Leigh S. Taylor

The Appellant appealed a reassessment of his 2016 taxation year concerning unreported capital gains from real estate transactions and the imposition of gross negligence penalties.

The Appellant argued he was entitled to deduct additional capital outlays and that the penalties were unjustified.

The Tax Court of Canada allowed the appeal in part, granting an additional $1,368 in capital outlays for two properties, but maintained the subsection 163(2) penalties for the unreported disposition of a property, finding the Minister met the burden of proving gross negligence.

The Appellant developed a condominium project and entered into pre-sale agreements before the GST rate was reduced from 6% to 5%.

The sales closed after the rate reduction took effect.

The Minister assessed the Appellant for unremitted GST at the 6% rate.

The Tax Court dismissed the appeal, finding that under the transitional rules and section 133 of the Excise Tax Act, the supplies were deemed made when the agreements were entered into, making them subject to the 6% rate.

Furthermore, the Appellant actually collected GST at the 6% rate and was therefore required to remit it.