http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/110871/index.do 
Amiripour v. The Queen (July 22, 2015 – 2015 TCC 187, D’Auray J.).
Précis: Mr. Amiripour earned income as both a sole proprietor and a partner in 2003 and 2004. CRA added unreported income and denied many of his expense claims for income tax purposes in those years and assessed net GST. This decision covers both his income tax appeal and his GST appeal.
The Court concluded that Mr. Amiripour failed to report large amounts income and, in addition, did not accept his evidence as to his expenses that were disallowed by CRA. The Court denied his appeals subject to small adjustments totalling roughly $5,500 for purchase of nails, automobile and telephone expense.
Decision: The Court summarized the items at issue:
[7] At my request, the respondent submitted at trial Schedules showing what the appellant reported as income and claimed as expenses and what the Minister added to the appellant’s income and allowed as expenses for income tax purposes for the taxation years under appeal:
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2003
Partnership Income and the appellant’s handy man income as a sole proprietorship
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Income reported by the appellant from the partnership
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Income assessed by the Minister from the partnership
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In dispute
|
|
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Alpine: $54,296
|
|
|
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Handy man work: 9,541
|
|
|
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Income (with GST): 63,837
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|
|
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(Less GST): 4,177
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|
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Total income from
partnership: $10,078
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Total income: $59,660
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$ 49,582
|
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Expenses
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Claimed by the appellant
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Allowed by the Minister
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In dispute
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Subcontractors: $12,850
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$ 12,850
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0
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Purchases: 19,458
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591
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18,867
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Rent: 4,860
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0
|
4,860
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Disposal: 1,252
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1,252
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0
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Small tools: 2,133
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2,133
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0
|
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Advertising: 332
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0
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332
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Automobile: 2,232
|
521
|
1,711
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Bank charges: 84
|
84
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0
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Telephone: 490
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0
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490
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CCA: 2,069
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0
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2,069
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Handy man expenses: 0
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5,350
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0
|
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Total expenses: $45,760
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$22,781
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$28,329
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Summary 2003
|
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Appellant
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Allowed
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In dispute
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Income from partnership: $10,078
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Income: $ 59,660
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$49,582
|
|
Expenses: 45,760
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Expenses: 22,781
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22,979
|
|
Net loss: ($35,682)
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Income: $36,879
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$72,561
|
|
|
|
|
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Appellant’s share: ($17,841)
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Appellant’s share: $18,439
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$36,280
|
|
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Sole proprietorship
income: 2,610
|
2,610
|
|
($17,841)
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$21,049
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$38,890
|
|
2004
Partnership Income and the appellant’s handy man income as a sole proprietorship
|
|
Income reported by the appellant
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Income assessed by the Minister
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In dispute
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|
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From Alpine: $186,734
|
|
|
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Handy man work: 5,692
|
|
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Income (with GST): 192,126
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|
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(Less GST): 12,569
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Partnership income: $24,000
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Total income: $179,557
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$155,5557
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Expenses
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Claimed by the appellant
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Allowed by the Minister
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In dispute
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Subcontractors: $57,492
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$54,282
|
321
|
|
Purchases: 23,135
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8,871
|
14,264
|
|
Advertising and promotion: 3,893
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0
|
3,893
|
|
Automobile: 3,572
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2,500
|
1,072
|
|
Bank charges: 388
|
388
|
0
|
|
Office: 1,378
|
0
|
1,378
|
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Accounting: 3,935
|
3,927
|
8
|
|
CCA: 1,447
|
1,033
|
414
|
|
Annual labour: 1,680
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1,680
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0
|
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Handy man expenses: 0
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3,192
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0
|
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96,920
|
75,873
|
21,350
|
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Loss: (72,920)
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Income: 103,684
|
176,907
|
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Appellant’s share: ($36,460)
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Income: $51,842
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$88,453.50
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The Court rejected Mr. Amiripour’s explanation of the unreported partnership income:
[9] The appellant was vague when asked why the partnership reported the amounts of $10,078 instead of $59,660 in 2003 and $24,000 instead of $179,557 in 2004, as income from Alpine Roofing and from the handy man work. He explained that his accountant was new and did not have enough experience in preparing income tax returns.
[10] I have some difficulty with this explanation. The discrepancy between the amounts earned and reported is significant. The appellant had to be aware that he was not reporting all his income earned from Alpine Roofing. At trial, he readily admitted, when presented with the evidence, that his gross income emanating from Alpine Roofing should be increased for both taxation years.
[11] However, the appellant did not agree that the amounts of $9,541 for 2003 and $5,692 for 2004 should be included in the partnership income for the handyman work that the partnership would have performed.
[12] With respect to these amounts, the respondent filed in evidence schedules showing all the deposits made in the partnership bank’s account. The deposits were all linked to income earned from the partnership. The appellant did not offer any reason as to why these amounts should not be included in the partnership income. The burden was on him to show that these amounts should not have been included in the partnership income and since he failed to do so, the appellant’s share of these amounts, namely $4,770.50 for 2003 and $2,846 for 2004, was properly included in the appellant’s income.
[13] Therefore, the Minister correctly established the partnership gross income at $59,660 (appellant’s share $29,830) for the 2003 taxation year and at $179,557 (appellant’s share $89,778.50) for the 2004 taxation year.
In the case of the income tax appeal the Court allowed only a reasonable amount of expenses for the purchase of nails in 2003 and for automobile and telephone expenses in both 2003 and 2004:
[39] The appellant is entitled to claim his share of the following expenses incurred by the partnership:
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Purchases
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Partnership
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Appellant’s share
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|
2003 taxation year
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$4,435
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2,217.50
|
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Automobile
|
|
|
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2003 taxation year
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$2,232
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$1,116
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|
2004 taxation year
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$3,572
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$1,786
|
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Telephone/office expenses
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|
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2003 taxation year
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$280
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$140
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2004 taxation year
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$560
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$280
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The GST appeal was dismissed.