Tax court of Canada | Tax | Income tax | Source of income
Taxpayer immigrated from Belarus to Canada. Taxpayer’s parents-in-law also immigrated to Canada and lived with taxpayer and his wife. Taxpayer incorporated B Inc. and in 2011 and 2012, taxpayer was only shareholder of B Inc. and was its main employee. In 2011, taxpayer and his father in law signed loan contract providing that father-in-law was to provide $15,000 interest-free loan to taxpayer. Taxpayer and his father in law also alleged that additional smaller amounts were advanced in various increments. Taxpayer testified that in 1997, he loaned $25,000 to acquaintance IB, who died before repaying loan, and that VB, as loan guarantor, made partial loan repayments. CRA conducted bank deposit analysis of taxpayer and B Inc. for 2011 and identified subject deposits which it characterized as unreported income of B Inc. and taxpayer. Taxpayer was reassessed for 2011 and 2012 taxation years. Taxpayer appealed. Appeals allowed and reassessments referred back to Minister of National Revenue on specified grounds. Reassessments confirmed in all other respects. Specified deposits under $200 were not to be included in computing taxpayer’s or B Inc.’s income for 2011. If reassessments for 2011 included amounts of $7,090 and $5,000 deposited to joint account of taxpayer and his wife, total of unidentified deposits that may be treated as unreported income of taxpayer and B Inc. was limited to $24,879.15 less specified amount of exclusion. If reassessments for 2011 did not include amounts of $7,090 and $5,900 deposited to joint account, those amounts were not to be included in computing incomes of taxpayer and B Inc. for purposes of new reassessments. Amount that was subject of personal loan contract between taxpayer and his father in law was not to be included in computing taxpayer’s or B Inc’s 2011 income.
Semenov v. The Queen (2018), 2018 CarswellNat 1154, 2018 TCC 58, Don R. Sommerfeldt J. (T.C.C. [Informal Procedure]).