[OFFICIAL ENGLISH TRANSLATION]
2002-1245(IT)I
BETWEEN:
DANIEL PAYETTE,
Appellant,
and
Her Majesty The Queen,
Respondent.
Appeal heard on October 9, 2002, at Montréal, Quebec, by
the Honourable Judge Louise Lamarre Proulx
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Marie-Claude Landry
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 29th day of October 2002.
|
"Louise Lamarre Proulx" |
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Date: 20021029
Docket: 2002-1245(IT)I
BETWEEN:
DANIEL PAYETTE,
Appellant,
and
Her Majesty The Queen,
Respondent.
Reasons For Judgment
Lamarre Proulx, J.T.C.C.
[1] This is an appeal under the informal procedure concerning the 1998 taxation year.
[2] The point at issue is the calculation of reasonable expenses for a stand-by charge for an automobile put at the appellant's disposal by an automobile dealership and, more specifically, the number of days of use and the kilometrage travelled.
[3] The facts on which the Minister of National Revenue (the "Minister") relied in making his assessment are described in paragraph 5 of the Reply to the Notice of Appeal as follows:
[TRANSLATION]
(a) The appellant has been an automobile sales representative for a number of years.
(b) In March 1998, the appellant was hired on a trial basis by Germain Baillargeon, the employer's sales manager at the time.
(c) The appellant started with an unpaid training period followed by two weeks of paid work.
(d) The appellant's gross wages for those two weeks of work was $154.80.
(e) Throughout the period when the appellant was employed by the employer, that is, from March 24 to April 30, 1998, he enjoyed the use of a motor vehicle having a fair market value of $27,360.80.
(f) During that period, the appellant travelled 4,447 km for personal purposes.
(g) The taxable benefit in respect of operating expenses for that vehicle amounted to $1,074.84.
(h) The total of wages earned and the automobile benefit enjoyed by the appellant was $1,229.
[4] In his testimony, the appellant denied all the subparagraphs with the exception of the first.
[5] The appellant is currently the sales manager at the Longueuil Toyota dealership. He said that he had been selling cars since 1978. He was very familiar with Germain Baillargeon, with whom he had worked at various dealerships. At the time the events occured, Mr. Baillargeon was the sales manager at Actuel Pontiac Buick Cadillac Inc. and he offered the appellant work at that dealership. The appellant first had to undergo a brief training period before having paid employment.
[6] The dealership immediately gave him the use of a car. That agreement is described in a document dated March 30, 1998, signed by the appellant and filed as Exhibit I-1. The stated kilometrage is seven kilometers. No document was filed stating the purpose of that use.
[7] Exhibit I-2 is an internal document of the dealership concerning staff movements. It is a document dated March 30, 1998, stating that the appellant would start as a salesman on April 6, 1998. His base salary would be $150 a week. It also states that an automobile was provided. The document is signed by Mr. Baillargeon as departmental manager and by the appellant as an employee.
[8] Exhibit I-5 is another document entitled, "Staff Movements". This time, the document refers to the appellant's departure on April 14, 1998. No reference is made to the car.
[9] The appellant lived and is still living in Venise en Québec. The dealership is located in St-Hubert. According to the appellant, and this was not contradicted by the respondent's witnesses, the difference between the two points is approximately 60 kilometers.
[10] Exhibit I-3 is the appellant's record of employment issued by Actuel Pontiac. The first work day was April 6, 1998, and the last paid day was April 13, 1998.
[11] Exhibit I-4 is the T4 statement of earnings prepared by the employer, Actuel Pontiac. It shows employment income of $1,222.63. The amount of the automobile benefit was determined to be $1,074.83.
[12] The appellant complained to Revenue Canada about the amount of the car benefit. Robert Lortie, the Minister's auditor, went to the garage to make the necessary checks. His report was filed as Exhibit I-6 and A-1. He determined a gross salary of $154.80, which the appellant does not dispute. To calculate the car benefit, he took an average value of $27,360.80, which the appellant did not dispute either. He multiplied that amount by 0.01 and by the fraction 38/30.
[13] The number 38 is the number of days the appellant purportedly had the car at his disposal. The appellant disputes that number and asserts that he had the car at his disposal from March 30 to April 20, that is, for 21 days.
[14] Exhibit A-5 is a record of employment from Candiac Toyota Inc. concerning the appellant. It states that the appellant worked there from April 20 to 22 inclusive. Gérard Rousseau is named as the contact person for information purposes. Exhibit A-6 is an undated letter from Mr. Rousseau stating that the appellant worked from April 20 to 23 and that from April 20 to 27, 1998, he had a courtesy vehicle in his possession.
[15] That letter is signed by Mr. Rousseau, general manager, and written on the letterhead of Candiac Toyota Inc. Counsel for the respondent objected to the filing of that document on the ground that the signatory was not present for cross-examination. The appellant pointed out that that same person was the one who had signed his record of employment (Exhibit A-5).
[16] Exhibit A-7 is a letter from the appellant's current employer, Longueuil Toyota. That letter confirms the appellant's employment since April 27, 1998.
[17] The appellant stated that he remembered very clearly that, on April 20, the first day of his employment with Candiac Toyota, he came with a salesman from Candiac Toyota to give back the car and he left with the salesman.
[18] Gilberte Tossings, Actuel's controller, testified and filed a number of documents. With respect to the return of the car, she did not have any particular documents with her. In preparing the T4, she had relied on Mr. Baillargeon's statements.
Conclusion
[19] It appears to me that the appellant's statements concerning the period of use of the car are plausible. He never changed versions. In his notice of appeal, he said that the two Toyota dealers had provided him with a car. At the hearing, he filed a record of employment from Candiac Toyota confirming the start of his employment as April 20, 1998, and a letter from Longueuil Toyota indicating the date of April 27, 1998. In both cases, the businesses confirmed that they had put a car at the appellant's disposal. However, no document was filed from Actuel Pontiac stating that April 30, 1998, was the date on which the use of the car ended.
[20] I therefore conclude that the car was put at the appellant's disposal for 21 days, not 38 days. As to the kilometrage, the appellant suggested no figure. The employer considered that the appellant had travelled 4,447 kilometers in 38 days, for an average of 117 kilometers a day. The number of kilometers a day may be plausible given the distance from the appellant's place of residence to his place of work. The same daily number of kilometers may therefore be retained.
[21] The appeal is allowed on that basis.
Signed at Ottawa, Canada, this 29th day of October 2002
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"Louise Lamarre Proulx" |
J.T.C.C.