The taxpayer engaged in forward foreign exchange straddle trading on the over-the-counter market to generate non-capital losses to offset his other income.
The Minister reassessed the taxpayer beyond the normal reassessment period, disallowing the losses on the basis that the trading was a sham and did not constitute a source of income, and assessed gross negligence penalties.
The Tax Court allowed the appeals for all years except 2002, finding that the trading was not a sham and constituted a source of income under the Stewart test.
For 2002, the Court found the taxpayer was grossly negligent in failing to report over $8 million in gains, justifying the reopening of that year and the imposition of a penalty.
