Date: 20020506
Docket: 2001-2189-IT-I
BETWEEN:
MONCEF BEN MABROUK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the Informal Procedure was heard at Fort McMurray, Alberta on April 22, 2002. The Appellant testified and called Hechemi Ben Kheled. The Respondent called the auditor on the file, Lynda Dombroski.
[2] Paragraphs 3 to 6 inclusive of the Reply to the Notice of Appeal set out the matters in dispute. They read:
3. In computing income for the 1998 and 1999 Taxation Years, the Appellant reported gross business income of $17,125 and $23,120 respectively.
4. In reassessing the Appellant for the 1998 and 1999 Taxation Years, the Minister of National Revenue (the "Minister") increased the gross business income by $23,800 and $23,183 respectively. The attached schedules A and B detail the amounts added to income.
5. In so reassessing the Appellant, the Minister made the following assumptions of fact:
(a) during the 1998 and 1999 Taxation Years the Appellant drove a Taxi Cab in Fort McMurray Alberta;
(b) the Appellant drove his Taxi Cab an average of 89,064 kilometers per year;
(c) the minimum rates charged by Taxi Cabs in Fort McMurray were $2.57 to go 90 meters and $.10 per 90 meters thereafter;
(d) the Appellant did not keep any records to record revenue received;
(e) the Appellant makes deposits to the bank on a weekly basis consisting of cash and charge receipts from the Taxi Cab company;
(f) the Appellant pays expenses such as gas and repairs for the Taxi Cab in cash;
(g) the Appellant does not provide any records to his accountant for the preparation of his income tax return, he tells him verbally what he earned and what his expenses were;
(h) the Appellant did not borrow any funds from friends or relatives during the 1998 and 1999 Taxation Years;
(i) funds received by the Appellant and his spouse in respect of Child Tax Benefits were deposited to an account at Scotia Bank held solely by the Appellants spouse;
B. ISSUES TO BE DECIDED
6. The issue is whether the amounts of $23,800 and $23,183 have correctly been included in the Appellants gross business income in the 1998 and 1999 Taxation Years respectively.
[3] Assumptions 5(a), (c), (d), (f), (g) and (i) were not refuted by the evidence. With respect to the remaining assumptions:
5(b) The Appellant testified that others also drove his taxi. On this basis, the Court finds that he drove the taxi for one-half of the kilometres assumed, per year. He also pointed out that the taxis is driven one-way empty and the other way with a fare - consisting of a further 1/2. This is accepted as true. Therefore the true fare paying mileage is 1/4 x 89,064 kilometres per year = 22,266 kilometres per year for which the Appellant should be assessed.
5(e) and (h) The Appellant testified that his deposits also consisted of money borrowed or gifted from two friends. One of these friends, Hechemi Ben Kheled, testified and confirmed this respecting his transactions. In particular, Hechemi Ben Kheled is believed. He told the Appellant to come from Montreal to Fort McMurray where Mr. Ben Kheled would get the Appellant a job as a heavy machinery mechanic. The Appellant came but, because of problems with English, he has only been able to get a job as a taxi driver at a very low income. Mr. Ben Kheled justly feels responsible and the Court accepts the Appellant's and Mr. Ben Kheled's testimony because it is logical and, in particular, Mr. Ben Kheled is accepted as a reliable witness.
[4] Ms. Dombroski presented Exhibit R-20, the appeal officer's calculations which supported the assessment. In relation to fuel costs, that officer calculated a fuel cost based on 10 kilometres per litre to justify the mileage calculation of income as related to his fuel expenses. In the Court's view 10 kilometres per litre is simply wrong. An ordinary large sedan such as a taxi gets about 12 litres per 100 kilometres on the highway under optimum conditions. That is not city rates which use much more gas; nor is it idling time in summer or winter which uses gas while sitting and not earning anything. Because of these three factors - large sedan, city mileage and idling, the fuel usage supports the 1/4 mileage figures suggested by the Appellant. Moreover, the Appellant, and his family's lifestyle is one based on very modest means, a fact which supports the Appellant's claims respecting his income. They rent, they get clothes from the Salvation Army and Mr. Ben Kheled described them as in need.
[5] Mr. Mabrouk testified that he also received loans from another friend, Rafik Agili, a fellow Tunisian immigrant. However Mr. Agili did not testify. He has moved from Fort McMurray to Calgary. But he did not answer the Respondent's letters. Because Mr. Agili did not substantiate the Appellant in reply to the Canada Customs and Revenue Agency's letters, and there are no cheques respecting them, his alleged loans are not accepted as valid. In order to validate the Appellant's claims respecting Mr. Agili either cross examination of Mr. Agili or satisfactory documentary evidence, or both, are necessary. It is for this reason that the alleged affidavit of Mr. Agili is not accepted by the Court.
[6] On the basis of the foregoing findings, the Court finds:
|
1998 |
1999 |
|
|
Total banked Revenue as per Schedule A |
$43,790.00 |
$49,545.25 |
|
Less gifts and loans from Mr. Ben Kheled |
$15,000.00 |
$ 3,000.00 |
|
$28,790.00 |
$46,545.25 |
[7] The appeals officer calculated gross taxi cab revenue at 50 cents per kilometre x 89,064 per year, which allows for one-way fares. However the taxi rates allowed in the years 1998 and 1999 average out to about $1.00 per kilometre. The Court finds on the premises described that, more or less, the Appellant's fare kilometres per year average 22,266, which yields a rough gross income of $22,266 per year. This compares roughly to the figures found in paragraph [6] hereof, although the 1999 figure in paragraph [6] is higher. Nonetheless, the paragraph [6] figures are adopted as correct because they are based on the evidence respecting the Appellant's own banked funds which is before the Court and which is accepted.
[8] Using these figures as a basis and the Respondent's format of calculation adopted in Schedules A and B of the Reply the Court finds:
|
1998 |
1999 |
|
|
Total Revenue |
$28,790.00 |
$46,545.21 |
|
Less GST on total revenue |
-1,883.46 |
-3,045.01 |
|
Net Revenue |
$26,906.54 |
$43,500.20 |
|
Reported Revenue |
-17,125.00 |
-23,120.00 |
|
Discrepancy |
$9,781.54 |
$20,380.20 |
[9] The appeals are allowed. These assessments are referred to the Minister of National Revenue for reconsideration and reassessment on the basis that the Appellant's increased gross business income for the years are:
1998 $ 9,781.54
1999 $20,380.20
Signed at Saskatoon, Saskatchewan, this 6th day of May, 2002.
"D. W. Beaubier"
J.T.C.C.
COURT FILE NO.: 2001-2189(IT)I
STYLE OF CAUSE: Moncef Ben Mabrouk v. The Queen
PLACE OF HEARING: Fort McMurray, Alberta
DATE OF HEARING: April 22, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge D. W. Beaubier
DATE OF JUDGMENT: May 6, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Brooke Sittler
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-2189(IT)I
BETWEEN:
MONCEF BEN MABROUK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on April 22, 2002 at Fort McMurray, Alberta, by
the Honourable Judge D. W. Beaubier
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Brooke Sittler
JUDGMENT
The appeals from the reassessments made under the Income Tax Act for the 1998 and 1999 taxation years are allowed, without costs, and the matters are referred to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Saskatoon, Saskatchewan, this 6th day of May, 2002.
|
"D. W. Beaubier" |
J.T.C.C.