http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/111072/index.do
Ali v. The Queen (August 6, 2015 – 2015 TCC 196, Masse D.J.).
Précis: Over the 2007, 2008, 2009 and 2010 taxation years Ms. Ali claimed large deductions for employment and business expenses and tuition. CRA rejected the bulk of her claims as being unsubstantiated.
The Tax Court dismissed the appeal. Ms. Ali’s evidence about her expenses was simply not credible.
Decision: This decision is an admixture of a number of deductions and credits that were not accepted by CRA:
[2] The factual context for this matter is taken from the pleadings and the evidence of the Appellant who was the only witness.
[3] In computing income for the 2007 taxation year, the Appellant reported gross professional income of $3,591. She claimed professional expenses of $12,364. Her employment income was nil but she claimed employment expenses of $8,989.
[4] In computing income for the 2008 taxation year, the Appellant reported gross professional income of $800, professional expenses of $4,750, employment income of $24,758 and employment expenses of $11,790.
[5] In computing tax payable for the 2008 and 2009 taxation years, the Appellant claimed a gross non‑refundable tax credit in respect of the following:
[6] Her spouse’s unused deductions consisted of his claimed disability tax credit and his claimed Canada child tax benefit. The CRA has on file two Disability Tax Credit Certificates (form T2201) dated December 17, 2009 and July 22, 2010, respectively, that relate to the Appellant.
[7] In computing tax payable for the 2010 taxation year, the Appellant claimed a non‑refundable tax credit in respect of tuition fees totalling $5,112.
[8] The Appellant also claimed an employee and partner GST/HST rebate (“GST/HST rebate”) of $781.62 for 2007, $2.30 for 2009 and $2.42 for 2010. She claimed a working income tax benefit (“WITB”) of $1,019.00 for 2008 and $2,142.50 for 2009.
[9] Initially, the Minister of National Revenue (the “Minister”) accepted all of the amounts claimed by the Appellant and issued Notices of Assessment and Notices of Determination for the taxation years. The Minister assessed zero federal tax payable for each of the taxation years. However, the Minister subsequently undertook a review of the Appellant’s professional expenses and revised these expenses downward to $394 for 2007 and $163 for 2008 based on the limited information that had been provided by the Appellant. The Minister also disallowed the claimed employment expenses for 2007 and 2008 as well as the other amounts claimed except for the Canada child tax benefit for 2009 and the GST/HST rebates for 2009 and 2010. The Appellant’s claim for deduction of tuition fees in the amount of $5,112 for 2010 was also disallowed and was revised downwards to $852.
The following paragraphs are illustrative of the nature of Ms. Ali’s claims:
[22] The Appellant agrees that she operated a daycare business in her home as a sole proprietorship under the name of “Mobeen’s Home Daycare” during the 2007 and 2008 taxation years. She agrees that her income from the business was no less than $3,591 in 2007 and $800 in 2008. She agrees that in 2007, she incurred business expenses of $300 on account of meals for the children and $50 for toys. She agrees that in 2008, she incurred expenses of only $66 on account of meals for the children and $54 for toys. She also agrees that, other than the meals and toys herein referred to, the only other business expenses claimed for the 2007 and 2008 taxation years were for the business use of her home.
[23] The total expenses in relation to the home that she lived in and in which she ran her daycare business are:
|
Heat
|
$1,662.73
|
$1,892.52
|
|
Electricity
|
$899.96
|
$983.64
|
|
Insurance
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$645.84
|
$645.84
|
|
Mortgage Interest
|
$17,816.37
|
$17,265.39
|
|
Property Taxes
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$4,674.21
|
$4,674.21
|
[24] The Appellant agrees that all of the above‑noted expenses were in relation to the entire house and not just that part of the house dedicated to her daycare business. The Appellant also agreed that her home is a large home of 4,000 sq. ft. and that only 400 sq. ft. were dedicated to her daycare business. She only had children in her care for 15 days of each of the taxation years and when she did have children in her care, this was for only 10 hours of the day.
At the end of the day the Court simply did not find her evidence credible:
[45] The only evidence that the Appellant adduced to support her position and to challenge the presumptions of fact relied upon by the Minister, was her own verbal testimony. Her testimony was found wanting. In addition, she agreed with practically all of the presumptions of fact relied upon by the Minister. She has not provided any documentary evidence to support any of the amounts that she claimed. The fact that her records were destroyed may have made it more difficult to obtain necessary documentation but it did not make it impossible. The Appellant has simply failed to discharge the burden of proof that is incumbent upon her. It is clear that she was not entitled to claim the deductions that she did claim nor was she entitled to receive the benefits that she claimed beyond what the Minister redetermined her to be entitled to.
[46] For all of the foregoing reasons, this appeal is dismissed.