Peralta v. The Queen

Citation: 2003TCC279

Date: 20030424

Docket: 2002-1717(IT)I

2002-1750(IT)I

BETWEEN:

MARIA F. PERALTA and YOUBERT ASHOORI,

Appellants,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Sarchuk J.

[1] These are appeals by Maria Peralta and Youbert Ashoori relating to reassessments of their respective 1998, 1999 and 2000 taxation years. Because the taxpayers' Notices of Appeal were so vaguely worded and failed to specify what the Appellants were objecting to or what relief was being sought, the Respondent took the position that each might be understood to be appealing each assessment and determination that Canada Customs and Revenue Agency took with respect to the years in question. As a result, at the commencement of the hearing counsel for the Respondent moved to have certain aspects of the "purported" appeals dismissed.

Ashoori

[2] With respect to Ashoori, the following facts are relevant to this aspect of his appeals. In computing income for each of the 1998, 1999 and 2000 taxation years, Ashoori treated his marital status as "separated, had one qualified dependent" and used his net income only in the calculation of the Ontario tax credits and the goods and services tax credits (GSTC). The Minister of National Revenue assessed Ashoori as filed for these taxation years by Notices of Assessment dated April 22, 1999, June 1, 2000 and March 26, 2001, respectively, Subsequently, his entitlement to the GSTC for each of these years was redetermined by the Minister on the basis that his marital status was common-law for each base taxation year and he had no qualified dependents, with the following result:

(a) for the 1998 base taxation year by GSTC Notice dated July 27, 2001, the Appellant was required to repay a GSTC overpayment of $304; and

(b) for the 1999 and 2000 base taxation years, the Appellant was required by GSTC Notices dated July 27, 2001 to repay overpayments of $437 and $130.75.

The Appellant Ashoori objected to the GSTC Notices of Determination for the 1998, 1999 and 2000 base taxation years by filing a Notice of Objection received on August 2, 2001. These determinations were confirmed by the Minister on April 15, 2002.

[3] Counsel for the Respondent observed that the reassessment of Ashoori's 1998, 1999 and 2000 taxation years made pursuant to subsection 165(3) of the Income Tax Act did not take place until April 15, 2002 as a result of which he was denied his claim with respect to Ontario tax credits. Accordingly, the Respondent's position is that:

(a) the appeal for the 1998 taxation year ought to be dismissed since the assessment appealed was a nil assessment;

(b) that the Appellant did not first serve on the Minister a Notice of Objection with respect to the said reassessments as required under sections 165 and 169 of the Act; and

(c) the Appellant is appealing the disallowance of the Ontario tax credit and this Court is without jurisdiction to grant the Appellant any relief under the Ontario Income Tax Act.

[4] Although Ashoori's Notice of Appeal refers to the April 15, 2002 reassessment, it was evident from his comments that he did not fully comprehend the distinction between the redetermination of his entitlement to the GSTC and the reassessments disallowing the Ontario tax credits, but that is of no assistance to him. Thus I have concluded that the Respondent's position that this Court does not have the jurisdiction to deal with the reassessment dated April 15, 2002 with respect to the Ontario tax credit is well founded. It is clear law that there is no appeal from a nil assessment and that the absence of a notice of objection deprives the Tax Court of jurisdiction to hear an appeal.[1]Even if that had not been the case, the fact remains that this Court does not have jurisdiction to deal with the disallowance of Ontario tax credits.

[5] As a result of the foregoing, Ashoori's appeal with respect to the GSTC redetermination dated April 15, 2002, is the only matter properly before the Court.

Peralta

[6] In computing income for each of the 1998, 1999 and 2000 taxation years, Peralta showed her marital status as "separated" for 1998 and "divorced" for 1999 and 2000 and claimed an equivalent to spouse amount of $5,380, $5,718 and $6,140, respectively, in respect of one of her children. Counsel for the Respondent noted that:

(a) For the 1998 taxation year, the Minister assessed the Appellant nil federal tax, interest and penalties by Notice of Assessment dated March 15, 1999; and

(b) The Minister reassessed her 1999 and 2000 taxation years pursuant to subsection 165(3) of the Act by concurrent Notices of Reassessment dated April 15, 2002 disallowing the equivalent to spouse amounts of $5,718 and $6,140, respectively.

[7] Counsel for the Respondent contends that Peralta's appeal for the 1998 taxation year in respect of the equivalent to spouse amount must be dismissed since the assessment appealed was a nil assessment. He further contends that the appeals for the 1999 and 2000 taxation years in respect to the equivalent to spouse amount should be dismissed as the Appellant did not first serve on the Minister a Notice of Objection to the reassessments dated April 15, 2002 on or before July 15, 2002 being the last day for serving such notices pursuant to the requirements of sections 165 and 169 of the Act. The Respondent's position is well founded and the Appellant's appeals insofar as it concerns these reassessments are dismissed.[2]

[8] Peralta's entitlement to Canada Child Tax Benefits (CCTB) and GSTC for the 1999 base taxation year was redetermined by the Minister by CCTB notice dated August 20, 2001 and GSTC notice dated July 27, 2001 and her entitlement for the 2000 base taxation year was redetermined by the Minister by CCTB notice dated August 20, 2001 and GSTC notice thereof dated August 24, 2001, in each case requiring her to repay overpayments on the basis that her marital status was common-law for each of the base taxation years. Peralta objected to these determinations by filing a Notice of Objection on September 26, 2001 which were confirmed by the Notification of Confirmation dated April 15, 2002.

