Federal Court


Expert’s credibility affected by close personal relationship with taxpayer

Ruling on admissibility of expert evidence. Taxpayer received shares in company from her spouse. Minister of National Revenue initially determined fair market value of these shares to be $708,155 for purposes of s. 160(1)(e) of Income Tax Act (Can.). Taxpayer requested reassessment. Minister determined fair market value of shares transferred for no consideration to be $546,835. Taxpayer appealed and called expert witness to opine on whether selling large blocks of shares affected share price. Expert had been self-employed as corporate development and investor relations consultant for 27 years. Evidence inadmissible. Expert was not credible witness, and for this reason alone his evidence was given no weight. Further, expert lacked expertise and impartiality required to provide court with opinion on fair market value of shares. Expert’s credibility was affected by close personal relationship with taxpayer and her spouse as well as expert’s failure to be forthcoming in his testimony. Expert lacked expertise in valuation since his services were in realm of corporate development and dealing with investors in client companies. Expert was not chartered business valuator, chartered accountant, chartered financial analyst, or certified general accountant. Expert had not even taken any valuation courses. Expert’s experience had not caused him to acquire skills of valuator. Expert’s objectivity was affected by fact that he was close friends with taxpayer’s spouse. Great deal of expert’s testimony was in nature of advocacy.

Shulkov v. Canada (Dec. 31, 2012, T.C.C., D’Arcy J., File No. 2008-1842(IT)G) 223 A.C.W.S. (3d) 896.

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