Lafond v. The Queen

Lafond v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2006-01-03
Neutral citation
2006 TCC 17
File numbers
2005-231(IT)I
Judges and Taxing Officers
Pierre Archambault
Subjects
Income Tax Act
Decision Content
Docket: 2005-231(IT)I
BETWEEN:
MANON LAFOND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
____________________________________________________________________
Amendment to the judgement handed down on January 3, 2006
by the Honourable Justice Pierre Archambault
AMENDMENT TO JUDGMENT
Whereas this Court handed down a judgment on January 3, 2006;
And whereas two mistakes, which do not affect the substance of the judgment, crept into footnote number 5, on page 4, and into paragraph 13 on page 9 of the Reasons;
This Court makes the following amendments:
Footnote number 5 should read in part as follows:
According to the statement of income for 2000 (Exhibit I‑5) and a letter from Éric Métivier, the syndic, Mr. Martel transferred his property on June 12, 2000. ...
and the last sentence of paragraph 13 is deleted.
Signed at Ottawa, Canada, this 17th day of January 2006.
"Pierre Archambault"
Archambault J.
Translation certified true
on this 25th day of July 2006
Monica F. Chamberlain, Reviser
BETWEEN:
MANON LAFOND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
____________________________________________________________________
Appeals heard on October 4, 2005, at Quebec City, Quebec.
Before: The Honourable Justice Pierre Archambault
Appearances:
Counsel for the Appellant:
Patrick Poulin
Counsel for the Respondent:
Annick Provencher
____________________________________________________________________
JUDGMENT
The appeals by Ms. Lafond from the assessments under the Income Tax Act for the 1999, 2000 and 2001 taxation years are allowed and the assessments are referred back to the Minister for reconsideration and reassessment, on the basis that the amount of personal expenditures will be reduced to $24,750 for 1999, $21,925 for 2000 and $24,366 for 2001, that the capital property of Ms. Lafond will be reduced by the value of the cars described in the attached Reasons, that the value of the staircase be reduced to $200 (rather than being established at $1,200) and that the penalties are cancelled, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 3rd day of January 2006.
"Pierre Archambault"
Archambault J.
Translation certified true
on this 25th day of July 2006
Monica F. Chamberlain, Reviser
Citation: 2006TCC17
Date: 20060103
Docket: 2005-231(IT)I
BETWEEN:
MANON LAFOND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Archambault J.
[1] Manon Lafond is appealing the assessments by the Minister of National Revenue (Minister) in respect of the 1999, 2000 and 2001 taxation years (relevant period). By these assessments, the Minister added to the income of Ms. Lafond additional income of $45,168 for 1999, $32,592 for 2000 and $31,440 for 2001. Each of these amounts comprises two separate elements: an amount attributable to the personal portion of motor vehicle expenditures, which are $3,194 for 1999, $2,862 for 2000 and $2,302 for 2001, and amounts of $41,974 for 1999, $29,730 for 2000 and $29,138 for 2001, representing unreported business income determined in accordance with the net worth method.
[2] In light of the objections raised by Ms. Lafond, the Minister reduced her unreported business income by $13,092 for 1999, $6,000 for 2000 and $3,240 for 2001. Pursuant to subsection 163(2) of the Income Tax Act (Act), penalties were imposed in respect of this business income. Ms. Lafond is disputing the addition of this business income and the imposition of penalties before the Court. She claimed that the Minister had made mistakes in his calculations, which were based on the net worth method. In particular, she maintained that the Minister had added to her capital property, property that belonged to another taxpayer, Michel Martel, specifically the motor vehicles and the bank accounts. The Minister added to Ms. Lafond's capital property the cost of building a garage, which was reportedly paid entirely by Mr. Martel. The Minister over-valued the personal expenditures of Ms. Lafond, in view of the fact that she lived to a large extent from the proceeds of her garden and from raising animals on her property. Lastly, the Minister did not take into account the fact that Mr. Martel generally paid half of the personal expenditures and that on occasion he paid all of them, specifically in respect of travel expenditures.
