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CaseUpdate - CASE UPDATE NOTES Some cases have been...

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CASE UPDATE NOTES: Some cases have been appealed. Some inconsistency in decisions where situation is apparently quite similar. All issues in certain cases have not been summarized. ANTHONY ET AL V. THE QUEEN, [2010] D.T.C. 1356 (T.C.C.) The CRA reassessed the taxpayer for free parking supplied by the employer by adding $92 per month to the taxable income of approximately 100 employees of a school. Taxpayers argued: - They received no benefit. - The value of the benefit, if any, should be based on the cost to the employer, not fair market value. - The Minister’s assessment of fair market value, if that is the proper approach, is too high. The school spent approximately $20,000 to maintain the lot. Court heard evidence of parking costs at nearby lots as comparables. DECISION: Benefit reduced based on a calculation of other costs. REZLER V. THE QUEEN, [2010] D.T.C. 1024 (T.C.C.) Taxpayer contributed $14,000 for 2003 and $15,000 for 2004 to her RRSP. The CRA disallowed $12,272 for 2003 and all for 2004. $15,000 was allowed for 2005 as the contribution was made within the allowable time in 2005. CRA assessed an over-contribution penalty and interest for 2003. Taxpayer contended that the penalty should not be assessed as the CRA did not contact her until 2007. DECISION: Appeal denied. Ignorance of the law is not an excuse, even if the law is complicated and not understood by taxpayers. 1
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PASCOAL V. THE QUEEN, [2010] D.T.C. 1010 (T.C.C.) A (illiterate) and N (a daughter with no business experience) were outside directors of a corporation managed by A’s son. Required remittances not made. A and N were assessed approximately $843,000. DECISION: Appeal allowed The due diligence defense threshold is much lower in a family business, especially one dominated by a family member. Reasonable for A and N to rely on T. A provided significant financial support to the corporation. Neither A nor N had signing authority. SANCHEZ V. THE QUEEN, [2011] D.T.C. 1003 (T.C.C.) Net worth assessment. Taxpayer operated a bicycle business and won significant amounts in bike races. There was a suggestion that he had $200,000 cash in a safe. Assessed on unreported corporate sales, which were added to his income in the following year. DECISION: Appeal dismissed. Vague and confusing testimony. Inadequate books and records. Relying on customs and habits in another country not relevant. Objective of a taxpayer in a net worth assessment is to provide solid evidence, not vague generalities. HUMPHREYS V. THE QUEEN, [2010] D.T.C. 1084 (T.C.C.) The taxpayer, a full-time student, lived in B.C. and commuted weekly to a school in the U.S., a 4 hour commute. The CRA denied education credits because the taxpayer did not live “near” the U.S. border. DECISION: Appeal allowed. 2
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In spite of the fact that the school issues “diplomas”, not “degrees”, as specified in the legislation. Court also discussed the meaning of “near”, and contrasted this situation with a Quebec case where the taxpayer was denied the credits even though the distance was shorter.
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