Brent E. Cuddy

The appellant was reassessed under subsection 160(1) of the Income Tax Act for the tax liability of a related corporation, Bakorp.

The Minister alleged that deemed dividends resulting from an increase in stated capital, as well as declared dividends evidenced by promissory notes, constituted transfers of property.

The Tax Court of Canada allowed the appeal, finding that neither the deemed dividends nor the declared dividends (which were unpaid and evidenced only by demand promissory notes) constituted a transfer of property under section 160, as there was no actual divestment of assets or impoverishment of the transferor.

The Respondent brought a motion to quash the Appellant's appeal from a 2013 income tax assessment on the basis that the Appellant failed to serve a notice of objection within the statutory time limits.

The Appellant argued that the assessment was not mailed until June 2022.

The Tax Court of Canada found that the Minister established on a balance of probabilities that the assessment was mailed on June 8, 2017, and the Appellant failed to rebut this presumption.

The motion was granted and the appeal was quashed.

The Minister reassessed the appellant for his 2008 to 2011 taxation years beyond the normal reassessment period, adding alleged unreported shareholder benefits and imposing gross negligence and foreign reporting penalties.

The Tax Court of Canada allowed the appeals and vacated the reassessments.

The Court found that the Minister failed to prove the alleged misrepresentations and that the appellant had exercised reasonable care in relying on professional accountants to file his returns.

The Court also vacated the penalties, finding no gross negligence and that the appellant had established a due diligence defence regarding his foreign reporting obligations.