Factual background
[3] The admissions made by Counsel for Ms. Lafond, include the fact set out at paragraph 41(d) of the amended Reply to the Notice of Appeal, according to which Ms. Lafond operated a business under the name of "Taxi Manon Lafond". In fact, in the statements of income produced as evidence, Ms. Lafond declared gross and (net) business income of $16,630 ($3,629) for 1999, $14,500 ($2,918) for 2000 and $12,892 ($3,594) for 2001. Another admission is that she drove her taxi from September to May or June during the relevant period. It seems, in fact, that during a large part of the remainder of the year, Ms. Lafond was receiving employment insurance benefits, the amount of which significantly exceeded her net income derived from operating the taxi. She reported benefits of $4,675 for 1999, $4,675 for 2000 and $6,050 for 2001.[1] Attached to her income tax return for 1999, there are T4s produced by "Taxi Michel Martel (lessor)" on behalf of "Lafond (lessee) Manon" and indicating an amount of insurable earnings of $10,000 and the other by a numbered company "9063‑5855 Québec Inc. (lessor)" (9063) indicating $6,500 in insurable earnings. These amounts total $16,500, which essentially corresponds to the gross business income of $16,630 reported by Ms. Lafond for that year. For the 2000 taxation year, the amount appearing on the T4 submitted by 9063 is $14,500, which is the amount of gross business income reported by Ms. Lafond, and for the year 2001, the amount on the T4 is $14,000, whereas the amount of gross business income declared is only $12,892.[2]
[4] Another fact revealed by Ms. Lafond's tax return for each of the years in the relevant period is that she stated that she was single. It must be added that, during the audit of her income tax returns, Ms. Lafond again told the auditor that she was living alone during the relevant period. Once the audit was over and the assessment had been issued setting the amount of tax payable, Ms. Lafond changed her story. She informed the Objections Officer that Michel Martel was her common-law partner during this period. The fact that the tax bill was much higher than the $500 to $600 that she had been expecting would explain this change in attitude. According to their testimony, Ms. Lafond and Mr. Martel had lived together from 1997 to April 2004. It would seem that the tensions created by the tax assessments had played a role in their separation. It is nonetheless worth mentioning that Mr. Martel solemnly declared in a letter dated April 2, 2004, that he would assume [translation] "all the costs incurred by Ms. Lafond for her tax file." Moreover, a discharge statement dated May 31, 2004, given following their separation expressly states that Ms. Lafond gave no discharge [translation] "in respect of debts that may be owed by Mr. Michel Martel as a result of operating his taxi company or resulting from their cohabitation."[3]
[5] We should also mention that Michel Martel himself operated a taxicab, either as owner or as lessee, that he was a lecturer and that he operated a small farming business.[4] The farm income appears, moreover, in his tax return for the 2000 taxation year, which was produced at the hearing. We should, finally, mention that Mr. Martel's financial situation was difficult and that he declared bankruptcy in June 2000.[5]
Analysis
[6] In order to decide whether the assessments by the Minister are well founded, it is worthwhile to recall a number of principles established by the courts. First, there are those set out in my decision in Léger v. The Queen, 2001 DTC 471. I wrote as follows at paragraphs 13 and following:
[13] First of all, the burden of proof resting on Mr. Léger in his appeals must be dealt with. My colleague Judge Tardif had an opportunity to discuss the burden of proof in a case that, like this one, raised the issue of the use of the net worth method.
[14] In Bastille v. R., 99 DTC 431 ([1999] 4 C.T.C. 2155), he wrote the following at paragraphs 5 et seq.:
[5] I think it is important to point out that the burden of proof rests on the Appellants, except with respect to the question of the penalties, where the burden of proof is on the Respondent.
[6] A NET WORTH assessment can never reflect the kind of mathematical accuracy that is both desired and desirable in tax assessment matters. Generally, there is a certain degree of arbitrariness in the determination of the value of the various elements assessed. The Court must decide whether that arbitrariness is reasonable.
[7] Moreover, use of this method of assessment is not the rule. It is, in a way, an exception for situations where the taxpayer is not in possession of all the information, documents and vouchers needed in order to carry out an audit that would be more in accordance with good auditing practice, and most importantly, that would produce a more accurate result.
[8] The bases or foundations of the calculations done in a NET WORTH assessment depend largely on information provided by the taxpayer who is the subject of the audit.
[9] The quality, plausibility and reasonableness of that information therefore takes on an absolutely fundamental importance.
[15] Another of my colleagues, Judge Bowman, stated the following in Ramsey v. Canada, [1993] T.C.J. No. 142 (QL) ([1993] 2 C.T.C. 2119, 93 DTC 791), at paragraph 6:
I am not unappreciative of the enormous, indeed virtually insuperable, difficulties facing the Appellant and his Counsel in seeking to challenge net worth assessments of a deceased taxpayer. The net worth method of estimating income is an unsatisfactory and imprecise way of determining a taxpayer’s income for the year. It is a blunt instrument of which the Minister must avail himself as a last resort. A net worth assessment involves a comparison of a taxpayer's net worth, i.e. the cost of his assets less his liabilities, at the beginning of the year, with his net worth at the end of the year. To the difference so determined there are added his expenditures in the year. The resulting figure is assumed to be his income unless the taxpayer establishes the contrary. Such assessments may be inaccurate within a range of indeterminate magnitude, but unless they are shown to be wrong they stand. The only truly effective way of disputing this is by means of a complete reconstruction of a taxpayer's income for a year. A taxpayer whose business records and method of reporting income are in such a state of disarray that a net worth assessment is required is frequently the author of his or her own misfortunes.
[My emphasis.]
[7] There are also the principles set out in the following paragraphs of the decision handed down on July 24, 2001, by the Federal Court of Appeal in Hsu v. Canada, [2001] F.C.J. No. 1174 (QL). This is what Desjardins J. wrote:
25 In his examination for discovery, the auditor admitted that he did not apply the precise methodology set out in the Taxpayers Operations Manual. He explained that an ordinary net worth assessment was impossible because the Appellant refused to disclose any information regarding his actual net worth in 1993 and 1994. Consequently, he did not have a closing balance to use as a benchmark for ascertaining any increase in the Appellant's worth during the periods in question.[6]
...
29 Net worth assessments are a method of last resort, commonly utilized in cases where the taxpayer refuses to file a tax return, has filed a return which is grossly inaccurate or refuses to furnish documents which would enable Revenue Canada to verify the return (V. Krishna, The Fundamentals of Canadian Income Tax Law, 5th edition (Toronto: Carswell, 1995) at page 1089). ...
33 I would add that it was open to the Tax Court judge to conclude that the Minister's method for determining the Appellant's income was reasonable and logical in the circumstances of this case. Although the Minister's reassessments were clearly arbitrary, it cannot be forgotten that this approach was the direct result of the Appellant's refusal to disclose any financial information or documentation. In Dezura, supra at 1103-1104, the President of the Exchequer Court of Canada explained:
... If his failure to satisfy the Court is due to his own fault or neglect such as his failure to keep proper accounts or records with which to support his own statements, he has no one to blame but himself.
34 As the Tax Court judge observed, the appellant has done nothing to ensure a full, complete and correct audit. The appellant has consistently failed to provide any evidence which would prove his actual income during the period in question. Accordingly, he cannot complain that the Minister has proceeded on the basis of speculative assumptions.
[My emphasis.]
Credibility of the testimony of Ms. Lafond and Mr. Martel
[8] Before embarking on a precise discussion of each of the points raised by Ms. Lafond to attack the net worth calculations, I would like to make some general comments on the credibility of the only two people who testified at the request of the Appellant. First, with regard to Mr. Martel, I would note that in his bankruptcy statement, produced as Exhibit I-7, Mr. Martel solemnly declared on June 12, 2000, before a Commissioner of Oaths, that he was a taxi driver residing at "5265 2nd Avenue West, Charlesbourg, Quebec and now domiciled and resident at 237 St‑Ambroise, Apt. 2, Québec, Quebec." In his income tax return dated April 28, 2003, for 2000, the year of the bankruptcy, and in the return for 2001, Mr. Martel's address is shown as 4-250 1st Avenue, Charlesbourg. In a statement under oath on September 7, 2004, made before a Commissioner of Oaths, Mr. Martel stated that he had lived common-law with Ms. Lafond from 1997 to 2004 at her residence in Stoneham. Which of these statements under oath reflects the truth, that of September 7, 2004, or that of June 12, 2000, which was given to the syndic?
[9] We would add that in the statement of June 12, 2000, Mr. Martel solemnly declared also that he had no assets other than a 1991 Dodge Spirit worth $900 and a taxi permit that was not subject to seizure, whereas he solemnly declared in a document dated April 2, 2004, that he had made deposits into a bank account of Ms. Lafond (folio 171456) for the operation of his taxi and for his "personal expenditures." In addition, he stated in the statement under oath of September 7, 2004, that all the automobiles registered in the name of his partner Manon Lafond had been for the personal use of Mr. Martel. Ms. Lafond acknowledged that at least one of these cars, the Oldsmobile Delta, had been given to her by her father.
[10] Furthermore, who is telling the truth: Mr. Martel, who stated that he had never written a cheque on account no. 171456, or Ms. Lafond, in whose name this bank account had been opened at the Caisse Populaire, who also states that she had never drawn any cheques on this account? A cheque for $321.32 was nonetheless drawn on January 5, 2000.
