Tax Court of Canada


Income tax

Business and property income

Taxpayers artificially lowered corporation’s tax by having it pay expenses of renovation

Taxpayers were brothers who owned corporation which was in construction and renovation business. Taxpayers purchased property in own names and renovated it, with expenses paid by corporation. Appellants sold at profit and deposited $92,136.37 profit in joint account. Neither one declared profit. Corporation provided trucks to taxpayers which were used personally, but taxpayers did not declare automobile benefit. Minister assessed taxpayers for profit in 2010 taxation year, automobile benefit and penalties. Taxpayers appealed. Appeals dismissed. Profit made was business income. Taxpayers had artificially lowered corporation’s tax by having it pay expenses of renovation. Profit was not deposited in corporation’s account and was used for personal purchases. Decision not to keep vehicle registers to record personal and business use was to minimize vehicle benefit. Proof offered as to use was not credible. Facts behind notices of assessment were not result of ignorance, incompetence or negligence. Taxpayers were origin of facts, or they validated accounting by their agents. In both cases, they were totally and personally responsible for gross negligence. Penalties upheld.

Cyr c. La Reine (2018), 2018 CarswellNat 3, 2018 CarswellNat 381, 2018 TCC 4, 2018 CCI 4, Alain Tardif J. (T.C.C. [Informal Procedure]).

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