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Appeal allowed and reassessment vacated; Minister failed to prove misrepresentation justifying reassessment outside normal period.
The appellant claimed input tax credits (ITCs) for GST paid to placement agencies that supplied casual workers.
The Minister reassessed the appellant outside the normal reassessment period, denying the ITCs and imposing gross negligence penalties, alleging the invoices were false or of convenience and part of a scheme to not remit GST.
The Tax Court allowed the appeal and vacated the reassessment, finding the Minister failed to prove the appellant made a misrepresentation attributable to neglect, carelessness, or wilful default, or committed fraud.
The evidence did not establish the appellant was aware of or complicit in the suppliers' failure to remit GST.
Appeal dismissed; bad debt deduction denied as parties were not at arm's length and tax was unremitted.
The appellant appealed an assessment denying a bad debt deduction under section 231 of the Excise Tax Act for uncollected GST on the assignment of a property.
The Tax Court of Canada dismissed the appeal, finding that the appellant and the recipient corporation were not dealing at arm's length because the appellant and his spouse controlled the corporation.
Furthermore, the appellant failed to meet the mandatory conditions of subsection 231(1.1) because the tax collectible was never included in the net tax reported and was never remitted.
