Federal Appeal


Income tax

Administration and enforcement

Trust must be done in accordance with laws of Canada

Tax debtor YSY transferred amounts to appellant taxpayer JLY, who was tax debtor’s brother-in-law, at time when tax debtor owed tax debt. Taxpayer alleged that funds had been received by his mother-in-law from sale of her house and she gave money to tax debtor to hold in trust for taxpayer’s wife. Minister of National Revenue assessed taxpayer under s. 160 of Income Tax Act in relation to amounts that were transferred to him from tax debtor. Tax Court judge dismissed taxpayer’s appeal on basis of insufficient evidence to establish existence of trust that had been settled with taxpayer’s mother-in-law’s money. Taxpayer appealed. Appeal dismissed. If trust was to be established in Canada, it must be done in accordance with laws of Canada, notwithstanding that taxpayer’s mother-in-law was from China. There was no basis to interfere with finding that evidence did not establish existence of trust. There were no documents to establish proceeds that mother-in-law received from sale of her house. There was no explanation why mother-in-law would give amounts to tax debtor to hold in trust for taxpayer’s wife at time when tax debtor was presumably facing criminal charges relating to marijuana grow-op. Judge did not make palpable and overriding error in finding that it was not possible to conclude that mother-in-law set aside any amount in trust for taxpayer’s wife.

Yu v. Canada (2018), 2018 CarswellNat 1390, 2018 FCA 68, Wyman W. Webb J.A., D.G. Near J.A., and J.B. Laskin J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 12036, 2016 CarswellNat 8719, 2016 TCC 276, 2016 CCI 276, Patrick Boyle J. (T.C.C. [General Procedure]).

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