Date: 20000628
Docket: A-477-98
EDMONTON, ALBERTA, WEDNESDAY, THE 28TH DAY OF JUNE, 2000.
PRESENT: ROBERTSON, J.A.
McDONALD, J.A.
SEXTON, J.A.
BETWEEN:
BRUCE HEGERAT
Applicant
- and -
HER MAJESTY THE QUEEN
Respondent
Heard at Edmonton, Alberta, on Monday, June 26, 2000
Judgment delivered from the Bench at Edmonton, Alberta, on Monday, June 26, 2000
REASONS OF THE COURT BY: SEXTON, J.A.
Date: 20000628
Docket: A-477-98
PRESENT: ROBERTSON, J.A.
McDONALD, J.A.
SEXTON, J.A.
BETWEEN:
BRUCE HEGERAT
Applicant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
SEXTON, J.A.:
[1] The facts of this case are set out in detail in the reasons of the Tax Court Judge which are reported at [1997] T.C.J. No. 1400 (T.C.C.). There are two issues on this appeal related to assessments under the Excise Tax Act:
| (1) Whether the applicant was entitled to input tax credits in the amount of $713.97 in relation to his alleged product design and development for the years 1991 to 1994 inclusive. The expenses incurred by the applicant were primarily expenses associated with the apartment where he lived. |
| (2) Whether the applicant was required to collect and account for GST in the amount of $299.83 on the consideration he received for supplies he made during the course of his property management activities. |
[2] The Tax Court Judge disallowed the claim for input tax credits because he concluded that in order to qualify, the taxpayer must carry on a "commercial activity" and that in order to do so the taxpayer must have had a reasonable expectation of profit. He found on the facts that what the applicant had was an abundance of imagination and ideas, but that he did not have a reasonable expectation of profit.
[3] On the second issue, the Tax Court Judge found that the applicant was paid fees for management of a significant building for an absentee owner. Because of this commercial activity in which he was engaged, as a GST registrant, he was obliged to charge his clients GST and remit the tax to Revenue Canada which he failed to do.
[4] On the first issue before us, the applicant argued that the Tax Court Judge failed to consider all of the evidence, and misconstrued the weight of evidence in concluding that the applicant was not carrying on a business. The applicant argued that his business was that of a venture capitalist. However, he admitted that no money was actually raised from third parties and used in developing his products. There was no product successfully developed and no revenue earned although he said that he had developed ideas for about 80 products. None was taken to the point of actually selling a product.
[5] We are unable to conclude on this issue that the Tax Court Judge erred in law in making his decision nor did he base his decision on an erroneous finding of fact made in a perverse or capricious manner or without regard to the facts before him.
[6] On the second issue, having regard to the argument advanced by the applicant to the effect that because his income was substantially less than $30,000, he therefore was not liable to collect and remit GST in the amount of $299.83, and having regard to the fact that the Minister of National Revenue was unable to respond in any meaningful way to this argument, we would allow the appeal on this issue.
[7] In conclusion, the appeal for judicial review should be allowed in part. The judgment of the Tax Court Judge dated February 12, 1997, should be allowed and the decision should be set aside with respect to the determination that the applicant was obligated to collect and remit GST in the amount of $299.83. The matter should be remitted to the Tax Court Judge to be disposed of in a manner consistent with these reasons. Success being divided, there will be no order as to costs.
"J. Edgar Sexton"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-477-97
STYLE OF CAUSE:
BRUCE HEGERAT
| - and - |
HER MAJESTY THE QUEEN
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: June 26, 2000
REASONS FOR JUDGMENT BY: Sexton, J.A.
CONCURRING REASONS BY:
DATED: June 28, 2000
APPEARANCES:
Mr. Bruce Hegerat ON HIS OWN BEHALF
Mr. John C. O'Callaghan FOR THE RESPONDENT
SOLICITORS OF RECORD:
Mr. Bruce Hegerat
c/o Affordable Mini Storage
10301 - 104th Street
Edmonton, Alberta T-5J 1B9 ON HIS OWN BEHALF
Morris A. Rosenberg
Deputy Attorney General of Canada
Department of Justice
10199 - 101 Street
Edmonton, Alberta T5J 3Y4 FOR THE RESPONDENT