[OFFICIAL ENGLISH TRANSLATION]
97-458(IT)I
BETWEEN:
ALAIN DOIRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on February 9, 1998, at Québec, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Simon Crépin
JUDGMENT
The appeal from the assessments made under the Income Tax Act for the 1992, 1993 and 1994 taxation years is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 31st day of March 1998.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 10th day of June 2003.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 19980331
Docket: 97-458(IT)I
BETWEEN:
ALAIN DOIRON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This appeal concerns the 1992, 1993 and 1994 taxation years. The appellant testified in support of his appeal. It emerged from his testimony that he had purchased a large house in 1988.
[2] After several months, seeing that there was considerably more room than his family needed, he decided to put in an apartment and rent it to a friend of his companion's, at a price below the market rate, as he himself admitted.
[3] Thus, the rent for the apartment for the 1992 taxation year was set at $300 for a period of five months and $350 for a period of two months.
[4] Major renovations were carried out in the same year, resulting in a loss of income for a period of five months.
[5] In 1993, the apartment was rented again.
[6] For the 1993 and 1994 taxation years, the rental income was $200 per month, or $2,400 per year. Again, the consideration was far below fair market value.
[7] The appellant himself indicated that, in the period in question, the rent for an apartment like his was between $400 and $500 per month.
[8] During that period-1992, 1993 and 1994-the fixed costs were the following:
FIXED COSTS
1992 1993 1994
TAXES $2,448 $1,751 $1,435
INTEREST 4,171 5,141 4,876
INSURANCE 481 596 632
HEATING 1,515 1,730 1,846
TOTAL $8,615 $9,218 $8,789
45% BUSINESS $3,876 $4,148 $3,955
LESS:
INCOME 2,200 2,400 2,400
LOSS $1,676 $1,748 $1,555
[9] These figures show that the gross rental income did not even cover the fixed costs. Although such results might occur in very special circumstances without jeopardizing the concept of a reasonable expectation of profit from the activity of renting a property, this is not the case here.
[10] The decision to rent and above all the amount of rent that was set were essentially guided by humanitarian and charitable considerations. The rental was a function of the tenants' personal problems and their ability to pay; it should have been set based on the market, taking into account the quality of the apartment, supply, demand, setting, location, and so on, but it never should have been based on the tenants' ability to pay. The only housing for which the tenants' ability to pay is taken into account is low-rental housing; this is housing in buildings having social and humanitarian purpose and it generally operating at a loss.
[11] The appellant's generosity and concern are fine and appealing qualities to be sure, but they cannot be taken into consideration, especially when the fixed costs for the space rented far exceed the rental income. This state of affairs, moreover, continued throughout the three years at issue when the apartment was rented to various persons.
[12] The mathematical reality is very revealing and is moreover corroborated by the appellant's intentions when he bought the house; he acknowledged in fact that he had bought the property solely for use as a family residence. The change in use arose from a combination of circumstances in which the appellant's generosity was the outstanding feature in the unfolding of the situation.
[13] I find, therefore, that the appellant really did not have a reasonable expectation of profit from the activity of renting part of the property in which he lived. In point of fact, he never viewed the apartment as a commercial undertaking. He was far more desirous of sharing excess space he had available with people he felt sorry for, and he could afford to do so. This was a rental that was never part of a housing pool; the appellant never advertised the apartment or rented it to strangers. The apartment at the centre of this dispute was rented from time to time to help out people in the appellant's circle.
[14] As for the deduction for childcare expenses, the appellant argued that the law was unfair but acknowledged that this Court was no doubt not the appropriate forum to argue that point. In this regard, I can only agree that his conclusion was correct, namely that only the legislature has the authority to change the law.
[15] Lastly, as indicated at the hearing, the Court does not have the authority to reduce or cancel the interest added to an assessment. Only the Department has that jurisdiction. The same is true with respect to spreading out, or granting terms regarding, the payment of amounts owed by a taxpayer.
[16] In the circumstances and since, moreover, the appellant has admitted that the very great majority of the facts on which was based the assessment for the 1992, 1993 and 1994 taxation years are correct and since he has not discharged the burden of proof that was on him, I must dismiss the appeal.
Signed at Ottawa, Canada, this 31st day of March 1998.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 10th day of June 2003.
Erich Klein, Revisor