[11] What are we to think, moreover, of the credibility of Ms. Lafond who, in her income tax returns, stated that she was single when she had lived in a marital relationship with Mr. Martel from 1997 to 2004? She repeated this information when the auditor of the Minister was preparing the data for the purposes of the net worth calculation. At the auditor's first interview with her, on May 5, 2004, she stated that she had no maintenance or repair expenditures for her accommodation. However, according to the auditor's report (Exhibit I-10), she told another representative of the Minister that she had spent $400 a year on this type of expense. Similarly, she stated to the auditor that she had not done any travelling, whereas 1999 credit card statements revealed that Ms. Lafond had made one trip to Old Orchard and another to Lac Saint‑Jean and to Thetford Mines. The report of the Objections Officer states that Ms. Lafond said that she had never been to a restaurant, whereas the credit card statements revealed restaurant expenditures (see Exhibit I-12). She also stated in an initial interview with the auditor of the Minister that she had not spent anything on cosmetics, whereas her credit card statements revealed such expenditures. With regard to clothing expenditures, she said that she spent $300 a year, while in a second interview, she spoke of $120 a year. He credit card statements revealed expenditures of $1,530 in 1999, $640 in 2000 and $670 in 2001.
[12] In his audit, the auditor found that the amount of Ms. Lafond's personal expenditures totalled $29,092 in 1999, $29,724 in 2000 and $29,307 in 2001. Ms. Lafond herself assessed the amount of her personal expenditures at $1,700 a month, i.e., $20,400 a year. Following the steps taken by the representative of Ms. Lafond, at the objections stage, corrections were made by the Minister. He reduced the amount of personal expenditures by $4,342 for 1999, by $4,300 for 2000 and by $2,440 for 2001, so that the amount of these expenditures following the recalculations totalled $24,750 for 1999, $25,424 for 2000 and $26,867 for 2001. Thus, the difference between the evaluations of each of the parties for these years is in the range of approximately $4,300 to $6,400. In her testimony, Ms. Lafond stated that the agreement with Mr. Martel called for equal sharing of the couple's personal expenditures. However, Mr. Martel was unable to confirm the existence of this sharing agreement; at most, he acknowledged that he had contributed to the cost of food, mortgage, electricity and similar expenditures. Furthermore, both stated that they were living largely from the proceeds of Ms. Lafond's garden and from raising animals, including the fish with which Mr. Martel had stocked a lake located on Ms. Lafond's land.
[13] It is, in my view, not sufficient for Ms. Lafond to state that her monthly expenditures were $1,700 to establish that the amount of expenditures estimated by the auditor is wrong. Clearly, the estimate of personal expenditures gives only a very approximate result, but that is the essence of this audit method, as Judge Bowman reminded us in the words I quoted earlier. With regard to the portion of the expenditures paid by Mr. Martel, it is difficult for me to accept the testimony of Ms. Lafond and Mr. Martel on this score. First, in estimating the personal expenditures of Ms. Lafond, the auditor assumed that she was living alone in her residence in Stoneham. It seems to me quite inappropriate to deduct from these expenditures the claimed contribution for Mr. Martel, when we do not know the total amount of the couple's expenditures. In order to be able to take Mr. Martel's contribution into account, the Minister would have had to have prepared a calculation of the discrepancy of the net worth for the couple, as is normally done. If that was not done in this case, it was because of Ms. Lafond's lie. She was the one who misled the Minister by stating that she was living alone.
[14] I am, however, prepared to grant a reduction in personal expenditures in addition to that already granted by the Objections Officer; this additional reduction referred to the item "non-allocated expenditures". According to the testimony of the auditor, these expenditures are those appearing on the credit card statements, which he was unable to assign to any of the various expenditure headings in his calculation of personal expenditures. In adopting this approach there is, in my view, a risk of duplicating certain personal expenditures. The auditor based his calculations either on information provided by Ms. Lafond or, as is common practice, on Statistics Canada data. In my view, one cannot, except in special circumstances, estimate personal expenditures for each of the headings normally found in a calculation of the net worth discrepancy by adding unidentified expenditures taken from credit card statements. As a result, the amount of personal expenditures should be reduced by the amount of the "non‑allocated expenditures." With regard to 1999, the Minister had already reduced personal expenditures by an amount corresponding to these "non‑allocated expenditures" of $4,342. However, for reasons that I fail to understand, this adjustment was not done entirely for the years 2000 and 2001. As a result, in order to complete this adjustment, we must subtract the balance of non‑allocated expenditures from personal expenditures. The amount of this balance for the year 2000 is $3,499 and $2,501 for 2001. Consequently, the total personal expenditures is now $24,750, as was established by the Objections Officer for 1999, $21,925 for the year 2000 and $24,366 for 2001.
