BETWEEN:
and
____________________________________________________________________
Appeals heard on August 29, 2006, and judgment delivered orally
on August 30, 2006, at Toronto, Ontario,
By: The Honourable Justice A.A. Sarchuk
Appearances:
____________________________________________________________________
JUDGMENT
The appeals from reassessments of tax made under the Income Tax Act for the 1995, 1996 and 1997 taxation years are dismissed.
On consent of the Respondent, the appeals from reassessments of tax made under the Act for the 1998 and 1999 taxation years are allowed, and the reassessments are referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that in computing income, the Appellant is entitled to deduct bad debt expenses of $516 and $2,580, respectively, with respect to the Lola Road property.
Signed at Ottawa, Canada, this day 15th of September 2006.
BETWEEN:
JOHN ARNOLDI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] These are appeals by John Arnoldi with respect to assessments of his 1995, 1996, 1997, 1998 and 1999 taxation years. With the exception of 1998, the Appellant failed to file his income tax returns for each of those years as and when required by subsection 150(1) of the Income Tax Act. His return for the 1998 taxation year was filed on April 30, 1999. The initial assessments of the 1995 and 1996 taxation years were made by the Minister of National Revenue in July 1999 and, for the 1998 year, on June 10, 1999.
[2] The Appellant filed his income tax returns for 1995, 1996, 1997 and 1999 and an amended return for the 1998 taxation year on July 14, 2000, and reported rental losses as business losses in the amounts of $7,442, $16,360, $16,695, $18,618 and $20,884, respectively.
[3] A series of assessments and reassessments followed, the last of which was dated October 1, 2001, which disallowed the rental losses as claimed. The Appellant objected. In further reassessing the Appellant for the 1995, 1996, 1997, 1998 and 1999 taxation years, on June 13, 2003, the Minister included additional income and allowed certain expenses, resulting in the Minister including the amounts of $3,150, $2,752 and $12,764 as net income from property for the 1996, 1997 and 1999 taxation years, respectively, and allowing the amounts of $4,838 and $5,179 as net losses from property for the 1995 and 1998 taxation years, respectively. These appeals followed.
[4] During the relevant periods of time, the Appellant owned four rental properties in respect of which he failed to report all of the revenues. The issue is whether the Minister properly computed the Appellant's income or loss from his rental activity.
[5] The Appellant was not represented by counsel at the hearing. His submission reflected his disagreement with four aspects of the assessments. First, he alleges that he was entitled to a capital cost allowance on his rental properties in 1995, 1996 and 1997. Second, he submitted that certain bank charges related to the rental activity should not have been disallowed. Third, he maintains that the rental income on 933 Mount Pleasant Road was not $1,800, as assessed, but rather $790. Fourth, he contends that no rental income was received with respect to the property described as 33 Lola Road.
[6] I propose to deal first with the capital cost allowance claim. Evidence adduced on behalf of the Respondent indicated that rental income reported included income from a second source, a store and a newspaper delivery business. The evidence did not clearly establish the nature of the store or whether the newspaper delivery formed part of its business. The existence of this source of income is relevant with respect to any potential capital cost allowance claim the Appellant was entitled to, since such income, that is, the income from the store and the newspaper delivery business would have to be segregated from the rental income and expenses in order to properly calculate the amount of capital cost allowance, if any, was available. In this context, the Appellant provided no information, neither documentary nor oral, to support his position.
[7] Absent such information it is clear that, as the Respondent's witness, Mr. Scott, observed, there is no way in which it would be possible to establish the amount of a capital cost allowance which might properly be claimed. The Respondent's position also reflects the fact that two of the years in issue were loss years in which case no capital cost allowance would have been available in any event. With respect to this issue, the Appellant's appeal is denied.
[8] I turn next to the second item, the bank charges. In his testimony, the Appellant made reference to charges incurred in each of the taxation years as follows: $570.28 in 1995, $848 in 1996, $1,003 in 1997, $864 in 1998, and $807 in 1999. He maintains that these expenses were deductible in his rental business, and also maintains that the relevant documents had been provided to Canada Revenue Agency at the Sudbury office. There is no dispute that was the case. However, the Appellant failed to produce any of the documents in Court and insisted that it was the Minister's responsibility to do so since they had seen the documents and they should have taken them into account.
[9] Unfortunately, that is not the case. It remains the Appellant's responsibility to provide all relevant material, including documents necessary in order to establish his case in Court. That no other evidence was forthcoming that these bank charges were incurred is not in question. That there is no evidence that they related to his rental activities in whole or in part has not been established. Accordingly, since the Appellant has failed to provide any documentary or oral testimony regarding the nature and relevance of these charges, it is not possible, absent such information, to allow his claim for that deduction.
[10] With respect to his claim regarding the Mount Pleasant Road rental income, no evidence was advanced by the Appellant in support. Accordingly, no reduction can be made to the assessment in that regard.
[11] The fourth item relates to the Appellant's submission that the amounts of $516 and $2,580, purporting to be rental income from 33 Lola Road in 1998 and 1999, respectively, had in fact never been received by him and had been written off as a bad debt. The Respondent has conceded this point and, to that extent, these amounts will be allowed and the necessary correction to the assessments will be made.
Signed at Ottawa, Canada, this 15th day of September 2006.
"A.A. Sarchuk"
Sarchuk D.J.
COURT FILE NO.: 2004-3554(IT)I
STYLE OF CAUSE: JOHN ARNOLDI AND
HER MAJESTY THE QUEEN
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: August 29, 2006
REASONS FOR JUDGMENT BY: The Honourable Justice A.A. Sarchuk
DATE OF JUDGMENT: September 15, 2006
APPEARANCES:
|
For the Appellant: |
The Appellant himself |
|
Counsel for the Respondent: |
Jocelyn Espejo Clarke |
COUNSEL OF RECORD:
Firm: N/A
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada