[OFFICIAL ENGLISH TRANSLATION]
Date: 19980923
Docket: 97-2392(IT)I
BETWEEN:
LOUISE BLAIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
___________________________________________________________________
Agent for the Appellant: Bernard Brosseau, C.A.
Counsel for the Respondent: Valérie Tardif
___________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally on July 2, 1998,
at Sherbrooke, Quebec.)
Archambault, J.T.C.C.
[1] Louise Blais disputes assessments made under the Income Tax Act (Act) by the Minister of National Revenue (Minister) for the 1993 and 1994 taxation years.
[2] To Ms. Blais's employment income, the Minister added additional amounts of $918 for 1993 and $4,785 for 1994 in respect of tips. Those tips allegedly came from the work she had done at a restaurant (Chez Ronnie). Ms. Blais contends that her tips should be limited to $102 for 1993 and $2,214 for 1994.
The Facts
[3] In making his assessment, the Minister assumed certain facts which he stated in paragraph 5 of the reply to the notice of appeal. The said paragraph 5 reads as follows:
[TRANSLATION]
(a) during the years in issue, the appellant was employed, inter alia, by Société Chez Ronnie Bar Restaurant Inc. (hereinafter the "Corporation");
(b) during the years in issue, the appellant was a waitress assigned to serve meals at the Corporation's restaurant;
(c) during the years in issue, the appellant received a basic salary and tips from the Corporation;
(d) T4 slips showing amounts of $793 for the 1993 taxation year and $4,298 for the 1994 taxation year were issued to the appellant by the Corporation;
(e) the appellant reported the following income in her tax returns for 1993 and 1994:
1993 1994
Base salary:
Jeans Flo-Rican Inc. $9,204 $3,491
Bar le Shooter $ 845
Chez Ronnie Bar Restaurant Inc. $ 793 $4,298
Auberge Royale $ 309
Tips: $ 0 $ 343
Unemployment insurance benefits $ 530
(f) the following computation method was used to establish the total amount of tips received by the appellant in her employment with Chez Ronnie Bar Restaurant Inc. for each of the taxation years 1993 and 1994:
(A/B)X(CXD)
where:
A is the appellant's gross annual salary;
B is the gross annual salary of all the waitresses assigned to serve meals at the restaurant;
C is the restaurant's after-tax sales;
D is the average percentage of tips paid to the waitresses on sales at the Corporation's restaurant;
(g) the appellant's gross annual salary at the Corporation was $793 for the 1993 taxation year and $4,606 for the 1994 taxation year;
(h) the gross annual salary of all the waitresses assigned to serve meals at the Corporation's restaurant was $51,092 for the 1993 taxation year and $44,794 for the 1994 taxation year;
(i) the restaurant's total after-tax sales amounted to $526,244 for the 1993 taxation year and $443,766 for the 1994 taxation year;
(j) the average percentage of tips paid to the waitresses on sales at the Corporation's restaurant was estimated at 11.24 percent for each of 1993 and 1994;
(k) the total amount of tips received by the appellant was established at $918 for the 1993 taxation year and $5,129 for the 1994 taxation year;
(l) consequently, unreported tip amounts of $918 for the 1993 taxation year and $4,785 for the 1994 taxation year were added to the appellant's income.
[4] Ms. Blais admitted all of these facts except those stated subparagraphs 5(f) and (h) to (l). The evidence she adduced did not contradict the facts that she did not admit.
[5] Before starting to work for Chez Ronnie, she had worked for approximately two months in 1993 at the Bar le Shooter where, she admitted, she earned from $35 to $50 in tips each evening.
[6] In 1993 and 1994, Chez Ronnie was a business operating a discotheque, a dining room and a bar. That business paid two types of remuneration: the workers who were waiters in the dining room or in the bar received an hourly wage of $5.13 as well as tips, while those who received few or no tips, such as the cloakroom attendants, were paid a higher hourly wage of $5.85.
[7] Chez Ronnie's workers were paid by cheque every other Thursday. A cheque stub was given for each type of remuneration, even if a worker was entitled to both types of remuneration for the same pay period.
[8] Ms. Blais began working for Chez Ronnie on October 17, 1993. Her testimony was quite evasive as to the type of services she had rendered during the two relevant taxation years. However, an examination of her cheque stubs provides us with the following information: she received an hourly wage of $5.13 during her first two weeks and $5.85 for the following eight weeks. It may therefore be assumed that she first worked as a waitress and then as a cloakroom attendant.
[9] Starting on December 26, 1993, in a single pay period, she worked as both a cloakroom attendant and a bar waitress. She described herself as a "shooter girl", which was the expression used in her milieu. She generally worked in this capacity for three or four hours on Fridays, when the bar was busiest. Her work as a cloakroom attendant was for approximately 10 hours a week, usually over two or three days.
[10] Starting on May 15, 1994, she spent most of her time as a waitress in the dining room. However, she also worked as a cloakroom attendant for approximately five hours a week in the last two weeks of May and about two and a half hours a week in June. She occasionally worked as a bar waitress.
[11] In her testimony, Ms. Blais said that she had marked down on the back of her cheque stubs the amount of tips she had earned during the two workweeks covered by those stubs. The amounts represent the total of all daily tips she had earned and had recorded on the back of her order books.
[12] Ms. Blais left her job with Chez Ronnie on October 1, 1994. Chez Ronnie had given the Auberge Royale a concession to operate the dining room. It appears that Ms. Blais worked for the new business for a short period of time.
