http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/100518/index.do 
Nguyen v. The Queen (Reasons delivered orally from the bench by conference call on November 11, 2014, signed January 13, 2015 – 2015 TCC 7, V. Miller J.).
Précis: The appellant, who was trained as a CGA, operated a restaurant. She was assessed for unreported sales. She argued that the assessment did not reflect her personal savings used to purchase produce for the restaurant nor salary paid to her husband. The Court rejected her arguments, upheld gross negligence penalties and dismissed the appeal.
Decision: This is a decision falling into the familiar pattern of unreported sales of a restaurant.
[4] It was the Appellant’s evidence that she used her own money from her personal savings, her line of credit and loans from friends and family to open the restaurant. The restaurant did not open until March 8, 2006. Any monies spent on the restaurant prior to March 8, 2006 were her personal monies. She entered these amounts into the Shareholder Loan Account as a credit and it was her position that she should be allowed to take money out of this account tax free as the money was hers.
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[6] The Appellant stated that throughout the period, when she was purchasing food items for her personal use, she also purchased items for the restaurant. She completely commingled her personal funds and expenses with those of the restaurant. This was a small family restaurant and she could not do a daily cash reconciliation. She felt that all small business owners would reconcile cash on an annual basis as she did.
[7] It was her evidence that during the period she was raising four children and helping her disabled mother. She did the best she could in keeping the Corporation’s books up-to-date. She did not deposit the cash earned by the restaurant each day. Instead, she used the cash to buy supplies for the restaurant and to purchase personal items for herself. She adjusted the cash clearing account on a monthly basis. At this time she recorded the expenses for supplies and debited the shareholder account for her personal expenses. At the end of the month, she deposited whatever cash she had left.
[8] The Appellant testified that her spouse worked in the kitchen in the restaurant on a regular basis but he was not paid. His wages are reflected in the credit to her Shareholder Loan Account and they were $20,000, $35,000 and $24,000 in 2006, 2007 and 2008. Her spouse reported these amounts in his income in each of the years and paid tax on the amounts. He had no other job besides working in the kitchen. She received a taxable dividend of $25,000 from the Corporation which she reported in her income in 2008.
[9] It was the Appellant’s position the amounts of $64,271, $16,248 and $44,465 which were included in her income contain the wages which her spouse declared. His wages should be deducted from the amounts included in her income as he has paid taxes on these amounts.
What appears to have been fatal to the Appellant’s case was that she was trained as an accountant:
[20] The Appellant was the sole shareholder of the Corporation. Contrary to her evidence, she has substantial accounting knowledge and experience. She had her Bachelor of Commerce degree from McMaster University. She had at least 8 years’ experience working in the accounting section of two different firms. In 2008, she received the CGA designation.
[21] The Appellant lost her CGA designation in 2014 …
[22] In the present case, the Appellant was the only person who had control of the restaurant’s monies and the Corporation’s books.
[23] From her studies and her work experience, the Appellant knew the importance of proper books and records for a Corporation. Yet, she failed to maintain accurate records. She commingled her personal monies with those of the Corporation and she did not keep detailed and orderly records so that her accounting records could be verified. She had the Corporation credit her with a substantial benefit in three years and none of the amounts credited to her could be verified. I have concluded that the sloppy Corporate records, the lack of proper source documents and the commingling of Corporate and personal funds were circumstances which amounted to gross negligence.
As a result the appeal was dismissed and the gross negligence penalties were upheld.
Comment: Unfortunately the decision is silent on whether the Appellant’s husband reported and paid tax on the “salary” amounts credited to her shareholder’s loan account. In fact there is no indication in the decision of CRA’s methodology in computing the unreported income from the restaurant. Thus it is essentially impossible to determine whether there was any basis in fact for the Appellant’s claims in her own defence.