[9] As the result of the foregoing the sole issue remaining to be considered in Peralta's appeals is whether the Minister's redetermination requiring her to repay CCTB and GSTC overpayments should be upheld.

Appellants' Testimony

[10] The issues to be determined rest solely on the relationship between the two Appellants. As previously noted, Ashoori and Peralta maintained that they were not in a common-law relationship but were, in the case of Ashoori, "separated, had one qualified dependent" and in the case of Peralta "separated" for 1998 and "divorced" for 1999 and 2000.

[11] Ashoori testified that he had been married, had two children, and that at some point in 1995 separated from his wife. For a period of time he lived alone in an apartment at 66 Clipper Road, Toronto and was employed as manager of a Mac's Milk outlet. In August 1996, he lost his job and although able to support himself and keep up payments to his ex-wife for the children, he could no longer meet all of his living expenses and in particular his rent, which circumstances forced him to give up the apartment. Maria Peralta, a friend who knew of his situation offered him a place to stay in her home where she lived with her two young daughters. Peralta did not have any income, "was getting welfare" and at some point of time that year according to her "they cut my welfare off and then he went to apply for welfare. They gave him the welfare for - for us - for us". As I understood their testimony, this situation continued until the summer of 1998 when Peralta's father told Ashoori that the managers of an apartment building at 40 Godstone were looking for an assistant superintendent. He applied and was advised that "They want two people, you know, like husband and wife, the brother or sister, or ... two people". This requirement was understood by Ashoori to be mandatory, since the contract required that one of them be on duty and available in the complex at all times[3] and for that purpose the employees were entitled to the use of a rent-free apartment. Ashoori says he asked Peralta to apply with him and she agreed. On August 8, 1998, contracts were signed and since that time, the Appellants have been employed by Venice Park Developments Limited and have been living together in the accommodation provided.

[12] The apartment was described by them as a two-bedroom unit with one bedroom occupied by Peralta and her daughters and the other by Ashoori. They say there was very little in the way of common activities. They maintained separate bank accounts and separate credit cards. Each bought groceries and prepared their own meals because as Ashoori put it: "I am Iranian, I eat Middle East food and she is Spanish, she cooks for her two kids". The only items shared in terms of cost were the telephone, cable and insurance for their respective vehicles (in the latter instance because it was cheaper to do so). As to their personal relationship Ashoori said Peralta was "a best friend" and denied the existence of any intimate relationship. Peralta called it a "friend relationship" and said that "he is doing his own thing and I'm doing my own thing". Both maintained that the only reason they cohabited was "because of the job" and maintained that insofar as their social lives were concerned each went their own way.

[13] Counsel for the Respondent cross-examined both as to the nature of their relationship and adduced evidence which established that in his 1996 and subsequent income tax returns, Ashoori declared that he was in a common-law relationship with Peralta. He alleged that this was done at the suggestion of a tax preparer and maintains that he did not understand the meaning of that term. This issue came to a head several years later when Revenue Canada was considering reassessments of both Appellants. They say when this issue was raised, they contacted their tax preparer, and with the latter's assistance, Peralta completed and signed a document with respect to her "current family status and the date your current status began" in which she stated she was "single" since August 1998. She also stated that the name of her former spouse was Youbert Ashoori and, asked to provide her former spouse's address wrote: "See explanation". The "explanation" reads in part:[4]

Due to the requirement of our job as superintendent we still share the "Super Apt" we have separate bedrooms it is a must for us to keep our job to be using the same apartment. We lived together as a couple until August 1998. We were on welfare and we accepted to take a job as Super and one of the requirements of the job is to be sharing the Super Apt.

Both witnesses denied the correctness of the statement relating to their common-law status and suggested that it was a misunderstanding totally attributable to their tax preparer.

[14] I have already indicated that their testimony regarding their personal relationship appeared to be somewhat questionable. Furthermore, their efforts to attribute the description of their relationship in 1998 as common-law to an error or misunderstanding on the part of their tax preparer were far from convincing. I note as well that Peralta conceded that she had read the letter before she sent it, albeit "but not very closely" and alleges that she did not see the words "we live together as a couple". I have substantial doubts regarding this testimony. The document contains a clear and unambiguous statement that the Appellants were living in a common-law relationship in 1998. If the tax preparer had in fact misconstrued the information provided to her, the Appellants could have subpoenaed her to testify to that effect. That was not done. I have concluded therefore that the testimony of the Appellants with respect to the nature of the relationship cannot be accepted and falls short of establishing on a balance of probabilities that they were not cohabiting with each other in a conjugal relationship within the meaning of the provisions of subsection 254(4) of the Act.

[15] Accordingly, the appeals of each Appellant are dismissed.

Signed at Ottawa, Canada, this 24th day of April, 2003.

"A.A. Sarchuk"

J.T.C.C.

[1] No Notice of Objection: Laforme v. The Queen, 91 DTC 5372, and Lok v. Canada, [2001] 1 C.T.C. 2650. No appeal from a nil assessment: Okalta Oils Ltd. v. M.N.R., 55 DTC 1176 (S.C.C.); Lornex Mining Corporation Ltd. v. M.N.R., 88 DTC 6399 (F.C.T.C.); Consoltex Inc. v. The Queen, 92 DTC 1567 (T.C.C.).

[2] See footnote above.

[3] See Exhibit A-1 - Employment Agreement.

[4] Exhibit A-3, page 3.