BETWEEN:
and
____________________________________________________________________
Appeal heard on January 12, 2009, at Fredericton, New Brunswick
Before: The Honourable Justice Wyman W. Webb
Appearances:
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under Part IX of the Excise Tax Act for the period from January 1, 2007 to December 31, 2007, dated January 18, 2008 and bearing number 08008003812340026 is dismissed, without costs.
Signed at Toronto, Ontario, this 29th day of January 2009.
BETWEEN:
GERALD WEBSTER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] The issue in this appeal is whether the Appellant was required to pay instalments pursuant to section 237 of the Excise Tax Act (the “Act”) in 2007. The Appellant was assessed interest pursuant to subsection 280(2) of the Act because he did not make any instalment payments in 2007.
[2] The Appellant stated that in late 2007 it was determined that he was an independent contractor and not an employee when he was providing services to his company. He also indicated that it was determined at that time that he would be registered under the Act as of November 1, 2006. The reporting period of the Appellant is the calendar year and the Appellant filed his returns under the Act for 2006 and 2007. For the 2006 year (which commenced on November 1, 2006 and ended on December 31, 2006) the net tax of the Appellant was $2,527.26. The net tax of the Appellant for 2007 was $7,174.50.
[3] Section 237 of the Act provides as follows:
237. (1) Where the reporting period of a registrant is a fiscal year or a period determined under subsection 248(3), the registrant shall, within one month after the end of each fiscal quarter of the registrant ending in the reporting period, pay to the Receiver General an instalment equal to
(a) except where paragraph (b) applies, ¼ of the registrant's instalment base for that reporting period; or
(b) the amount determined under subsection (5).
(2) A registrant's instalment base for a particular reporting period of the registrant is the lesser of
(a) an amount equal to
…
(ii) … the net tax for the particular reporting period, and
(b) the amount determined by the formula
C × 365/D
where
C is the total of all amounts each of which is the net tax for a reporting period of the registrant ending in the twelve month period immediately preceding the particular reporting period, and
D is the number of days in the period commencing on the first day of the first of those preceding reporting periods and ending on the last day of the last of those preceding reporting periods.
[4] The requirement to pay instalments is based on the determination of whether a person is a registrant. “Registrant” is defined in section 123 as follows:
“registrant” means a person who is registered, or who is required to be registered, under Subdivision d of Division V;
[5] A person will become a registrant when that person is required to be registered under the Act (if they have not already registered). The Appellant acknowledged that he was registered under the Act as of November 1, 2006. His registration was backdated approximately one year as it was in the fall of 2007 that it was determined that he was an independent contractor. It would seem that this was presumably based on the date that he would have ceased to have been a small supplier and would have been required to register under the Act and the Appellant confirmed this in his closing argument. As a result the Appellant would have been a registrant in 2006 even if he would not have been registered as of November 1, 2006 and was required to make instalments in 2007.
[6] Although the Appellant only files his returns on an annual basis, he is still required to pay quarterly instalments under the Act. His instalment base for 2007 will be the lesser of two amounts – his net tax for 2007 ($7,174.50) and his net tax for 2006 adjusted for the number of days in his reporting period in 2006. Since his net tax for 2006 was $2,527.26 and there were 61 days in his reporting period in 2006, this second amount determined for 2006 would be $15,122.13 and his instalment base for 2007 would be $7,174.50.
[7] Failing to pay any instalments in 2007 results in the application of subsection 280(2) of the Act which provides as follows:
(2) Despite subsection (1), if a person fails to pay all of an instalment payable by the person under subsection 237(1) within the time specified in that subsection, the person shall pay, on the amount of the instalment not paid, interest at the prescribed rate, computed for the period beginning on the first day following that time and ending on the earlier of
(a) the day the total of the amount and interest is paid, and
(b) the day on or before which the tax on account of which the instalment was payable is required to be remitted.
[8] Therefore since the Appellant did not pay any instalments in 2007, the Appellant is liable for interest in relation to these unpaid instalments.
[9] The Appellant had submitted that the costs of complying with the Act were excessive and imposed a significant financial burden on his business. He was seeking to recover these costs from the Respondent. However, the powers of this Court in relation to an appeal of an assessment under the Act are limited by section 309, which provides as follows:
309. (1) The Tax Court may dispose of an appeal from an assessment by
(a) dismissing it; or
(b) allowing it and
(i) vacating the assessment, or
(ii) referring the assessment back to the Minister for reconsideration and reassessment.
[10] Therefore the remedies available to this Court are limited to those listed in subsection 309(1) of the Act and this Court does not have any jurisdiction to award the Appellant any amount as compensation for his cost of compliance with the Act.
[11] As a result, the appeal is dismissed, without costs.
Signed at Toronto, Ontario, this 29th day of January 2009.
“Wyman W. Webb”
Webb J.
COURT FILE NO.: 2008-1207(GST)I
STYLE OF CAUSE: GERALD WEBSTER AND HER MAJESTY THE QUEEN
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: January 12, 2009
REASONS FOR JUDGMENT BY: The Honourable Justice Wyman W. Webb
DATE OF JUDGMENT: January 29, 2009
APPEARANCES:
|
For the Appellant: |
The Appellant himself |
|
Counsel for the Respondent: |
Toks C. Omisade |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada