K.A. Siobhan Monaghan

The appellants challenged net worth reassessments alleging unreported business income from a car cleaning business, related GST/HST reassessments, and gross negligence penalties.

The court found the appellants failed to provide credible documentary or viva voce evidence to explain large increases in net worth through non-taxable sources, lower personal expenditures, or alleged accounting errors.

The court upheld the income tax reassessments, the out-of-time reassessment for one taxation year, and the penalty assessments, finding the only plausible explanation for the wealth increase was unreported income.

The court also rejected a late-added argument that certain purported interest payments from a fraudulent investment arrangement were non-taxable returns of capital.

Two GST/HST appeals were allowed only to reflect the respondent’s concession that those reassessments had not been updated to match reduced unreported income figures.

The appellants, husband and wife, were equal shareholders of a corporation that paid them dividends between 1998 and 2013.

The Minister assessed them under section 160 of the Income Tax Act, making them jointly and severally liable for the corporation's tax debt.

The appellants argued that the dividends were part of the compensation for services they provided to the corporation, and thus they gave consideration for the property transferred.

The Tax Court of Canada rejected this argument, following Supreme Court precedent that a dividend is related to shareholding and not to any other consideration.

However, the appeals were allowed in part on consent to reduce the underlying liability to $86,848.04.

The Minister reassessed the appellant's 2011 and 2012 taxation years, adding unreported business income from a restaurant and imposing gross negligence penalties under subsection 163(2) of the Income Tax Act.

The Minister assumed that various restaurant expenses were paid using cash from unreported sales.

The appellant appealed, arguing that all sales were recorded and that cash expenses were funded by cash sales not deposited in the business bank account, as well as personal funds transferred to the business.

The Tax Court of Canada allowed the appeal, finding that the appellant provided a plausible explanation and sufficient evidence to rebut the Minister's assumptions.

The court concluded that the appellant did not have unreported income and was therefore not liable for the penalties.

The appellant immigrated to Canada in 2012.

From 2002 to 2011, while a non-resident with no Canadian source income, he attended universities in the United States and paid tuition.

Upon becoming a Canadian resident in 2012, he sought to claim unused tuition tax credits carried forward from those years.

The Minister reassessed his 2012 taxation year to disallow the credits.

The Tax Court of Canada dismissed the appeal, holding that because the appellant was not a taxpayer potentially liable to Canadian tax during the years he paid the tuition, those years were not 'taxation years' for him under the Income Tax Act.

Consequently, he could not accumulate tuition tax credits under section 118.5 to carry forward under section 118.61.

The appellants brought motions to set aside Notices of Discontinuance and Judgments issued by the Tax Court, alleging their agent settled their tax appeals without authorization and contrary to their instructions.

The appellants relied on Rule 172(2)(a) of the Tax Court of Canada Rules (General Procedure), arguing the judgments were obtained by fraud or that the agent's unauthorized actions constituted newly discovered facts.

The sole evidence provided was an affidavit from an associate lawyer at the firm representing the appellants on the motions, based entirely on information and belief.

The court found the affidavit did not comply with Rule 72, contained inadmissible opinions and legal arguments, and lacked necessity and reliability.

The motions were dismissed as the evidence fell far short of establishing the conditions required to set aside the judgments.

The taxpayer appealed a tax reassessment for his 2011 taxation year, which was issued beyond the normal reassessment period.

The Minister had disallowed rental losses, reduced business expenses, and added an unreported capital gain from the transfer of a property to his son.

The Tax Court found that the rental properties were a personal endeavor and not a source of income, and that the disallowed business expenses were either personal or unreasonable.

The Court also upheld the Minister's right to reassess beyond the normal period due to misrepresentations attributable to neglect or carelessness.

However, the Court allowed the appeal in part to increase the adjusted cost base of the transferred property, reducing the taxable capital gain to $14,437.