[15] With regard to the balance arrived by the auditor for Ms. Lafond, I am prepared to concede that some of the cars shown on it are the property of Mr. Martel. In view of the comments that I have made with regard to the credibility of Mr. Martel's testimony, I am not willing to accept that all the cars that he mentioned are deemed to belong to him. We should recall that Mr. Martel had stated that all these cars registered in the name of Ms. Lafond belonged to him, whereas in fact, at least one which – as Ms. Lafond acknowledged– was hers, namely the Oldsmobile Delta obtained as a gift from her father. Moreover, since several cars were registered to the name of Ms. Lafond, I am prepared to acknowledge that some of them had to belong to someone else. I believe that is justifiable to subtract from the cost of the cars in Ms. Lafond's statement the cost of the 1977 Dodge Van, the Ford Ranger and the Plymouth Voyager. All the net worth calculations will need to be recalculated taking into account the fact that these cars did not belong to her.
[16] In view of the contradictory evidence related to the bank withdrawals, I have concluded that Ms. Lafond did not succeed in establishing that the amounts appearing in bank account 171456 belonged to Mr. Martel. This account will accordingly appear as part of the capital property of Ms. Lafond.[7]
[17] As far as the garage is concerned, Ms. Lafond claimed that it had been built entirely by Mr. Martel and that he had borne the cost thereof. The purpose of this building was to allow Mr. Martel to do mechanical repairs on cars. Ms. Lafond acknowledged, however, that no mechanical work was done in this garage and that it had instead been used for raising animals. There is also a contradiction in respect of the building of this garage. According to Ms. Lafond, construction began in 1999 after a building permit had been obtained on August 4, 1999, whereas, according to Mr. Martel, construction began in 1997 and took place over a three-year period. The cost as shown on the permit application is $6,000.
[18] In view of this contradictory evidence, I am not prepared to consider the costs of building the garage as having been borne by Mr. Martel. This is an asset built on land belonging to Ms. Lafond and was used to house Ms. Lafond's animals. Consequently, this capital property must appear on her balance sheet. At the objections stage, the Minister has already reduced the amount of the construction costs from $16,000 to $10,000. According to Ms. Lafond, the cost did not exceed $6,000. The evidence revealed that many of the construction elements had been recycled. However, the exterior appears to have been made from products that were purchased. Since no invoice was submitted to justify this amount of $6,000, the evidence is insufficient to allow a reduction in the cost from $10,000 to $6,000.
[19] However, the evidence submitted by Ms. Lafond with regard to the building of the staircase leads me to believe that the construction cost was in fact substantially lower than the $1,200 figure established by the Minister. The quality of the materials used and the style of the staircase built, as is apparent from the photograph submitted as evidence (Exhibit A-4), justify a reduction in this cost to $200 in calculating the balance for 2001. The value of the capital property in respect of the staircase should thus be reduced from $1,200 to $200.
[20] There remains the question of the penalties. As was mentioned above, the burden of proof rested on the shoulders of the Minister in order to establish that the imposition of penalties was warranted. In my view, the Minister did not succeed in establishing this proof. I was not convinced, on the balance of probabilities, that Ms. Lafond had displayed gross negligence in the submission of her returns. Generally speaking, when the net worth method reveals substantial amounts of non-reported income, and there is no doubt regarding the identity of the taxpayer who earned this income, I have no hesitation in confirming the penalty. However, in the instant case, where we have two taxpayers who were living together and who blended their finances (in fact, Ms. Lafond had allowed Mr. Martel to use her credit cards and her bank accounts), I am not convinced that the undeclared income determined by the net worth method is necessarily that of Ms. Lafond. It must be stated that Mr. Martel committed himself to [translation] "[take on] all the expenditures incurred by Ms. Lafond in respect of her tax return." Furthermore, the amount of the discrepancies was reduced because of the amendments made by the Minister. For all these reasons, I have concluded that the evidence is insufficient. It must be borne in mind that Ms. Lafond had the burden of proving that the income assessed by the Minister was wrong and she largely failed in that endeavour. On the other hand, the burden rested on the Respondent to establish the proof that the discrepancy between this income and that declared was sufficient to allow the Court to conclude that there was gross negligence on the part of Ms. Lafond. Since the Respondent did not succeed in so doing, the penalties must be cancelled.
[21] For all these reasons, the appeals by Ms. Lafond are allowed and the assessments are referred back to the Minister for reconsideration and reassessment in light of the fact that the amount of personal expenditures must be reduced to $24,750 for 1999, $21,925 for 2000 and $24,366 for 2001, that the capital property of Ms. Lafond must be reduced by the value of the vehicles described above, that the value of the staircase must be reduced to $200 (rather than being assessed at $1,200) and that the penalties must be cancelled.
