Taxpayer did not provide adequate records to substantiate business income

Tax - Income Tax - Administration and enforcement

Taxpayer filed requests for adjustments to reduce net business income after three-year normal reassessment period. Delegate of Minister of National Revenue denied taxpayer’s second administrative review of adjustment requests to reduce business income and total income. Taxpayer brought application for judicial review. Application dismissed. Delegate properly exercised ministerial discretion. Decision to deny adjustments did not fall outside range of possible, acceptable outcomes. Minister conducted fresh and independent redetermination of requested adjustments. Allegations of bad faith on part of auditor or delegate were unsubstantiated. Evidence supported auditor’s recommendation and delegate’s decision to deny requests. Taxpayer did not provide new documents during second-level review or adequate records to substantiate business income. It was not unreasonable for decision-maker to conclude that, in absence of contracts or invoices establishing taxpayer’s annual business income received from company, cheques made out to “cash” were insufficient to justify adjusting original assessments outside normal reassessment period.

Abou-Rached v. Canada (Attorney General) (2019), 2019 CarswellNat 2156, 2019 CarswellNat 3122, 2019 FC 750, 2019 CF 750, Luc Martineau J. (F.C.).

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