[OFFICIAL ENGLISH TRANSLATION]
97-3787(IT)I
BETWEEN:
MARCEL GAUTHIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeal of Diane Gauthier (97-3742(IT)I), on May 28, 1998, at Québec, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: M. Lamarre
JUDGMENT
The appeal from the assessments made under the Income Tax Act for the 1991, 1992, 1994 and 1995 taxation years is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of August 1998.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 27th day of June 2003.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
97-3742(IT)I
BETWEEN:
DIANE GAUTHIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeal of Marcel Gauthier (97-3787(IT)I), on May 28, 1998, at Québec, Quebec, by
the Honourable Judge Alain Tardif
Appearances
Agent for the Appellant: Marcel Gauthier
Counsel for the Respondent: M. Lamarre
JUDGMENT
The appeal from the assessments made under the Income Tax Act for the 1991, 1992, 1994 and 1995 taxation years is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of August 1998.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 27th day of June 2003.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 19980818
Docket: 97-3787(IT)I
97-3742(IT)I
BETWEEN:
MARCEL GAUTHIER,
DIANE GAUTHIER,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] These are appeals for the 1991, 1992, 1994 and 1995 taxation years. Marcel Gauthier, the appellant in file no. 97-3787(IT)I, stated that his spouse, Diane Gauthier, the appellant in file no. 97-3742(IT)I, would not be present and that he wished to submit common evidence for both files.
[2] To that end, Mr. Gauthier filed a power of attorney dated May 26, 1998, signed by Diane B. Gauthier, authorizing him to act on her behalf.
[3] In lengthy preliminary remarks, the Court informed the appellant Marcel Gauthier that the absence of the appellant Diane Gauthier could be prejudicial to her since the burden of proof is always on the appellant, except however with respect to the issue of penalties.
[4] In spite of these remarks and warnings, the appellant Marcel Gauthier chose to proceed, stating that the evidence he was filing applied to both appeals. He himself had completed the appellant Diane Gauthier's tax returns and he said he was better informed than she about the facts and other aspects of his spouse's case.
[5] Counsel for the respondent expressed concern about the difficulties caused by the appellant Diane Gauthier's absence, particularly since penalties had been assessed against her as well.
[6] Having decided to proceed despite the comments on the possible consequences of the appellant Diane Gauthier's absence, Marcel Gauthier presented evidence. This evidence consisted mainly of documents of debatable and dubious relevance. A number of the documents were moreover objected to on the ground that they were documents concerning which the appellant Marcel Gauthier could not testify or simply because they were irrelevant.
[7] At the start of the trial, the appellant Marcel Gauthier gave the impression that his evidence would be substantiated by numerous documents. He expressed himself with ease and his thoughts were clearly articulated. He appeared to have a definite plan for the presentation of his evidence. From there, however, things rapidly deteriorated into confusion and utter ambiguity.
[8] After filing a number of documents, the appellant Marcel Gauthier testified in an incoherent, rambling manner and the explanations he provided were, in most instances, of no interest. On a number of occasions, he stated that he had undergone audits for previous years and that everything had proved to be in order, and so he did not understand why the Minister did not accept his explanations this time.
[9] He candidly admitted that he had neither any accounts nor any records or inventory of his large and numerous stock market transactions; he even said that he did not have all the supporting documents.
[10] What is more, he admitted in cross-examination that he had arbitrarily fixed the RRSP amount without having made any contribution, saying to himself that the Minister would make the adjustments if that was not acceptable.
[11] He also admitted and acknowledged a number of times that there was little or no order in the management of his affairs, which the evidence very convincingly demonstrated.
[12] He criticized the method used by the department in making the assessments, but admitted, however, that many supporting documents absolutely essential for the purpose of determining the acquisition cost of some of his investments were missing.
[13] According to the appellant Marcel Gauthier, the department should have relied on the incomplete information he had provided orally, the basis of which was more often than not intuitive or indeed fictitious.
[14] This is all the more absurd since he admitted he had claimed the benefits of an RRSP without having made a contribution. He also admitted that all the facts on which the penalty was based were true, that is, that the expenses claimed in respect of the income property had in fact been claimed for the appellants' personal residence.
[15] In particular, I refer to the replacement of the cupboards and the purchase of a water bed, a bathtub, an armchair and stool and so on, on which substantial amounts were spent. The explanation and justification provided by the appellant Marcel Gauthier were to the effect that it compensated for the unremunerated work he had done with respect to the income property. In other words, Marcel Gauthier took matters into his own hands.
[16] On this important question of misrepresentation, the appellant Marcel Gauthier also admitted that his spouse was aware that personal expenses had been deliberately claimed as expenses relating to the management of the income property, which was done for the purpose of reducing the amount of tax they had to pay. Marcel Gauthier moreover received large refunds during the years in issue.
[17] The evidence showed that the appellants had completed their tax returns for the taxation years in issue based on the amounts of tax payable. The appellant Marcel Gauthier first arbitrarily evaluated his tax burden, then arranged things so that the figures would support the pre-established result. He admitted to what is amply sufficient to justify the penalties assessed, namely that, to achieve this, he had arbitrarily fixed the amount of the purported RRSP contribution.
[18] The officer responsible for the audit of the appellants' files testified. He said that he had met the appellant Mr. Gauthier at his private residence and that he had had to manage with very incomplete information. He was obliged to obtain certain information from securities dealers and Revenu Québec. He explained how he had gone about the audit work that led to the assessments giving rise to the appeals.
[19] To be sure, it came out that the method used was not scientific; it was even arbitrary in some respects, but never unreasonable. On the contrary, the same evidence showed that the appellants benefited from a favourable bias in some of the evaluations.
[20] The appellants may perhaps criticize the lack of rigour in the method used, but they only have themselves to blame since their gross negligence, carelessness and recklessness are the sole factors responsible for the situation they do not accept. They were required to have in their possession at all times records, accounts or a compilation of relevant data on the basis of which an audit could be conducted. The appellant Marcel Gauthier is an administrator by training and a health services consultant and should have had at least some rudimentary system of accounting, particularly since he himself admitted he was undisciplined in the management of his affairs.
[21] Not only were the documents relevant to an audit not available, but what he had was a real jumble and incomplete, and, which is a much more serious matter, utterly false. I refer in particular to the RRSP amounts claimed and to the personal expenses camouflaged as income property expenses.
[22] Since the evidence submitted by the
appellant in support of the two appeals was totally
insufficient to justify and explain any point whatever in
dispute; since the burden of proof in this matter was on the
appellants; since the appellant Marcel Gauthier admitted
unequivocally that he had indeed arbitrarily invented the RRSP
amount claimed and that he and his spouse had wilfully and
knowingly made misrepresentations regarding certain major
expenses claimed, in order to reduce the amount of tax that he
and his spouse would have to pay; since the explanations provided
to justify their actions were bizarre, absurd and totally
unacceptable; and in view of the total absence of any evidence
in support of their claims, I unhesitatingly dismiss the appeals
in both cases.
Signed at Ottawa, Canada, this 18th day of August 1998.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 27th day of June 2003.
Erich Klein, Revisor