The taxpayer appealed reassessments for the 2011 and 2012 taxation years that added unreported business income from an online auction and DVD business, and imposed gross negligence penalties.
The Minister used the deposit method to determine the taxpayer's income.
The taxpayer argued the amounts were unearned income or loans, and claimed additional advertising expenses.
The Tax Court of Canada dismissed the appeals, finding the taxpayer failed to demolish the Minister's assumptions or prove the additional expenses.
The Court upheld the gross negligence penalties, concluding the taxpayer's failure to keep adequate records and report significant income was a marked departure from the conduct of a reasonable businessperson.