Analysis
[13] As the Minister made his assessment within the normal time period, the burden is on Ms. Blais to show that the facts assumed by the Minister are incorrect, which burden, in this instance, consists mainly in establishing that the amounts of income from tips were lower than those stated by the Minister in his notices of assessment.
[14] Unfortunately for Ms. Blais, I do not believe that she successfully discharged that onus. I must say in general that I found her testimony quite evasive, particularly as regards the terms and conditions of her employment: the start, duration and end of her employment, the description of her duties, the amount of her tips and the number of tables to be waited on. She was also rather evasive about the circumstances of the signing of her tax returns for 1993 and 1994.
[15] In her 1993 return, she included no tips, whereas $102 in tips are indicated on the back of her cheque stubs. In her 1994 return, only an amount of $343 is reported in respect of tips, whereas the amounts indicated on the back of her cheque stubs come to at least $2,253.
[16] Furthermore, some of Ms. Blais's statements were contradicted by evidence brought before the Court. Ms. Blais claimed that she had earned no tips as a cloakroom attendant. It is true that the cheque stubs relating to the remuneration received by her as a cloakroom attendant for 1993 show no tips. However, all the cheque stubs for 1994 having reference to the remuneration received in that capacity show tips earned by Ms. Blais.
[17] Of her 40 weeks of employment with Chez Ronnie in 1994, Ms. Blais worked approximately 24¾that is, 12 pay periods¾as both a cloakroom attendant and a waitress. On examining the cheque stubs for those 12 pay periods, it may be seen that most[1] of the stubs relating to the remuneration paid for the work as a cloakroom attendant showed tips which, calculated on an hourly basis, are greater than the tips paid to Ms. Blais when she worked as a waitress in the dining room.
[18] Furthermore, Ms. Blais's testimony was contradicted by that of the former owner of Chez Ronnie, who stated that the cloakroom attendants could share the tips left on a small plate near the cloakroom.
[19] Thus Ms. Blais's argument that the Minister attributed tips to her for work periods during which she was working as a cloakroom attendant and had no opportunity to receive tips is not valid. Even if that argument were accepted for 1993, the additional income of $918 could relate to tips that Ms. Blais earned at the Bar le Shooter and that she did not report. As she herself admitted, she earned between $35 and $50 in tips each evening at that establishment. It is therefore reasonable to conclude that Ms. Blais earned at least $918 in tips in 1993.
[20] Here is how I arrive at that figure. Ms. Blais earned remuneration of $845 from the Bar le Shooter. At an hourly rate of $5.13, that represents 164 hours which gives, if one assumes a seven-hour workday, 23 days of work. Using the minimum daily amount of tips that she admits she received, namely $35, one arrives at tips of $823 for her work at the Bar le Shooter. If I add only the amount of tips which she admitted receiving from Chez Ronnie in 1993, that is, $102, the result is a total of $925 in tips for 1993.
[21] It is quite clear that, if one considered the fact that the appellant worked as a waitress during her first two weeks of employment at Chez Ronnie, it could be supposed that the amount of tips from that establishment was much greater than $102.
[22] Moreover, I found Ms. Blais's testimony neither convincing nor credible as to the amounts of tips she had indicated on her cheque stubs. On the contrary, the evidence shows that Ms. Blais did not report her income from tips. She admitted that she had earned tips of $35 to $50 an evening when she worked as a bar waitress or "shooter girl", whereas her stubs show, on average, only about $10 or $12 per evening. At $12 per evening, assuming a tip of $0.50 per drink, she would have served only 24 drinks in a period of roughly three hours between 11:00 p.m. and 2:00 a.m. That strikes me as unrealistic. Tips totalling $50 represent a $0.50 tip per drink for 100 drinks, which I find more reasonable for a weekend evening, during the hours when the bar was busiest.
[23] The appellant did not report tips for either of her waitress jobs in 1993, that is to say, for her work at the Bar le Shooter and at Chez Ronnie. Furthermore, she did not report tips from her work at the Auberge Royale in 1994.
[24] I find the estimate by the Minister's auditor entirely reasonable. To determine the amount of tips to be attributed to Ms. Blais, the auditor considered only sales related to the operation of the dining room and did not include sales of alcoholic beverages. He assumed that Ms. Blais had been hired solely as a waitress in the dining room. In addition, the auditor did not try to estimate the amount of tips from the Bar le Shooter or from the Auberge Royale. Yet, the evidence showed that Ms. Blais had worked as a bar waitress from December 26, 1993, to May 15, 1994. The auditor could therefore have attributed to her an even larger amount of tips.
[25] Mr. Dumontais admitted that the rate of 11.24 percent for tips used by the Minister's auditor seemed reasonable to him for the dining room's sales and said that it was even low when it came to sales at the bar.
[26] There is no evidence that this evaluation is unreasonable. Moreover, Ms. Blais's agent did not dispute the percentage used by the auditor or the proportion of sales that was attributed to Ms. Blais. His only real argument was that part of the work related to duties that did not entitle the appellant to tips. However, as mentioned above, that argument is not support by the facts adduced in evidence.
[27] For all these reasons, Ms. Blais's appeals for the 1993 and 1994 taxation years are dismissed, without costs.
Signed at Ottawa, Canada, this 23rd day of September 1998.
|
"Pierre Archambault" |
J.T.C.C.
Translation certified true
on this 30th day of June 2003.
Erich Klein, Revisor