Date: 20011211

Docket: 2000-4832-GST-I

BETWEEN:

GRAZIANO FIRMANI,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

    For the Appellant:                                   The Appellant himself

                                                           Counsel for the Respondent:                 Andrea Jackett

____________________________________________________________________

Reasonsfor Judgment

(Delivered orally from the Bench at Toronto, Ontario, on August 31, 2001)

McArthur J.

[1]            This is an appeal from an assessment under the Excise Tax Act. The Minister of National Revenue submits that the Appellant failed to report goods and services tax of $42,523. The facts are that the Appellant together with Vince Maffi purchased 301 Spring Garden Avenue, North York in or about 1996, for approximately $260,000. They demolished an existing home and constructed a 3,400 square foot new home which they sold in 1998 for approximately $670,000. At the time of the sale, the Appellant and Vince had a violent falling out. I believe Vince wanted to falsify documentation to the effect that the home on the property was the Appellant's principal place of residence and not subject to GST.

[2]            The Appellant is a carpenter and unsophisticated in paperwork. As partners, Vince was to look after the record-keeping. It appears that upon the closing of the sale, the solicitor for the Appellant originally withheld $30,000 on account of GST but remitted only $15,000. He may have been misled or misunderstood a GST officer as to the amount owing. This I do not find is an issue.

[3]            The Minister allowed the Appellant the amount of $8,631 in input tax credits based on invoices supplied in the approximate amount of $99,000. Apparently, these invoices were provided to the Revenue Canada auditor, Ms. Whyte, from Vince after, as I understand it, some difficulty. There may well have been more expenditures but this was as best she could determine from her audit. She relied on paragraph 169(4)(a) of the Act and I believe correctly so. It reads as follows:

169(4)      A registrant may not claim an input tax credit for a reporting period unless, before filing the return in which the credit is claimed,

(a)            the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the input tax credit to be determined, including any such information as may be prescribed; ...

[4]            The Appellant submitted in his Notice of Appeal:

... that the amount allowed for input tax credits, namely the sum of $8,631, although this represents the amount of credits confirmed by way of documentation submitted for income tax credits, there is no relationship to the actual cost of construction of the home and ignores the circumstances of the subject case, namely that the taxpayer was not in possession of documentation to substantiate income tax credits. It is submitted that the cost of construction of the home and the subject property was approximately $300,000 and the input tax credits could reasonably be calculated and should have been calculated in that amount or a similar amount.

The Appellant appeared on his own behalf. I offered him the opportunity to have his solicitor and Vince given evidence but he chose to proceed alone. He had no documentation other than the $99,000 in invoices relied on by the Minister's officers. I cannot guess as to the amount in excess of the $99,000 that may have been expended and rely on the evidence of the Minister's auditor. It is an unfortunate situation. Obviously, the cost of materials to construct a 3,400 square home is a good deal more than $99,000. There is an obligation on a supplier to provide documentation to support a claim for input tax credits.[1]

[5]            I find as a fact that the Appellant was a 50% partner with Vince and liable for 50% of the GST assessed. I note that the Appellant is to be commended for his voluntary disclosure of the entire transaction and that $15,000 has been paid toward the GST owing. I take that $15,000 as having been paid on behalf of the partnership and that the Appellant's share would be $7,500. Somewhat arbitrarily, I find the unreported net tax to be $30,000 and not $33,891.84. The amount of $30,000 is more realistic in that there is no doubt the Appellant was entitled to more than $8,631.52 in ITCs. Further, I believe counsel for the Respondent was satisfied with the net tax being $30,000.

[6]            The appeal is allowed to reflect that the Appellant had only a 50% interest in the transaction which gives rise to the GST and I find that he paid $7,500 towards his 50% liability. He is liable to pay the further sum of $7,500 with interest.

Signed at Ottawa, Canada, this 11th day of December, 2001.

"C.H. McArthur"

J.T.C.C.

COURT FILE NO.:                                                 2000-4832(GST)I

STYLE OF CAUSE:                                               Graziano Firmani and

                                                                                Her Majesty the Queen

PLACE OF HEARING:                                         Toronto, Ontario

DATE OF HEARING:                                           August 31, 2001

REASONS FOR JUDGMENT BY:                      The Honourable Judge C.H. McArthur

DATE OF JUDGMENT:                                       September 6, 2001

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Andrea Jackett

COUNSEL OF RECORD:

For the Appellant:                

Name:                N/A

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

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