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Posts tagged "Gross Negligence Penalties"

Hogg v. R. – TCC: Gross negligence penalties upheld in case of false business loss claim
7 décembre 2017 By Bill Innes
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Précis: This is another in a long line of cases where the taxpayer unsuccessfully claimed fictitious business losses and was assessed gross negligence penalties. Mr. Hogg’s appeal to the Tax Court was dismissed. He know what business losses were and he did not have any. There was no order for costs.
Hogg v. R. – TCC: Gross negligence penalties upheld in case of false business loss claimPlus >
Bolduc v. R. – TCC: Court rejects gross negligence penalty in case where false business losses claimed
20 octobre 2017 By Bill Innes
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Précis: The taxpayer was employed as a production team leader at Toyota. In 2008 he switched to a new firm of accountants, Solutions 21, on the recommendation of his wife’s aunt. In filing his 2009 tax return he claimed, on the advice of Solutions 21, a business loss of roughly $325,000 part of which was used in 2009 and the balance of which was used to claim refunds for 2006, 2007 and 2008. CRA rejected the loss claim and imposed a gross negligence penalty of roughly $42,000 for the taxpayer’s 2009 taxation year. He appealed to the Tax Court which allowed his appeal, with costs.
Bolduc v. R. – TCC: Court rejects gross negligence penalty in case where false business losses claimedPlus >
Wynter v. R. – FCA: Claiming false business loss amounted to willful blindness – penalties upheld
3 octobre 2017 By Bill Innes
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Précis: The appellant, who was employed at Chrysler, claimed a business loss of $447,148.31 in 2009. Although the loss was initially allowed, she was subsequently reassessed to deny the loss and a gross negligence penalty of $51,569.49 was applied. The Tax Court dismissed her appeal of the penalty and she appealed to the Federal Court of Appeal. The primary basis of the appeal was that the Tax Court judge erred in imposing too low a standard for a finding of “wilful blindness”. Counsel argued that the test, established in Supreme Court criminal jurisprudence, involved finding an intention to “cheat”. The Federal Court of Appeal rejected this argument holding that imposing a criminal law standard was not appropriate for the imposition of gross negligence penalties under the Income Tax Act (the “Act”).
Wynter v. R. – FCA: Claiming false business loss amounted to willful blindness – penalties upheldPlus >
Arbuckle v. R. – TCC: Gross negligence penalties upheld in “Detax” program
2 octobre 2017 By Bill Innes
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Précis: The taxpayer, an employee of the Government of Ontario, claimed business losses of $209,664.62 and $167,111.43 in 2008 and 2009, respectively. The losses were part of a “Detax” plan recommended by her tax preparer, Mr. Rasool. CRA denied the losses and imposed gross negligence penalties. The Tax Court rejected much of the taxpayer’s evidence, particularly the suggestion that the losses were added to the returns after she had signed them and without her knowledge. As a result the gross negligence penalties were sustained and the appeal was dismissed with costs to the Crown.
Arbuckle v. R. – TCC: Gross negligence penalties upheld in “Detax” programPlus >
Mady v. R. - TCC: Taxpayer under-reported income on selling shares to wife and children for one cent
13 juillet 2017 By Bill Innes
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Précis: The taxpayer entered into two sets of complex tax planning transactions. The first involved a trust holding shares of his dental practice corporation which transferred shares to his wife who then transferred the shares to the taxpayer. The result, if it worked, was that dividends would be taxed in his wife’s hands because of the application of section 74.1 of the Income Tax Act (the “Act”). The Minister denied the application of section 74.1 and applied the avoidance rule contained in subsection 74.5(11) to tax the dividends in the hands of the taxpayer rather than at a lower rate in the hands of his wife. The second transaction involved a reorganization of his dental corporation which involved three special classes of common shares which he then sold to his wife and two children, in trust, for one cent for each holder. On the same day all of the shares of the dental corporation were sold to an unrelated third party purchaser. The common shares issued to the taxpayer’s wife and children, in trust, were sold for roughly $735,000 for each holder. CRA reassessed on the basis that the shares were not transferred at fair market value by the taxpayer.