Signed at Ottawa, Canada, this 3rd day of January 2006.
"Pierre Archambault"
Archambault J.
Translation certified true
on this 25th day of July 2006
Monica F. Chamberlain, Reviser
Référence: 2006CCI7
Date: 20060103
Dossier: 2005-231(IT)I
ENTRE:
MANON LAFOND,
appelante,
et
SA MAJESTÉ LA REINE,
intimée.
MOTIFS DU JUGEMENT
Le juge Archambault
[1] Madame Manon Lafond interjette appel des cotisations établies par le ministre du Revenu national (ministre) à l'égard des années d'imposition 1999, 2000 et 2001 (période pertinente). Par ces cotisations, le ministre a ajouté aux revenus de madame Lafond un revenu additionnel de 45 168 $ pour 1999, de 32 592 $ pour 2000 et de 31 440 $ pour 2001. Chacun de ces montants représente deux éléments distincts: un montant attribuable à la partie personnelle de dépenses de véhicule automobile, lequel montant s'élève à 3 194 $ pour 1999, à 2 862 $ pour 2000 et à 2 302 $ pour 2001, et des montants, soit 41 974 $ pour 1999, 29 730 $ pour 2000 et 29 138 $ pour 2001, représentant des revenus d'entreprise non déclarés et déterminés selon la méthode de l'avoir net.
[2] À la suite des oppositions produites par madame Lafond, le ministre a réduit de 13 092 $ pour 1999, de 6 000 $ pour 2000 et de 3 240 $ pour 2001 les revenus d'entreprise non déclarés attribués à celle‑ci. En vertu du paragraphe 163(2) de la Loi de l'impôt sur le revenu (Loi), des pénalités ont été imposées à l'égard de ces revenus d'entreprise. Madame Lafond conteste devant la Cour l'ajout de ces revenus d'entreprise et l'imposition des pénalités. Selon elle, le ministre a commis des erreurs dans ses calculs faits selon la méthode de l'avoir net. En particulier, elle soutient que le ministre a ajouté à ses immobilisations des biens qui appartenaient à un autre contribuable, monsieur Michel Martel, dont notamment des véhicules automobiles et des comptes bancaires. Le ministre a ajouté aux immobilisations de madame Lafond le coût de la construction d'un garage qui aurait été entièrement payée par monsieur Martel. Le ministre aurait surévalué les dépenses personnelles de madame Lafond, compte tenu du fait qu'elle vivait en grande partie du produit de son jardin et de l'élevage d'animaux qu'elle faisait sur son terrain. Finalement, le ministre ne tient pas compte du fait que monsieur Martel payait, en général, la moitié des dépenses personnelles et que, à l'occasion, il les payait en entier, notamment lorsqu'il s'agissait de frais de voyage.
Contexte factuel
[3] Parmi les admissions faites par le procureur de madame Lafond, il y a le fait énoncé à l'alinéa 41 d) de la Réponse à l'avis d'appel modifié, selon lequel madame Lafond a exploité une entreprise sous le nom de « Taxi Manon Lafond ». En effet, dans les déclarations de revenus produites en preuve, madame Lafond a déclaré des revenus bruts et (nets) d'entreprise de 16 630 $ (3 629 $) pour 1999, de 14 500 $ (2 918 $) pour 2000 et de 12 892 $ (3 594 $) pour 2001. Une autre admission est qu'elle conduisait son taxi de septembre à mai ou juin durant la période pertinente. Il semble, en effet, que durant une bonne partie du reste de l'année madame Lafond recevait des prestations d'assurance‑emploi dont le montant dépassait sensiblement son revenu net tiré de l'exploitation du taxi. Elle a déclaré des prestations de 4 675 $ pour 1999, de 4 675 $ pour 2000 et de 6 050 $ pour 2001[8]. Sont joints à sa déclaration de revenus pour 1999 des T4 établis l'un par « Taxi Michel Martel (locateur) » au nom de « Lafond (locataire) Manon » et indiquant un montant de gains assurables de 10 000 $ et l'autre par la société à dénomination numérique « 9063‑5855 Québec Inc. (locateur) » (9063) et indiquant un montant de gains assurables de 6 500 $. Ces montants totalisant 16 500 $ correspondent essentiellement aux revenus bruts d'entreprise de 16 630 $ déclarés par madame Lafond pour cette année‑là. Pour l'année d'imposition 2000, le montant apparaissant sur le T4 établi par 9063 s'élève à 14 500 $, soit le montant des revenus bruts d'entreprise déclarés par madame Lafond, et pour l'année 2001, le montant sur le T4 s'élève à 14 000 $ alors que le montant des revenus bruts d'entreprise déclarés est uniquement de 12 892 $[9].
