97-2483(GST)I
BETWEEN:
ELEANOR KURBIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on June 11, 1998 at Castlegar, British Columbia, by
the Honourable Judge D.W. Beaubier
Appearances
Agent for the Appellant: Leonard Kurbis
Counsel for the Respondent: Brent Paris
JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated November 27, 1996 and bears number 11EU0101859, is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada this 17th day of June, 1998.
|
"D.W. Beaubier" |
J.T.C.C.
Date: 19980617
Docket: 97-2438(GST)I
BETWEEN:
ELEANOR KURBIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, J.T.C.C.
[1] This appeal pursuant to the Informal Procedure was heard at Castlegar, British Columbia on June 11, 1998. The Appellant and her husband, Leonard Kurbis, testified on her behalf. The Respondent's GST auditor, Alexander Cook, also testified.
[2] The Appellant was assessed respecting her motel, mobile home court and campground business in Salmo, British Columbia for the period July 1, 1993 to September 30, 1995 after it was discovered that she reported $409.85 GST collected and claimed $11,817.42 in input tax credits for those periods.
[3] Paragraphs 3 to 7 inclusive of the Reply to the Notice of Appeal read:
3. In filing her GST returns for the period July 1, 1993 to September 30, 1995, the Appellant reported a total of $409.85 of GST collected and claimed total input tax credits ("ITCS") of $11,817.42;
4. By Notice of Assessment No. 11EU0101859, dated November 27, 1996 (the "Assessment"), the Minister of National Revenue (the "Minister") assessed the Appellant $4,478.79 net credit of GST, $1,602.80 interest and $1,599.71 in penalty with respect to the period July 1, 1993 to September 30, 1995.
5. By Notice of Objection dated February 8, 1997, the Appellant objected to the Assessment.
6. By Notice of Decision No. 115019440 dated April 30, 1997, the Minister confirmed the Assessment.
7. In so assessing the Appellant, the Minister relied on, inter alia, the following assumptions of fact:
(a) the facts admitted and stated above;
(b) the Appellant is an individual and was registered under Part IX of the Excise Tax Act (the "Act") with GST Registration No. 110927746;
(c) the Appellant operates as "Pine Springs Motel" in Salmo, British Columbia;
(d) the Appellant's main business activities are the supply of motel and mobile home park services and campground facilities;
(e) the Appellant had both taxable (for example, motel rooms and campground facilities) and exempt supplies (for example, long term rentals of mobile homes or mobile sites);
(f) all or substantially all of the Appellant's motel rooms were, or were expected to be, rented for periods of less than 60 days and as a result, all of the Appellant's supplies of motel rooms were taxable at 7%;
(g) the Appellant did not keep adequate books and records;
(h) the Appellant understated GST collected or collectible by $6,668.76 during the period under appeal based on the analysis of the Appellant's bank deposits; and
(i) the Appellant overstated ITCS by $4,205.60 during the period under appeal, including ITCS claimed on four vehicles which were not used primarily in the Appellant's commercial activities.
[4] The Appellant is a middle-aged woman who worked in the accounting department of Alberta Government Telephones and of another major firm for five years. During the periods in question she managed the small business which was reassessed and also had what she described as a part-time job in a nearby town. Her husband, Leonard Kurbis, had a full-time job in addition to assisting Mrs. Kurbis in the business. The Appellant's mother resided in Edmonton, Alberta and her two sons were attending university at Edmonton.
[5] The Appellant presented exhibits which purported to detail gross income from the motel, trailer and camp business. They indicate a gross income deposited in two financial institutions by year as follows:
1993 4th Quarter $ 9,285.34
plus $ 7,862.22
Total: $17,147.56 (See Exhibit A-1)
1994 calendar year $62,420.43
plus $25,150.98
Total: $87,571.41 (See Exhibit A-2)
1995 1st, 2nd & 3rd quarters $47,102.68
plus $44,494.91
Total: $91,597.59 (See Exhibit A-3)
The Appellant stated that she had receipt books present in Court for review which supported these statements although in some cases they were duplicates of credit card receipts. Mr. Cook, the Revenue Canada auditor, stated that none of the statements prepared by Mrs. Kurbis and filed as Exhibits A-1, A-2 and A-3 and none of the receipt books or any names of customers were made available to him on the audit. The audit, which took a number of days and which was also reviewed by Mr. Cook with the Appellant and her husband on two evenings later on during another week in which he stayed at the motel, was made solely on the basis of the bank accounts since the Appellant did not make any records available to him.
[6] Because the Appellant did not make any records available to the auditor at the time of the audit, including any receipt books, it raises a question as to whether or not the receipt books were prepared after the events in question and were simply not in existence at the time of the audit. Exhibits A-1, A-2 and A-3 were prepared after the audit.
[7] Mr. Kurbis testified first. His testimony offered no detail whatsoever respecting the accounting that is necessary for the purposes of appealing the assessment. Mrs. Kurbis testified respecting Exhibits A-1 to A-3 inclusive. The statements themselves cannot be understood clearly. Mrs. Kurbis testified in a very confusing manner respecting them and indicated a number of duplications or mis-descriptions in these exhibits. On one occasion, as an aside, she referred to cases in which tenants of the mobile home court had contested levies by Mrs. Kurbis of GST in Small Claims Courts in British Columbia and won. However, she did not state the names of these tenants or the dates in which they were alleged to have resided at Pine Springs Motel. No names or periods of residence were given for alleged residential tenants during the assessment periods in question. The Court finds that the statements and her testimony were designed to confuse the Court and the auditor who was in the courtroom. The statements and her testimony did not refute the assumptions. For someone who had worked in accounting for five years, the testimony was not credible.
[8] The Appellant did not bring any material to Court verifying anything in respect to the input tax credits. Her testimony concerning input tax credits in cross-examination was not credible. For example, she claimed input tax credits in respect to a General Motors pick-up truck which was purchased and given to her son. Input tax credits were claimed respecting all goods purchased including a loveseat which cost $3,233 which she stated was placed in the honeymoon suite in the motel. Input tax credits were claimed on all vehicles and she denied any personal use whatsoever. Yet she and her husband used vehicles to go to their employments. Input tax credits were claimed on all trips to Edmonton and elsewhere which she claimed were totally business related. She stated she went to Edmonton from Salmo, a distance of approximately 640 kilometres, for such purposes as to repair a vacuum cleaner or to buy a few sheets of wallboard and that the principal purposes of these trips were business even though her mother and sons were living there at the time. She claimed input tax credits respecting BC ferries, cigarettes, groceries and other items. When pressed on cross-examination, her final reply was sometimes "no comment". Mr. Kurbis offered no germane evidence respecting the claims for input tax credits.
[9] In summary, the Appellant's evidence was not credible. Her evidence is not accepted as true. On the evidence before the Court, the Appellant's reports respecting GST, when filed, were deliberately false for the period in question and were intended to be so. The appeal is dismissed.
Signed at Ottawa, Canada this 17th day of June, 1998.
|
"D.W. Beaubier" |
J.T.C.C.
COURT FILE NO.: 97-2438(GST)I
STYLE OF CAUSE: Eleanor Kurbis v. Her Majesty the Queen
PLACE OF HEARING: Castlegar, British Columbia
DATE OF HEARING: June 11, 1998
REASONS FOR JUDGMENT BY: The Honourable D.W. Beaubier
DATE OF JUDGMENT: June 17, 1998
APPEARANCES:
Counsel for the Appellant:
Counsel for the Respondent: Brent Paris
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: George Thomson
Deputy Attorney General of Canada
Ottawa, Canada