Taxpayer’s lifestyle appeared to contradict claims of modest income Appeal by taxpayer from assessment by Minister under Income Tax Act (Can.), for 2000 to 2002 taxation years, and under Excise Tax Act (Can.), for 1998 to 2002 taxation years for unpaid GST. Taxpayer operated automobile brokerage, traded in shares of Internet business, and temporarily rented his home. Minister added income from business and rental income, and treating sale of shares as capital gain. Appeal allowed in part. Shares of Internet business may have been dealt with in manner contrary to securities commission rules. Gains from disposition of shares were capital in nature, and reassessment to make them part of ordinary income would be out of time. Payments made to internet business were not expenses but loans, and were not deductible. Loans did not have contingent obligation for repayment. Minister properly assessed revenue from automobile brokerage in 2000 and 2001 taxation years based on initial returns, and minister’s assumptions were not demolished. Home was used for car business purposes, and deduction was granted of 20 per cent of home expenses when premises were not leases. Deduction of 10 per cent suggested by minister was too low. No reliable evidence regarding use of home to meet business clients. Deposit analysis of 2002 taxation year showed deposits into bank of more than $500,000 and reported income from car business of $29,324. Certain expenses for automotive brokerage in 2002 were conceded by minister. All deposits were not likely from sale of cars, as some amounts were in American dollars and car sales were Canadian. Income from automobile brokerage reduced by $170,000. Taxpayer was not required to prove source of income to disprove minister’s assumptions. Taxpayer’s lifestyle appeared to contradict claims of modest income. Payment to law firm was not shown to be business related deduction of legal expenses. Rental income which was not reported in returns but not included in assessments could be reassessed, as taxpayer made misrepresentation regarding rental income. Deposit in amount of $10,000 could not be added to rental business as issue was not raised in pleadings. No adjustment made to GST collectible in 1998 and 1999, amount in other taxation years to be adjusted to reflect new findings regarding income tax owing. Minister did not show sufficient evidence to warrant penalties. Last v. Canada (Oct. 9, 2012, T.C.C., Woods J., File No. 2006-2525(IT)G; 2006-2902(GST)I) 220 A.C.W.S. (3d) 650.