[4] Un autre fait révélé par les déclarations de revenus de madame Lafond pour chacune des années de la période pertinente est qu'elle se déclare célibataire. Il faut ajouter que, lors de la vérification de ses déclarations de revenus, madame Lafond avait informé à nouveau le vérificateur qu'elle vivait seule durant la période pertinente. Une fois la vérification terminée et une fois établie la cotisation fixant le montant de l'impôt à payer, l'attitude de madame Lafond a changé. Elle a informé l'agent des oppositions que Michel Martel était son conjoint de fait durant cette période. Le fait que la note d'impôt a été beaucoup plus élevée que les 500 $ ou 600 $ auxquels elle s'attendait expliquerait ce changement d'attitude. Selon leurs témoignages, madame Lafond et monsieur Martel avaient fait vie commune de 1997 à avril 2004. Il semble que les tensions créées par les cotisations fiscales aient joué un rôle dans la séparation du couple. Il faut toutefois mentionner que monsieur Martel affirme solennellement dans une lettre du 2 avril 2004 qu'il assumera « tous les frais encourus par Mme Lafond pour son dossier fiscal ». D'ailleurs, un acte de quittance en date du 31 mai 2004 donné à la suite de la séparation du couple stipule expressément que madame Lafond ne donne aucune quittance « quant aux créances qui pourraient être dues par Monsieur Michel Martel en raison de l'exploitation de son entreprise de taxi ou résultant de la vie commune entre les parties »[10].
[5] Mentionnons également que monsieur Michel Martel exploitait lui‑même une voiture de taxi, soit à titre de propriétaire ou à titre de locataire, qu'il aurait été chargé de cours et qu'il exploitait une petite entreprise agricole[11]. Des revenus agricoles apparaissent d'ailleurs dans sa déclaration de revenus pour l'année d'imposition 2000 produite lors de l'audience. Mentionnons finalement que monsieur Martel a vécu une situation financière difficile et qu'il aurait fait faillite au mois de juin 2000[12].
Analyse
[6] Pour décider si les cotisations du ministre sont bien fondées, il est utile de rappeler quelques principes établis par les tribunaux. Il y a d'abord ceux énoncés dans la décision que j'ai rendue dans l'affaire Léger c. La Reine, 2001 DTC 471. Aux paragraphes 13 et suivants, j'ai écrit ce qui suit:
[13] Tout d'abord, il faut traiter du fardeau de la preuve qui incombe à monsieur Léger dans ses appels. Mon collègue le juge Tardif a eu l'occasion de traiter du fardeau de la preuve dans une affaire soulevant, comme c'est le cas ici, la question de l'application de la méthode de l'avoir net.
[14] Dans l'affaire Bastille c. Sa Majesté la Reine, 99 DTC 431 ([1999] 4 C.T.C. 2155), il écrit aux paragraphes 5 et suivants:
[5] Il m'apparaît important de rappeler qu'en cette matière, le fardeau de la preuve incombe aux appelants, à l'exception toutefois de la question des pénalités où le fardeau de preuve est imputable à l'intimée.
[6] Une cotisation établie en vertu de la formule AVOIR NET ne peut jamais découler de la rigueur mathématique souhaitée et souhaitable en matière de cotisation. Il y a généralement une certaine partie d'arbitraire provenant de la détermination de la valeur des composantes. Le Tribunal doit décider de la raisonnabilité de cet arbitraire.
[7] Le recours à ce procédé n'est d'ailleurs pas la règle. Il constitue en quelque sorte une exception utilisée dans les situations où le contribuable n'a pas en sa possession toutes les informations, documents et pièces justificatives pour permettre une vérification plus conforme aux règles de l'art et surtout plus précise quant au résultat.
[8] Les assises ou fondements des calculs élaborés dans le cadre d'un avoir net sont tributaires en très grande partie des informations transmises par le contribuable faisant l'objet de la vérification.
[9] La qualité, la vraisemblance, la raisonnabilité des informations ont donc une importance absolument fondamentale.
