Edison Transportation, LLC v. R. - TCC: Services rendered by non-resident entity not credible

Edison Transportation, LLC v. R. - TCC:  Services rendered by non-resident entity not credible

http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/143402/index.do

Edison Transportation, LLC v. The Queen  (April 6, 2016 – 2016 TCC 80, Pizzitelli J.).

Précis:  The taxpayer operated a bus service for the 2010 Winter Olympics and Para Olympics.  It claimed deductions totalling US $2.5 million in 2009 and 2010 for payments to an associated non-resident corporation, iTransit Inc., (“iTransit”) “ pursuant to an arrangement to effectively pay for shares sold from the previous sole shareholder of the Appellant, one Mr. M. Pouncey (“Pouncey”) to the next sole shareholder, one Mr. R. Hill (“Hill”)” [para. 2].  CRA disallowed US $2.1 million of the deductions as not being incurred for the purpose or earning or producing income (paragraph 18(1)(a) of the Income Tax Act (the “Act”)) or, in the alternative, as being unreasonable (section 67 of the Act).  The Court essentially did not believe the taxpayer’s evidence and dismissed the appeal with costs.

Decision:   This tale ended with the dreaded age old kiss off delivered by courts to counsel whose arguments lose sight of their facts:

[74]        Regardless of how competent and skillful counsel for the Appellant may be in argument, there must be foundational evidence to support the facts he presumes to take as true. I do not find the Appellant has met the onus of demolishing the Minister’s assumptions that no more than $400,000 was paid to iTransit for any support services provided.

Appeal dismissed with costs to the Crown.