Mady v. R. - TCC: Taxpayer under-reported income on selling shares to wife and children for one centPlus >
Rowe v. R. - TCC: Gross Negligence Penalties Affirmed on Fiscal Arbitrator Client
7 juillet 2017 By Bill Innes
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Précis: This is a Fiscal Arbitrators case with two twists. Mr. Rowe was a professional accountant (CGA). He claimed the large Fiscal Arbitrators loss in 2009 in order to carry it back to prior taxation years where he had unsuccessfully attempted to claim bogus charitable donations. The only issue in this appeal was whether gross negligence penalties were applicable. Not surprisingly, the Court held that they were and dismissed the appeal. In view of Mr. Rowe’s contrition on the stand, among other factors, the Court did not award costs.
Rowe v. R. - TCC: Gross Negligence Penalties Affirmed on Fiscal Arbitrator ClientPlus >
Liu v. R. - TCC: Court rejects gross negligence penalties on unreported income
6 juillet 2017 By Bill Innes
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Précis: Mr. Liu was assessed with respect to unreported income for the 2010 and 2011 taxation years as well as gross negligence penalties in respect of such unreported business income. At or before trial the Crown made substantial concessions on the amount of unreported income. In addition, the Court allowed somewhat modest adjustments to the expenses Mr. Liu was entitled to claim. On balance the Court found that this was not an appropriate case for the imposition of gross negligence penalties and vacated the penalties imposed for 2010 and 2011. Although this was a general procedure case, the Court decided to make no order as to costs.
Liu v. R. - TCC: Court rejects gross negligence penalties on unreported incomePlus >
Pirart v. R. - TCC: Mixed success on unreported income from drug sales - no order of costs
25 janvier 2017 By Bill Innes
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Précis: This is a report of a motion to reconsider the Tax Court’s decision not to award costs on the earlier trial, which was blogged on this site. Mr. Pirart was assessed unreported income in the amounts of $1,050,000 for 2005, $1,200,000 for 2006, $1,350,000 for 2007, and $1,500,000 for 2008, mostly from an alleged cocaine business; in addition he was assessed for gross negligence penalties on the unreported income. The Tax Court accepted his evidence that the cocaine was the property of his former partner, Wendy Anderson (since deceased), and allowed the appeal with respect to that income.
Pirart v. R. - TCC: Mixed success on unreported income from drug sales - no order of costsPlus >
Lubega-Matovu v. R. - FCA: Appeal of unproven losses dismissed, gross negligence penalties sustained
25 janvier 2017 By Bill Innes
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Précis: This is an appeal of a decision blogged earlier on this site. Mr. Lubega-Matovu was, at the date of the hearing, a retired senior auditor with CRA. In 2006, 2007 and 2008 he claimed business and rental losses that essentially reduced his taxable income to nothing. His wife, Ms. Lukwago, claimed a small amount of business income in those years and also claimed losses from businesses carried on with her husband. Mr. Lubega-Matovu had unsuccessfully appealed assessments of his 2004 and 2005 taxation years before Justice Campbell who found no evidence to substantiate his business activities during the course of a 1 day trial. Similarly, Justice Woods found no evidence of business activities during the course of a 5 ½ day trial.
Lubega-Matovu v. R. - FCA: Appeal of unproven losses dismissed, gross negligence penalties sustainedPlus >
Lauzon v. R. - FCA: Fiscal Arbitrators appeal rejected by Federal Court of Appeal
30 novembre 2016 By Bill Innes
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Précis: This is an appeal from a Tax Court decision upholding a gross negligence penalty where the taxpayer had claimed $308,073 in false business losses in a Fiscal Arbitrators scheme. It is perhaps surprising that the Federal Court of Appeal reserved for 1 day and took a full 16 paragraphs to dismiss the appeal. Nevertheless Justice Woods is a very careful jurist.
Lauzon v. R. - FCA: Fiscal Arbitrators appeal rejected by Federal Court of AppealPlus >

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