[15] Un autre de mes collègues, le juge Bowman, tenait les propos suivants dans l'affaire Ramey c. la Reine, [1993] A.C.I. no 142 (QL) ([1993] 2 C.T.C. 2119, 93 DTC 791), au paragraphe 6:
Je ne sous-estime pas les difficultés énormes, sinon pratiquement insurmontables, auxquelles l'appelant et son avocat se heurtent dans leur tentative de contester les cotisations d'actif net établies à l'égard d'un contribuable décédé. Estimer le revenu annuel d'un contribuable à partir de la valeur de son actif net est une méthode insatisfaisante et imprécise. C'est un instrument grossier que le ministre doit utiliser en dernier ressort. Une cotisation d'actif net repose sur une comparaison de l'actif net du contribuable, à savoir la valeur de l'actif moins le passif au début d'une année, avec son actif net à la fin de l'année. À la différence ainsi obtenue, on ajoute les dépenses qu'il a engagées pendant l'année. Le montant obtenu est réputé être le revenu du contribuable, sauf preuve contraire. Ces cotisations peuvent être inexactes dans une mesure indéterminée, mais elles sont valables jusqu'à preuve de leur inexactitude. Il est quasi impossible de les contester à la pièce. La seule façon vraiment efficace de les contester est de procéder à une reconstitution complète du revenu du contribuable pour l'année. Un contribuable dont les registres comptables et le mode de déclaration de revenus sont dans un tel fouillis que la cotisation d'actif net s'impose est souvent l'artisan de son propre malheur.
[Je souligne.]
[7] Il y a aussi les principes énoncés aux paragraphes suivants de la décision en date du 24 juillet 2001 rendue par la Cour d'appel fédérale dans l'affaire Hsu c. Canada, [2001] A.C.F. no 1174 (QL). Voici ce que la juge Desjardins a écrit:
25 Dans son interrogatoire préalable, le vérificateur a admis qu'il n'appliquait pas la méthodologie précise établie dans le Manuel des opérations de l'impôt. Il a expliqué qu'une évaluation ordinaire de la valeur nette était impossible parce que l'appelant avait refusé de divulguer tout renseignement concernant sa valeur nette réelle en 1993 et en 1994. Le vérificateur ne disposait donc pas d'un chiffre de clôture comme point de repère lui permettant de déterminer toute augmentation de la valeur de l'appelant au cours des périodes en question[13].
[...]
29 Les évaluations de la valeur nette sont une solution de dernier recours communément employée dans les cas où le contribuable refuse de produire une déclaration de revenus, qu'il a produit une déclaration fort inexacte ou qu'il refuse de fournir des documents qui permettraient à Revenu Canada de vérifier le rendement (V. Krishna, The Fundamentals of Canadian Income Tax Law, 5e éd. (Toronto): Carswell, (1995) à la page 1089). [...]
33 Je tiens à ajouter qu'il était loisible au juge de la Cour de l'impôt de conclure que la méthode que le ministre avait employée pour déterminer le revenu de l'appelant était raisonnable et logique eu égard aux circonstances de l'espèce. Les nouvelles cotisations établies par le ministre étaient clairement arbitraires, mais il ne faut pas oublier que cette approche était directement attribuable au refus de l'appelant de divulguer des renseignements ou documents financiers. Dans la décision Dezura, précitée, aux pages 1103 et 1104, le président de la Cour de l'Échiquier du Canada a donné les explications suivantes:
[TRADUCTION]
[...] Si son omission de convaincre la Cour est attribuable à sa propre faute ou à une négligence telle que l'omission de conserver des comptes ou des documents appropriés lui permettant d'étayer ses propres déclarations, il ne peut imputer la chose qu'à sa propre faute.
34 Comme le juge de la Cour de l'impôt l'a fait remarquer, l'appelant n'a rien fait pour assurer une vérification exhaustive, complète et juste. L'appelant a toujours omis de fournir des éléments de preuve tendant à établir quel était son revenu réel au cours de la période en question. Il ne peut donc pas se plaindre du fait que le ministre s'est fondé sur des hypothèses.
[Je souligne.]
Crédibilité des témoignages de madame Lafond et de monsieur Martel
[8] Avant de discuter de façon précise chacun des points soulevés par madame Lafond pour attaquer les calculs de l'avoir net, j'aimerais faire des commentaires généraux sur la crédibilité des deux seules personnes qui ont témoigné à la demande de l'appelante. Tout d'abord, en ce qui a trait à monsieur Martel, mentionnons que dans son bilan de failli, produit sous la cote I‑7, monsieur Martel déclare solennellement le 12 juin 2000, devant un commissaire à l'assermentation, qu'il est chauffeur de taxi ayant résidé au « 5265, 2e Avenue Ouest, Charlesbourg (Québec) et maintenant domicilié et résidant au 237, St‑Ambroise, app. 2