Schmidt v. M.N.R.

Schmidt v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2005-11-09
Neutral citation
2005 TCC 737
File numbers
2003-3982(CPP)
Judges and Taxing Officers
David W. Beaubier
Subjects
Canada Pension Plan
Decision Content
Docket: 2003-3982(CPP)
BETWEEN:
REID SCHMIDT,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SEAL IT PRODUCTS INTERNATIONAL INC.,
Intervenor.
____________________________________________________________________
Appeal heard together on common evidence with the appeal of Seal It Products International Inc. (2003-3980(CPP)) on November 2, 2005,
at Saskatoon, Saskatchewan
Before: The Honourable Justice D.W. Beaubier
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
Brooke Sittler
Agent for the Intervenor:
Reid D. Schmidt
____________________________________________________________________
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in
accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 9th day of November 2005.
"D.W. Beaubier"
Beaubier, J.
Docket: 2003-3980(CPP)
BETWEEN:
SEAL IT PRODUCTS INTERNATIONAL INC.
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
REID SCHMIDT,
Intervenor,
and
DOUGLAS L. SCHOCK,
Intervenor.
____________________________________________________________________
Appeal heard together on common evidence with the appeal of Reid Schmidt (2003-3982(CPP) on November 2, 2005,
at Saskatoon, Saskatchewan
Before: The Honourable Justice D.W. Beaubier
Appearances:
Agent for the Appellant:
Reid Schmidt
Counsel for the Respondent:
Brooke Sittler
Counsel for the Intervenor:
Reid Schmidt
____________________________________________________________________
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in
accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 9th day of November 2005.
"D.W. Beaubier"
Beaubier, J.
Citation: 2005TCC737
Date: 20051109
Docket: 2003-3982(CPP)
BETWEEN:
REID SCHMIDT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
and
SEAL IT PRODUCTS INTERNATIONAL INC.,
Intervenor.
Docket: 2003-3980(CPP)
AND BETWEEN:
SEAL IT PRODUCTS INTERNATIONAL INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
and
REID SCHMIDT,
Intervenor,
and
DOUGLAS L. SCHOCK
Intervenor.
REASONS FOR JUDGMENT
Beaubier, J.
[1] These appeals were heard together on common evidence at Saskatoon, Saskatchewan on November 2, 2005. Reid Schmidt was the only witness.
[2] The particulars in dispute are set out fully in the Reply to the Notice of Appeal (2003-3980(CPP)). Paragraphs 3 to 7 inclusive of that Reply read:
3. By Notice of Assessment dated December 3, 2002 the Appellant was assessed for, among other things, Canada Pension Plan contributions in the amount of $2,187.22 for the 201 year, in respect of Schock and Reid Schmidt (hereinafter “Schmidt”). This amount was reduced by a credit carry forward of $500.82.
4. By letter dated February 6, 2003 the Appellant appealed to the Minister for a reconsideration of the 2000 and 2001 year assessments.
5. In response to the Appellant’s appeal, the Minister confirmed the assessments for the 2000 and 2001 years as the amounts paid by the Appellant to Schock and Schmidt (collectively hereinafter “the Workers”) were director’s fees.
6. In so deciding as the Minister did with respect to the Workers, the Minister relied on the following assumptions of fact:
(a) the Appellant’s business involved the manufacturing and marketing of building material preservatives.
(b) the share structure of the Appellant was as follows:
Schock 50%
Schmidt 50%
(c) the Workers were the corporate directors of the Appellant;
(d) the Appellant paid director’s fees to the Workers;
(e) director’s fees paid by the Appellant to the Workers for the 2000 and 2001 years were as follows:
2000
2001
Schock
$10,550.08
$16,216.40
Schmidt
$16,216.39
(f) Schock received royalty payments from the Appellants;
(g) the Appellant filed federal corporate income tax returns (“T2s”) as follows:
Year-end
T2 Filed
T2 Assessed
31/12/2000
11/6/2001
10/10/2001
31/12/2001
4/7/2002
7/8/2002
(h) the Appellant had not filed amended T2s as of the date of the Minister’s decision;
(i) on the T2s, the Appellant claimed director’s fees paid to the Workers;
(j) the Appellant’s shareholder loan amounts were as follows:
31/12/1999
Loan from Schock
$13,335
Loan from Schmidt
$16,041
Total Shareholder loan
$29,376
31/12/2000
Loan from Schock
$23,329
Loan from Schmidt
$17,382
Total Shareholder loan
$40,711
31/12/2001
Loan from Schock
$39,512
Loan from Schmidt
$34,519
Total Shareholder loan
$74,031
B. ISSUES TO BE DECIDED
7. The issue to be decided is whether the amounts paid by the Appellant to the Workers for the 2000 and 2001 years was director’s fees.
[3] None of the assumptions were refuted by the evidence.
[4] Mr. Schmidt kept the books of the corporation for the years in question on a computer program. He testified at great length. It is clear that he does not understand the program, accounting or corporate concepts. The changes described in assumption 6(j) were done by Mr. Schmidt as an arithmetic exercise to balance each side of the books. His testimony did not provide any substance to support the changes from the original numbers.
[5] This case is clear evidence that a corporation requires a qualified accountant to operate and to file its various statements and reports in Canada’s highly regulated economy.
[6] The Appellants failed to refute either set of assumptions and failed to provide any credible evidence to support the appeals.
[7] The appeals are dismissed.
Signed at Ottawa, Canada, this 9th day of November 2005.
"D.W. Beaubier"
Beaubier, J.
CITATION: 2005TCC737
COURT FILE NOs.: 2003-3982(CPP) and 2003-3980(CPP)
STYLE OF CAUSE: Reid Schmidt, et al. v. The Minister of National Revenue
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: November 2, 2005
REASONS FOR JUDGEMENT BY: The Honourable Justice D.W. Beaubier
DATE OF JUDGMENT: November 9, 2005
APPEARANCES:
For the Appellants:
Reid Schmidt
Counsel for the Respondent:
Brooke Sittler
For the Intervenors:
Reid Schmidt
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario