Bolton v. The Queen

Bolton v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2003-12-05 Neutral citation 2003 TCC 861 File numbers 2002-4153(IT)I Judges and Taxing Officers Cameron Hugh McArthur Subjects Income Tax Act Decision Content Citation: 2003TCC861 Date: 20031205 Docket: 2002-4153(IT)I BETWEEN: TAMARA BOLTON, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Agent for the Appellant: Peter Bolton Counsel for the Respondent: Eric Sherbert ____________________________________________________________________ REASONS FOR JUDGMENT (Delivered orally from the Bench at Toronto, Ontario, on September 18, 2003) McArthur J. [1] Mr. and Mrs. Bolton, you are upset and distressed with the manner in which you feel you were treated by Canada Customs and Revenue Agency. I have let you vent your frustrations and if you were not treated with respect, that is regrettable, but it is not something I can take into consideration this afternoon, and I have to disregard that part of your argument. [2] You have not made it terribly easy for me because your books are not only in disarray, I have not seen any books. I have heard your general arguments and nothing specific. On the positive side, I find you both honest and straightforward. You did not come here to lie but you do not have the evidence to prove your situation. My decision will be, out of necessity, somewhat rough and ready. In listening to both sides and trying to work out figures, I am going to allow everything claimed for 1997 but for $8,000 and I will give you my reasons briefly. [3] Dealing with the largest expense for supplies of $18,000 in 1997, you agreed that $12,000 was a capital expense for computers for a difference of $6,000, $3,000 of which was unsubstantiated and I do not allow you that $3,000. I do allow the $3,000 which is an expense occurred in trying to renovate 210 and 212 Main Street. I find that the business you intended to carry on was an extension of the bookstore and one and the same. So those extension expenditures I find are part of the bookstore expenses. So, there was a $3,000 amount not allowed because it is unsubstantiated and I have nothing but your submissions. [4] Agood deal of the utilities claimed was based on an allocation of 2,500 square feet for your upstairs apartment, and 2,800 square feet for the bookstore. I accept your figure of 900 square feet for upstairs and 2,800 square feet for the downstairs. I have not done the arithmetic again because I do not have exact figures in front of me. I was impressed with the auditor's presentation and her evidence. Many invoices were dumped on her lap. I believe she did the best she could with what she was given. [5] Surely, you had advertising amounts in excess of what was allowed but I can do no more than divide the amount claimed in two and disallow one-half of the $2,882 advertising. With respect to the business tax, fees, license, I think probably with the information that I had, you were properly disallowed the $1,000. The rent is not one that can be compromised. It either was or was not. I can well understand the auditor not allowing it if she did not have such a thing as a cancelled cheque and evidence in the return of Mr. Bolton. But, again, I accept the evidence of the Appellant and Mr. Bolton, and accept that that was an amount that was paid. [6] Now, those figures are given in an attempt to arrive at the gross figures that I have already given. The appeal for the 1997 taxation year will be allowed to permit the Appellant to deduct total expenses of $30,000 as opposed to her claim of about $39,000. HIS HONOUR: Now, Mr. Sherbert, is that something I can incorporate in an order. Are you satisfied with the global number or is it something you want to give some thought to? I want help in preparing the order. MR. SHERBERT: No. I think that the global number is enough, I believe. You mean as far as Revenue Canada adjusting this? HIS HONOUR: Yes. MR. SHERBERT: I believe a global number is enough. I think that would be fine is my understanding. HIS HONOUR: So, if in the order for the 1997 taxation year I say the appeal is allowed to permit Tamara Bolton to deduct expenses in the total amount of $30,000, is that clear enough for CCRA? MR. SHERBERT: You mean given that the net income right now is at zero? So, it would be a $30,000 loss, is that - HIS HONOUR: Yes, a $30,000 loss. MR. SHERBERT: Perhaps if it is stated as a business loss or something of that nature so they understand that this is on the loss side and not the total amount. HIS HONOUR: All right. The revenue is zero you are saying. Now, do you understand that, Mr. and Mrs. Bolton? MR. BOLTON: I think. HIS HONOUR: I am not asking you to argue with me. MR. BOLTON: No. HIS HONOUR: I have made my decision. I am asking you do you understand? MR. BOLTON: I think what you're saying is that -- I'm going to the top of page 2 here in this correspondence that came from Mr. Sherbert to myself. It says at the top of this page 2 that these expenses would result in a net loss of twenty-nine ninety-five [phon] for 1997, and I think that you're making that loss $32,925. HIS HONOUR: $30,000. MR. BOLTON: So, $30,000 even? HIS HONOUR: Yes. MR. BOLTON: So, you are augmenting it by about $27,000? HIS HONOUR: How many? MR. BOLTON: About $27,000 higher? Like, because they had the loss at twenty-nine twenty-five [phon] for that year. HIS HONOUR: Oh, I see. When you said 29, I thought you meant $29,000. MR. BOLTON: $2,925. So, you are augmenting that allowable loss to -- HIS HONOUR: We are singing from different song sheets. I do not have the document, not at this point. I am referring to the Notice of Appeal. My file consists of two things, this document and your Notice of Appeal and nothing else, and after a half day of evidence, I still have nothing which is credible to me. But what I am saying is the Reply to the Notice of Appeal, 1997, Schedule "A". MR. BOLTON: This one? HIS HONOUR: Yes. If you go to the schedule. Mr. Sherbert, would you be good enough to go over? MR. SHERBERT: Yes. I think I understand what he means. Yes. He is correct. That given the settlement we had, it would have been a business loss of $2,000 -- MR. BOLTON: 925. MR. SHERBERT: That business loss is now $30,000 exactly. HIS HONOUR: You both follow that? MR. SHERBERT: Yes. That explains I think the question we had. HIS HONOUR: What do we do with 1998? I presume you have made a settlement and 1998 was not a concern. MR. SHERBERT: No. Because Revenue Canada had again set that year or her loss -- her net income for that year at zero and we both felt that that was fine for both sides. HIS HONOUR: Now, the 1998 appeal is withdrawn? MR. SHERBERT: Yes. Effectively, it is withdrawn or the Appellant withdrew their appeal to that year, yes. HIS HONOUR: Is that accurate? MR. BOLTON: Yes, Your Honour. We are basically agreeing with their submission of zero income for the year. HIS HONOUR: All right. Good. That is it then. Thank you very much. Signed at Ottawa, Canada, this 5th day of December, 2003. "C.H. McArthur" J.T.C.C. CITATION: 2003TCC861 COURT FILE NO.: 2002-4153(IT)I STYLE OF CAUSE: Tamara Bolton and Her Majesty the Queen PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: September 18, 2003 REASONS FOR JUDGMENT BY: The Honourable Justice C.H. McArthur DATE OF JUDGMENT: September 24, 2003 APPEARANCES: Agent for the Appellant: Peter Bolton Counsel for the Respondent: Eric Sherbert COUNSEL OF RECORD: For the Appellant: Name: N/A Firm: N/A For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada