The appellants appealed reassessments for the 2006, 2007, and 2008 taxation years which added unreported income using a combined net worth method and imposed gross negligence penalties.
The respondent conceded the 2006 taxation year.
For 2007 and 2008, the Tax Court found that the appellants failed to discharge their burden to disprove the unreported income, which was appropriated from their corporation into a joint personal account.
The Court upheld the gross negligence penalties for the husband, who was closely involved in the business and tax reporting, but deleted the penalties for the wife, finding her role was limited and she did not act knowingly or with gross negligence.
