The appellants, a corporate taxpayer and its sole director/shareholder, appealed reassessments for the 2007, 2008, and 2009 taxation years.
The Minister disallowed significant business expenses claimed by the corporation, including family travel, childcare, and personal items, and assessed them as shareholder benefits to the individual.
The Minister also denied interest expense deductions, opened a statute-barred year due to misrepresentation, and applied gross negligence penalties.
The Tax Court of Canada allowed the appeals only to the extent of certain concessions made by the parties.
The court upheld the disallowance of the remaining expenses, finding them personal in nature, and confirmed their characterization as shareholder benefits rather than employment income.
The court also upheld the interest expense denials, the statute-barred reassessments, and the gross negligence penalties, citing the individual's deliberate and methodical deduction of patently personal expenses.
