http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/68560/index.do
Burlando v. The Queen (March 25, 2014, 2014 – 2014 TCC 92) was a case where the taxpayer sought to deduct wages he claimed to have paid to his wife to assist him in his work as an automobile commission salesperson.
The court rejected both the evidence of the taxpayer and his spouse:
[8] It is my view that neither the Appellant nor Bonita gave credible evidence. Their testimony was inconsistent within itself and with the documentary evidence. Those inconsistencies were as follows.
[9] During cross examination, Bonita stated that she stopped working for the Appellant in June 2013 and she had worked for him for three years. When she was reminded by counsel that the years under appeal were 2008 and 2009, Bonita nevertheless insisted that she worked for her spouse for three years. According to Bonita’s evidence she did not work for the Appellant in 2008 and 2009 because she only started to work for him in 2010.
[10] Both witnesses testified that Bonita worked four to four and one half hours for five days each week making telephone calls and checking Craigslist. I found this testimony to be self serving and unbelievable.
[11] At the objection stage of this case, the Appellant wrote to the Canada Revenue Agency (“CRA”) that Bonita was his assistant and that he has misreported her wages on his income tax return as referral fees. He described the duties she performed as his assistant as follows:
The assistant’s duties included the greeting of customers, demonstration of the targeted vehicles, followed up calls from customers, communicated with stores for accessories requested by customers, delivered sold vehicles to customers, handled after sale services to include the pick up (sic) the vehicles for routine services which was inherent to the sales.
The assistant was usually around or available on call to the taxpayer and paid once a month depending on the work done.
These duties bear no resemblance to those which the Appellant and Bonita described at the hearing.
As a result, the court dismissed the appeal:
[15] In the circumstances of this appeal, I have concluded that the Appellant’s evidence was implausible. In addition, his evidence with respect to Bonita’s duties and wages was not in accord with prior statements he made to the CRA.
[16] In conclusion, it is my view that the Appellant has not satisfied the onus on him of showing that the reassessment was incorrect. He has not shown that Bonita actually worked for him or that he paid her any wages. In a situation such as existed in this appeal, where there is an alleged working relationship between non-arm’s length parties, there should have been some documentation or independent evidence to support that working relationship. In this case, neither was given.
[17] The appeal is dismissed.