Tax Court of Canada


Taxation

INCOME TAX
Rebates received by appellant were shareholder benefits and were taxable

Appellant worked for company belonging to his father. Appellant and his brothers were sole directors and shareholders of company. During taxation years at issue company purchased life insurance for father of appellant as well as for appellant and his three brothers. Appellant received cheque by insurance company in 2000 for amount of $15,000 representing insurance rebate. Appellant did not claim amount of $15,000 on his income tax return. Appellant also received cheques from insurance company in 2002 for amounts of $8,430 and $34,630. Minister reassessed appellant and added to appellant’s income for 2000 and 2002 taxation year’s amounts of $15,000 and $43,060, respectively. Minister also assessed penalties in amounts of $1,816 and $4,972 for 2000 and 2002 taxation years. Appellant appealed. Appeal dismissed. Rebates received by appellant were shareholder benefits and were taxable. Rebates were too important to be considered a gift. There was gross negligence on part of appellant and penalties were justified in the circumstances.

Lapalme v. Canada

(Aug. 25, 2011, T.C.C., Favreau J., File No. 2008-4008(IT)G) Reasons in French. 206 A.C.W.S. (3d) 628 (22 pp.).

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