Insufficient to tax taxpayer solely because person under audit pointed to them

Tax court of Canada | Taxation

INCOME TAX

Insufficient to tax taxpayer solely because person under audit pointed to them

Appeal by taxpayer. In payroll audit of group of related companies, companies provided list of subcontractors that included taxpayer’s misspelled name and address. Apart from confirming that taxpayer lived at address provided, CRA did no other verification that taxpayer received any amounts from audited group of companies before assessing him to add $28,000 in income. Appeal allowed. Taxpayer, who spoke only Russian, consistently maintained that he had never heard of any of these companies or their principals, never worked for any of them, and never received any money from them. Taxpayer’s position was plausible prima facie while Minister did not adduce credible evidence to support assessing position. It was simply insufficient to tax taxpayer solely because person under audit pointed to them and provided their name and address. Names and addresses were readily available publicly, and audited companies did not provide social insurance numbers or any other evidence to support amounts allegedly paid to those on list. No reconciliation of taxpayer’s banking records or net worth assessment was conducted. Principal of one company testified that she hired taxpayer as driver but that her company did not pay him. It was entirely possible that taxpayer did work for and got paid by these companies, but evidence fell very short of establishing that conclusion on balance of probabilities.
Gorfain v. R. (Apr. 10, 2013, T.C.C. [Informal Procedure], Patrick Boyle J., File No. 2012-1331(IT)I) 228 A.C.W.S. (3d) 871.

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