from tips through her employment with the Employer in the amount of $10,446.00 for the 2001 taxation year.
18. He further submits that the Minister properly assessed the Appellant for the 2001 taxation year to include into income additional income received from tips, which was not previously reported, in the amount of $9,703.00 in accordance with section 3 and subsection 5(1) of the Act.
19. In the alternative, he
submits that if the Court should find that Appellant did not
receive additional tip income in the amount of $9,703.00 as
assessed by the Minister, which is not admitted but is denied,
the Appellant did not receive additional tip income
in the amount of at least $5,555.00 as voluntarily
disclosed by the Appellant in her letter dated January 26,
2003.
[3] Assumptions 14 (a), (b), (c), (d), (e), (f), (i) and (j) were not refuted. As to the remainder:
(g) and (h): These figures were based on the total amount of credit card reported tips for all employees at Houlihan's Restaurant in Red Deer, Alberta. The cash sales' tips were calculated based on the credit card numbers. As the Appellant pointed out and the auditor admitted, they will vary with each employee - waitress or waiter.
(i) and (j): The Appellant also paid a sum to the cook and was liable to "walk-out" charges which should reduce the amount in question. "Walk-out" charges are levied against her by Houlihan's respecting customers who walk out without paying their bills.
[4] The Appellant submitted Exhibit A-1, dated January 26, 2003, to the Respondent in the course of the audit. In it she admitted an extra $5,555 in tips received, based on credit card amounts. She testified that her cash tips amount to about 10% more, but that these were off set by her various payments or charges respecting support staff, cook, et cetera as previously itemized.
[5] Except for the global calculations arrived at in the course of the audit, the Appellant's statements described in paragraph [4] were not contested. The Court accepts her testimony as a true experience. She was a part-time worker and income will vary by shift, by cash or credit sales, and by the personalities of the worker and the customers he/she attracts or attends upon.
[6] For these reasons, the appeal is allowed and the matter is referred to the Minister of National Revenue on the basis described in paragraph 19 of the Reply to the Notice of Appeal.
[7] The amount found in favour of the Appellant exceeds one-half of the amount assessed. Therefore the Appellant is entitled to her costs of prosecuting the appeal in Calgary. She had to travel from Red Deer and back, a distance of about 320 kilometres round-trip. She is awarded her out-of-pocket disbursements incurred in prosecuting her appeal, which the Court fixes at $250.
These Amended Reasons for Judgment are issued in substitution for the Reasons for Judgment dated June 28, 2004.
Signed at Vancouver, British Columbia, this 16th day of September, 2004.
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"D.W. Beaubier" |
Beaubier, J.
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CITATION: |
2004TCC455 |
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COURT FILE NO.: |
2003-4377(IT)I |
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STYLE OF CAUSE: |
Leslie Gillis v. The Queen |
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PLACE OF HEARING: |
Calgary, Alberta |
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DATE OF HEARING: |
June 17, 2004 |
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AMENDED REASONS FOR JUDGMENT BY: |
The Honourable Justice Beaubier |
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DATE OF AMENDED REASONS: |
September 16, 2004 |
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APPEARANCES: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
George F. Body |
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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 |