Michael U. Ezri

The appellant appealed assessments under section 160 of the Income Tax Act regarding a dividend received from a corporation with an outstanding tax debt, and under section 227.1 for a separate corporation's failure to remit source deductions.

The Tax Court found that the appellant and his 50-50 co-shareholder acted in concert to declare the dividend, meaning they did not deal at arm's length with the corporation.

On the source deductions issue, the Court found the workers were employees, not independent contractors, and the appellant failed to establish a due diligence defence because he completely abdicated his supervisory responsibilities to a bookkeeper.

Both appeals were dismissed.

The appellant, a commissioned salesperson, incurred promotional expenses in 2012 but had no commission income that year.

He sought to deduct those expenses in 2013 when he earned commission income, arguing that the French text of paragraph 8(1)(f) of the Income Tax Act permitted deducting amounts 'consumed' in the year rather than just 'spent'.

The Tax Court of Canada dismissed the appeal, holding that employees must compute income and expenses on a cash basis, and the legislation does not permit deferring the deduction of expenses to a subsequent year.