Bekkerus v. R. – TCC: court rejects claim that private sector taxpayers are not taxable

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Bekkerus v. The Queen (October 20, 2014 – 2014 TCC 311) involved assessments under subsection 160(1) of the Income Tax Act against the wife and mother of a taxpayer who had transferred property to them for no consideration at a time when he owed a substantial amount of income tax. The defence raised appears to have been an odd variant of some of the tax protest claims that have peppered the Tax Court in recent years:

I. Introduction

[1] These two appeals involve the transfer of two items of property by a son and husband to his mother, Roseann, and to his spouse, Desiree, respectively. The Minister of National Revenue (the “Minister”) raised an assessment against the mother and the spouse because in each relevant tax year (stretching from 2005 to 2011), the son owed outstanding income taxes. Generally, in such cases, Appellants challenge components of the statutory framework of subsection 160(1) of the Income Tax Act (the “Act”). In this present case, that would otherwise be: the underlying validity of the son’s tax liability, the nature of the relationship between the son and his mother or his spouse and, most usually, the fair market value of the property transferred or the amount of value (or consideration) paid by the recipient for the transferred asset.

[2] Specifically, in these two matters before the Court, the basis of the appeals as tendered by the Appellant’s agent is a singular legal argument of general application: the Act fails to describe a taxpayer as a person who gains her livelihood in the private sector.

II. Some Additional Facts

[3] As mentioned, there are no facts in dispute. Roseann and Desiree Bekkerus are the wife and mother, respectively, of Rick Bekkerus. In 2005, Rick transferred his 2002 Harley-Davidson motorcycle (the “Harley”) to Desiree for no consideration. At that time he owed approximately $206,000 to the Minister for income taxes assessed. In 2011, Rick transferred his 2011 Lexus RX450H (the “Lexus”) to Roseann for no consideration. At that time he owed the Minister in excess of $3,000,000 for income taxes assessed. At the respective time of transfer, the Harley had an assumed fair market value of $19,000 and the Lexus had an assumed fair market value of $51,500. The Minister raised assessments equal to the fair market values of the Harley and the Lexus, respectively, against Desiree and Roseann, again respectively, as transferees under section 160 of the Act.

[Emphasis added]

The appellants’ arguments were further fleshed out by the court:

[8] While strictly speaking, submissions contained within a notice of appeal do not constitute per se submissions in Court, in this matter, they do assist in providing some additional needed flesh to the skeletal argument above. The Court notes the following excerpts from the identical legal argument contained in the notice of appeal for both Appellants:

a. To have a liability under the Income Tax Act R.S.C. 1985, 5th Suppl, two essential elements must attach to a person.

b. Resident: One must be a resident within the meaning of the Act i.e. one must reside on the lands that her Majesty the Queen in Right of Canada either owns, or has a right to dispose of OR falls within the meaning of section 250(1), (2), (3).

c. Taxable Income: To have taxable income, one must have a taxable profit or gain or be employed within the meaning of section 248, “employed”.

d. If the Income Tax Act R.S.C. 1985, 5th Suppl spoke uniformly to every man, woman and person (i.e. Corporations) there would be no need to identify civil servants and their positions as office or employment.

e. There is no mention of any private man or woman gaining a livelihood in the private sector.

f. The Appellants have no obligation or are compelled to any performance pursuant to the Income Tax Act R.S.C. 1985, 5th Suppl as evidenced in case law and legislation.

g. Canadian custom and convention has only made provisions for the abrogation of private sector human and civil rights in the presence of war. Because of the excessive abuse in the past, the Parliament of Canada repealed the War Measures Act and currently has no legislative instrument to unilaterally compel any performance of the private sector to the Income War Tax Act, 1917 as amended.

[9] The submissions additionally contend, within the above context, that the Appellants have never “resided” on federal lands or been governmental employees and have never performed a function for government or held office or employment for profit.

The court rejected these arguments as having no merit:

[10] For two different reasons, the appeals cannot succeed and are dismissed: firstly, section 160 does not require Desiree or Roseann to be a taxpayer and, secondly, the Constitution Act, 1867, 1867 (UK) 30 & 31 Victoria, c. 3 ascribes to Parliament clear, broad and enumerated powers of taxation of all Canadians and in conjunction with the Act itself, does not limit the assessment of such taxes to government employees, office holders or residents of federal lands.

The court further outlines the bases for these conclusions but most readers will likely not benefit from further reading since the taxpayers’ arguments were so inherently eccentric.

The appeals were dismissed.