|
Docket: 2003-3986(GST)I |
|
BETWEEN: |
|
764845 ALBERTA LTD. O/A DIAMOND S. CONSULTING, |
|
Appellant, |
|
and |
|
|
|
HER MAJESTY THE QUEEN, |
|
Respondent. |
____________________________________________________________________
Appeal heard on May 21, 2004 in Grande Prairie, Alberta
|
Before: The Honourable Justice D.W. Beaubier |
|
|
|
|
|
Appearances: |
|
|
|
|
|
Agent for the Appellant: |
Mike Skrynyk |
|
|
|
|
Counsel for the Respondent: |
John-Paul Hargrove |
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated November 27, 2002, is allowed and the assessment is referred to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
The Appellant is awarded the sum of $350 for its out-of-pocket expenses for disbursements to prosecute this appeal.
Signed at Ottawa, Canada, this 28th day of May 2004.
|
"D.W. Beaubier" |
Beaubier, J.
|
Citation: 2004TCC388 |
|
Date: 20040528 |
|
Docket: 2003-3986(GST)I |
|
BETWEEN:
|
|
764845 ALBERTA LTD. O/A DIAMOND S. CONSULTING, |
|
Appellant, |
|
and |
|
|
|
HER MAJESTY THE QUEEN, |
|
Respondent. |
____________________________________________________________________
REASONS FOR JUDGMENT
Beaubier, J.
[1] This appeal pursuant to the Informal Procedure was heard at Grande Prairie, Alberta on May 21, 2004. Michael Skrynyk, President of the Appellant, was the only witness.
[2] Paragraphs 7 to 15 inclusive of the Reply to the Notice of Appeal outline the matters in dispute. They read:
7. In reporting net tax for the reporting period of May 1, 2002 to July 31, 2002 (the "Relevant Period"), the Appellant claimed input tax credits of $3,235.40 and $3,217.00 with respect to the purchase of two quad-cab trucks, a 2002 GMC Sierra (the "GMC") and a 2002 Chevrolet Silverado (the "Chevrolet") respectively.
8. By Notice of Assessment dated November 27, 2002 (the "Assessment"), the Minister assessed the Appellant net tax of $698.15 for the Relevant Period. In assessing the Appellant's net tax the Minister did not allow the full input tax credits claimed by the Appellant on the GMC and the Chevrolet quad-cab trucks. The Minister disallowed inputs tax credits above $2,100.00 for each truck and made additional adjustments as follows:
|
net tax reported on returns
|
-1,657.65 |
|
|
adjustments to net tax
|
|
|
|
input tax credits claimed on the GMC above $2,100.00
|
1,135.40 |
*** |
|
input tax credits claimed on the Chevrolet above $2,100.00
|
1,117.00 |
*** |
|
input tax credits claimed on personal items
|
54.54 |
|
|
clawback 50% of allowable meals expense
|
27.27 |
|
|
input tax credits claimed on exempt supply
|
21.59 |
|
|
net tax as assessed
|
698.15 |
|
|
*** input tax credits at issue in this appeal |
|
|
9. The Appellant filed by a Notice of Objection, received on January 22, 2003, to the Assessment. The Appellant objected to the reduction of input tax credits with respect to the purchase of the GMC and the Chevrolet quad-cab trucks.
10. The Minister confirmed the Assessment by a Notice of Decision dated May 28, 2003.
11. In so assessing the Appellant and confirming the Assessment, the Minister relied on the following assumptions of fact:
(a) the Appellant was a corporation carrying on business in Alberta;
(b) at all material times the Appellant was engaged in commercial activities;
(c) at all material times the Appellant was a registrant for the purposes of the Excise Tax Act (the "ETA");
(d) Mike Skrynyk was the president and director of the Appellant at all relevant times;
(e) the Appellant was required to file its returns on a quarterly basis, with a year end of January 31;
(f) the Appellant purchased the GMC quad-cab truck in May 2002;
(g) the GMC has a seating capacity for the driver and at least 3 passengers;
(h) during the Relevant Period the GMC was driven a total of 8,279 kilometres;
(i) during the relevant period the GMC was not used at all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income;
(j) the Appellant purchased the Chevrolet quad-cab truck on May 16, 2002;
(k) the Chevrolet has a seating capacity for the driver and at least 3 passengers;
(l) during the Relevant Period the Chevrolet was driven a total of 11,555 kilometres;
(m) during the Relevant Period the Chevrolet was used 5,401 kilometres by Mike Skrynyk or a person related to him for purposes of attending meetings in Edmonton, picking up files and travel to golf courses in Stetler;
(n) the GMC and the Chevrolet were not used all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income in the Appellant's taxation year of February 1, 2002 to January 31, 2003, which is the taxation year in which the GMC and Chevrolet were acquired.
(o) for the reporting period ending July 31, 2002, the Appellant filed a return claiming full input tax credits of $3,235.40 with respect to the purchase of the GMC and $3,217.00 with respect to the purchase of the Chevrolet;
B. ISSUE TO BE DECIDED
12. The issue to be decided in this appeal is whether the Minister, in assessing the Appellant's net tax for the Relevant Period, properly disallowed input tax credits in the amount of $1,135.40 with respect to the GMC and $1,117.00 with respect to the Chevrolet.
