[OFFICIAL ENGLISH TRANSLATION]
97-2435(IT)I
BETWEEN:
RAYNALD MICHAUD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on April 14, 1998, at Québec, Quebec, by
the Honourable Judge Guy Tremblay
Appearances
Counsel for the Appellant: The Appellant himself
Counsel for the Respondent: Catherine Letellier
JUDGMENT
The appeal from the assessment made under the Income Tax Act, notice of which is dated May 16, 1996, and bears number 02072, is dismissed in accordance with the attached Reasons for Judgment.
Signed at Québec, Quebec, on April 22, 1998.
|
"Guy Tremblay" |
J.T.C.C.
Translation certified true
on this 10th day of June 2003.
Sophie Debbané, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 19980422
Docket: 97-2435(IT)I
BETWEEN:
RAYNALD MICHAUD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Guy Tremblay, J.T.C.C.
Issue
[1] According to the Notice of Appeal and the Reply to the Notice of Appeal, the issue is whether or not, in computing his tax for the 1995 taxation year, the appellant is required to pay $10,664.83.
[2] The respondent argued that the appellant was the sole shareholder of Gestion Sarck Inc. In 1993, that company sold Sylvain Michaud, the appellant's son, an immovable property in St-Étienne-de-Lauzon for $127,000. According to the notarial contract, the purchaser paid $67,000 and assumed the existing $60,000 mortgage.
[3] By resolution of the board of directors, $67,000 was transferred to the appellant in discharge, according to the respondent, of an alleged promissory note dating back to 1989.
[4] The respondent also argued that no evidence has been adduced to show the existence of the alleged $67,000 claim and that, at the time of the 1993 transaction, Gestion Sarck Inc. was liable to the Minister of National Revenue for taxes for 1988, 1989, 1990 and 1991. In 1996, that liability (principal, interest and penalties) apparently amounted to $10,664.83.
[5] The appellant argued that Gestion Sarck Inc. did not derive any advantage or benefit from a preferential payment. As for the appellant, he merely paid the debts of Gestion Sarck Inc., which was insolvent at the time. The real estate slump was what caused the company's illiquidity, making it impossible for it to pay taxes.
Burden of proof
[6] The appellant bears the burden of showing that the respondent's assessments are incorrect. This burden of proof derives from a number of judicial decisions, including the Supreme Court of Canada's judgment in Johnston v. Minister of National Revenue.[1]
[7] In Johnston, the Court held that the facts assumed by the respondent to support assessments or reassessments are also presumed to be true until proven otherwise. In the case at bar, the facts assumed by the respondent are described in subparagraphs (a) to (i) of paragraph 11 of the Reply to the Notice of Appeal. That paragraph reads as follows:
[TRANSLATION]
11. In making this assessment, the Minister assumed the following facts, inter alia:
(a) according to a notarial contract dated July 16, 1993, Gestion Sarck Inc. sold Sylvain Michaud an immovable property at 185 Rue Principale in Saint-Étienne-de-Lauzon for $127,000; [admitted]
(b) according to the said notarial contract, Sylvain Michaud assumed the existing $60,000 mortgage; [admitted]
(c) through resolutions adopted by the board of directors of Gestion Sarck Inc., it was resolved that the $67,000 balance of sale payable to the said corporation by Sylvain Michaud would be paid to the appellant to discharge an alleged promissory note dated 1989; [admitted with an explanation]
(d) at all relevant times, the appellant was the sole shareholder of Gestion Sarck Inc.; [admitted]
(e) Sylvain Michaud is the appellant's son; [admitted]
(f) the Minister has never been given the document proving the claim that the appellant allegedly had against Gestion Sarck Inc.; [admitted with an explanation]
(g) the $67,000 claim that Gestion Sarck Inc. had was transferred to the appellant on July 16, 1993, at fair market value without the appellant being able to prove that any consideration was provided; [admitted]
(h) on July 16, 1993, when the claim was transferred, Gestion Sarck Inc. was liable to the Minister for taxes; [admitted]
(i) on May 16, 1996, Gestion Sarck Inc. owed the Minister $10,664.83 in unpaid taxes for the fiscal years ending on December 31, 1988, December 31, 1989, December 31, 1990, and December 31, 1991:
(i) federal tax $3,616.54
(ii) interest $6,178.27
(iii) penalties $870.02
Facts in evidence
[8] The appellant argued that he was never paid the $67,000. He also said that a clause had been added stating that the purchaser, his son, would look after his father until his death. The appellant's L4 and L5 vertebrae are fractured as a result of an accident in 1978, and he is currently on welfare.
[9] The appellant argued that he had had the company's tax returns partly prepared by an accountant but that, at one point, the accountant had demanded substantial fees that he could no longer pay. According to the appellant, the company had a lot of debts and could not be taxable. He also stated that Revenue Quebec had vacated the assessments.
[10] Yves Côté, an appeals officer, testified that he had met with the appellant's accountant concerning 1988 and 1989. He had accepted the returns on the basis of the documents and figures provided by the accountant. The witness revoked the assessments. The company had about $130,000 in debts. The 1990, 1991 and 1992 tax returns were not filed. Mr. Côté said that, if the situation had been the same, he would have made the same decision.
[11] The Court gave the appellant 24 hours to file a document from Revenue Quebec.
[12] The appellant filed the following document within that time frame:
[TRANSLATION]
Sainte-Foy, April 15, 1998
Raynald Michaud
185 Rue Principale
Saint-Étienne-de-Lauzon, Quebec
G6J 1E8
Ref. No.: QR 9601643 and Map 0963866
Subject: Gestion Sarck Inc.
Dear Sir:
Further to your request, we are sending you the following information.
The ministère du Revenu du Québec has suspended collection in the above-mentioned file because of the corporation's financial inability to pay.
However, the ministère reserves the right to reactivate the file if the financial situation returns to normal.
We trust that this information will be satisfactory.
Yours truly,
(s) Jean-Luc Côté
Jean-Luc Côté
Tel.: (418) 577-0103
1 888 543-7539 (ext. 10103)
Fax: (418) 644-1442
[13] According to that document, the basis for the decision was not necessarily the invalidity of the assessments but rather the financial inability of Gestion Sarck Inc., a situation that has not changed.
[14] This Court has no jurisdiction to determine whether Gestion Sarck Inc. or the appellant is or is not able to pay, but it does have jurisdiction to consider whether the assessments were correctly made on the basis of the evidence adduced. As a result of the admissions and the documents adduced in evidence, the Court must confirm the assessment.
Conclusion
[15] The appeal is dismissed.
Signed at Québec, Quebec, on April 22, 1998.
|
"Guy Tremblay" |
J.T.C.C.
Translation certified true
on this 10th day of June 2003.
Sophie Debbané, Revisor