Minister did not bear onus of proving there was misrepresentation

Tax - Income Tax - Administration and enforcement

Taxpayer applied for pleasure craft license in 2015 for sailboat given to her by husband and as part of process to obtain licence, letter of intent was sent in which husband indicated that he wanted to transfer ownership of sailboat to taxpayer. Minister of National Revenue reassessed husband for taxation years 2005 to 2012 (underlying assessments). Minister assessed taxpayer under s. 160 of Income Tax Act in amount of $46,498.50. Taxpayer filed notice of objection and Minister reassessed taxpayer, reducing amount to $22,500. Taxpayer appealed. Appeal dismissed. Parties acknowledged that there was transfer of property without consideration and that husband was reassessed under Act for taxation years 2005 to 2012. Sailboat was transferred to taxpayer on September 21, 2015 and that fair market value of sailboat at that time was $22,500. It was not plausible that taxpayer would have used sailboat for five years without knowing that she had to apply for pleasure craft licence. Taxpayer could have adduced evidence to challenge underlying assessments but decided not to do so. Given total lack of evidence concerning day of sending of notice of original assessment in respect of husband or day of sending of original notification that no tax was payable by husband for these taxation years, Court was not in position to determine whether underlying assessments were issued to husband outside normal reassessment period. In absence of evidence, Minister did not bear onus of proving that there was misrepresentation attributable to neglect, carelessness or wilful default or fraud on part of husband. Underlying assessments were correct and consequently, husband was liable to pay tax under Act for taxation years 2005 to 2010 in amount far greater than fair market value of sailboat.

Manna v. The Queen (2019), 2019 CarswellNat 1204, 2019 CarswellNat 992, 2019 TCC 70, 2019 CCI 70, Dominique Lafleur J. (T.C.C. [Informal Procedure]).

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