C. STATUTORY PROVISIONS RELIED ON AND RELIEF SOUGHT
13. The Deputy Attorney General relies on subsection 123(1), specifically the definition of "passenger vehicle", 225(1) and 235(1) and sections 165, 169, 201, 221, 228, 280, 286, and 296 of the Excise Tax Act, R.S.C. 1985, c. E-15, as amended and subsection 248(1), specifically the definition of "automobile", "motor vehicle" and "passenger vehicle", of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ("ITA").
14. He submits that the GMC was a passenger vehicle within the meaning of subsection 248(1) of the ITA and subsection 123(1) of the ETA. It is therefore submitted that the Minister correctly disallowed input tax credits in the amount of $1,135.40 with respect to the GMC as the Minster allowed the maximum input tax credits, $2,100.00, permitted under sections 169 and 201 of the ETA.
15. He submits that the Chevrolet was a passenger vehicle within the meaning of subsection 248(1) of the ITA and subsection 123(1) of the ETA. It is therefore submitted that the Minister correctly disallowed input tax credits in the amount of $1,117.00 with respect to the GMC as the Minister allowed the maximum input tax credits, $2,100.00, permitted under sections 169 and 201 of the ETA.
[3] Assumptions 11 (a) to (g) inclusive and (j) to (l) inclusive were not refuted. Respecting the remaining assumptions:
11(h) During the period the GMC was driven a total of 8,289 kilometres.
11(i), (m), (n) and (o) are the subject of the dispute.
[4] The Appellant and his wife are the directors and operators of the Appellant. Its business was conducted out of their home office at Widewater, Alberta, a town on the south shore of the Lesser Slave Lake, east north-east of Grande Prairie in northern Alberta. The Appellant does on site oilwell completion supervision as a contractor to oil companies in Alberta. Its area of operations is wherever oil and gas wells need that work, essentially in Alberta.
[5] The Appellant previously had only one truck, which was similar to these two. It purchased two at once so that one would always work and more particularly so that it would not be so worn that it had to be traded off for a new one at a low value within two years. Mr. Skrynyk is on the road and Mrs. Skrynyk does the books, records and banking. Their home-office is 17 kilometres from Slave Lake, where the Appellant banks. The corporation also had an interest in a travel agency which was involved in amalgamation talks with another travel agency in St. Albert, Alberta, adjacent to Edmonton (which is 300 kilometres from Widewater) during the period and was doing oil work near Vermilion, 250-300 kilometres from its office during the period. It put on an annual golf tournament for its customers at Stettler, Alberta, 465 kilometres away, during the period. Stettler is about half-way between Edmonton and Calgary and south of Vermillion in the eastern Alberta oilfields.
[6] Mrs. Skrynyk uses a truck left at Widewater for banking and business. They also have a personal vehicle.
[7] Mr. Skrynyk proved, with logs filed as evidence, that the two vehicles use during the period is as follows:
|
GMC |
|
|
Business |
7,743 km |
|
Total |
8,289 km |
|
|
|
|
Chevrolet |
|
|
Business |
10,481 km |
|
Total |
11,555 km |
Thus the business use for each truck was over 90 per cent during the period. (See Exhibit R-1). He also filed photographs to prove that the trucks are an on the road office which contained an instrument, a hardhat, a cell phone, radio, and a number of large, loose-leaf reference texts and office supplies in large plastic holders on its seats. They are four-wheel drive, heavy duty pickups designed and used for off-road and on-road work. The pictures filed of one of them does not have a luxury, leather power-seat type of interior. It appears to be what Mr. Skrynyk described - a working truck which, after its working life, is expected to have a reasonable trade-in value. The front window appears to have a couple of severe horizontal stone cracks in it (Exhibit A-1).
[8] Mr. Skrynyk's testimony is believed.
[9] The evidence has established that both trucks were used all or substantially all of the time for commercial activities in the course of the Appellant earning business income.
[10] The appeals are allowed. The Appellant had to travel from Widewater to Grande Prairie and incurred postage and copying expenses to proceed with this appeal. It is awarded $350 on account of out-of-pocket disbursements incurred for that purpose.
[11] This matter is referred to the Minister of National Revenue for reconsideration and reassessment allowing the appeal.
Signed at Ottawa, Canada, this 28th day of May 2004.
|
"D.W. Beaubier" |
Beaubier, J.
|
CITATION: |
20044TCC388 |
|
COURT FILE NO.: |
2003-3986(GST)I |
|
STYLE OF CAUSE: |
764845 Alberta Ltd. o/a Diamon S. Consulting v. The Queen |
|
PLACE OF HEARING: |
Grande Prairie, Alberta |
|
DATE OF HEARING: |
May 21, 2004 |
|
REASONS FOR JUDGMENT BY: |
The Honourable D.W. Beaubier |
|
DATE OF JUDGMENT: |
May 28, 2004 |
|
APPEARANCES: |
|
Agent for the Appellant: |
Mike Skrynyk |
|
Counsel for the Respondent: |
John-Paul Hargrove |
|
COUNSEL OF RECORD: |
|
For the Appellant: |
|
Name: |
|
|
Firm: |
|
|
For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |