Date: 19971209
Docket: 95-3617-IT-G
BETWEEN:
MICHAEL RUSNAK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
O'Connor, J.T.C.C.
[1] The Minister of National Revenue has denied the Appellant certain alleged business expenses in the 1991 and 1992 taxation years. The issue is whether those denials were correct. The Appellant commenced work with Mutual Life in 1950 and continues working to this day, notwithstanding that he is 72 years of age. In the years in question he was not an employee of the company but rather was an independent contractor on a commission basis. He sold life insurance and other financial products such as annuities, mutual funds, R.R.S.P.'s and R.R.I.F.'s. He had numerous clients, put in long hours and travelled frequently. He was one of the top salesmen in the business. He had a business office in Yorkton, Saskatchewan and also carried on business from his home office. The total area of the home was 2,800 square feet and the office measured 400 square feet. I accept without reservation the credibility of the Appellant. This is important because in certain cases the records and logs kept by the Appellant were less than ideal. However, certain records were kept and the Appellant's testimony has helped fill in the gaps to some extent.
[2] Based on the written and oral evidence presented, I allow the appeals on the following bases. For convenience my analysis will be based on Schedules 1 and 2 of the Minister's Reply to the Notice of Appeal and on certain assumptions of the Minister contained in the said Reply.
1. As agreed by the parties, the amount of telephone expense disallowed in each of the 1991 and 1992 years is $163.
2. As agreed by the Appellant the travel expenses disallowed of $2,000 in 1991 and $2,800 in 1992 and the office expense of $80 in 1991 and $385 in 1992 will remain disallowed.
3. The costs of office in the home, namely $600 in 1991 and $800 in 1992 are allowed.
4. As to the conventions, I accept the submissions of the Minister contained in paragraphs 8(e) to 8(m) of the Reply. The Appellant's evidence with respect to 1992 that 17 days in Hawaii probably cost about the same as 6 days because of cheaper charter airfares was not corroborated nor proven to my satisfaction. However, as to business expenses, although there were no vouchers on certain items, I accept the Appellant's testimony that the cash amounts of $2,690 and $1,250 referred to in paragraph 8(n) of the Reply were cash disbursements incurred for business purposes. Consequently, these two amounts are to be allowed, notwithstanding that Appellant's counsel did not push the issue.
5. I am also satisfied that the advertising and promotion expenses claimed by the Appellant of $4,983 in 1991 and $6,760 in 1992 were actually incurred for business purposes. Consequently, these full amounts are to be allowed. In my opinion, the testimony of the Appellant is to be preferred to the assumptions of the Minister contained in paragraphs 8(q) to 8(z) of the Reply.
6. As to car operating expenses and C.C.A. on auto, the Appellant is entitled to 80% thereof. For purposes of C.C.A., I find that the correct purchase price of the Cadillac in 1991 was $13,798. Also, I find that the amount of $5,459 claimed by the Appellant in 1992 should be reduced to $4,125.
[3] In consequence, this matter is referred back to the Minister for reconsideration and reassessment on the above basis.
[4] Owing to the mixed result of these appeals there shall be no costs.
Signed at Ottawa, Canada, this 9th day of December, 1997.
"T.P. O'Connor"
J.T.C.C.