Federal Appeal


Income tax

Administration and enforcement

Proper to take gambling records into account in net worth determination

Taxpayer was regular attendee at casinos and received large amounts of gifts from her boyfriend. Taxpayer owned businesses and acquired properties and vehicles. Taxpayer did not keep books and records and filed late or incomplete tax returns. Minister of National Revenue reassessed taxpayer for 2005 through 2009 taxation years for unreported income under Income Tax Act (ITA) based on alternative net worth assessment. Tax Court judge dismissed taxpayer’s appeals as to 2005 through 2008 and allowed appeal as to 2009 in part to extent that parties agreed to reduce 2009 assessment by $4,800. Judge held that alternative assessment was necessary and appropriate since taxpayer filed returns late, maintained no books or records, operated several businesses, owned properties and maintained various bank accounts. Taxpayer admitted that asset values were correct and failed to show that Minister’s assessment was flawed or suspect. Judge found no evidence of trust assets, offsetting family loans or misallocated business assets. Judge held that CRA audit in area of gambling met standard of probability and that Minister’s assessment was only reliable evidence of taxpayer’s income liability. Judge reduced assessment in respect of 2009 taxation year by $4,800, which represented double entry effect of $2,400 win at casino having been recorded as loss, which was added to income when it should have been deducted. Taxpayer appealed. Appeal dismissed. Judge made no reviewable error in admitting records of gambling, which were admissible as business records. Judge did not err in determining that it was proper to take gambling records into account in net worth determination or in preferring evidence of taxpayer’s former boyfriend over evidence of her friends and relatives. Judge was not biased, and did not misstate or ignore evidence.

Truong v. Canada (2018), 2018 CarswellNat 28, 2018 FCA 6, David Stratas J.A., Near J.A., and Judith Woods J.A. (F.C.A.); affirmed (2017), 2017 CarswellNat 335, 2017 TCC 22, Randall S. Bocock J. (T.C.C. [General Procedure]).

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