A taxpayer filed for extensions to file notices of appeal. Her excuse was that she had not received her notices of assessment. Her application was denied as the Tax Court found that in all probability, the CRA did mail them, and she did get them. She appealed this decision too. The Federal Court of Appeal determined she could not establish that the Tax Court made a palpable and overriding error in it’s core finding of fact. She lost again.
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Not caring equals gross negligence
The taxpayer appealed the imposition of penalties caused by disallowed business expenses. The taxpayer argued that the expenses were claimed but he didn’t realize they had been used. The Tax Court of Canada found that the taxpayer had done nothing to verify the information used in the tax return. Just signing the return at the end of the year equates to wilful blindness. The appeal was dismissed.
Unremitted payroll deductions
A corporation went out of business in 2006. In 2013, the taxpayer, a director, was assessed for unremitted payroll deductions of the corporation. He appealed. The Tax Court of Canada threw out the appeal as he had never resigned as a director. Also, he had never done any due diligence. That is, he couldn’t prove he had taken steps to learn of the remittances, taken steps to verify they had been paid, or taken steps to satisfy discrepancies. These are all steps required of a reasonable prudent director to establish a defence of due diligence. The kicker … he also had to pay court costs to the government.
RRSPs and the GIS
The Guaranteed Income Supplement (GIS) is a low-income benefit for those collecting Old Age Security. It is based on income. Seniors withdrawing from their RRSPs can see almost a dollar for dollar decrease in their GIS. A taxpayer challenged this and said RRSP withdrawals should not be used in the calculation. The Tax Court of Canada did not agree with her and determined RRSP income should be used in the calculation.
Spousal support or not
The taxpayer claimed spousal support on her 2013 tax return. The claim was denied by the CRA because the parties’ settlement agreement was not issued until March 2015. The Tax Court of Canada (TCC) agreed with the concept. However, the TCC found that the March 2015 court order was from an agreement reached in November 2014 which included the 2013 payments. It was the same agreement accepted by the Superior Court judge. Therefore, by chance, the deduction was allowed.
Woodlot as part of principal residence
The taxpayer had two lots; one contained her house and the other was a woodlot. She sold the woodlot, realized a small capital gain, and claimed the principal residence exemption. She claimed the woodlot was the main source of wood used to heat her house. The Tax Court agreed with the CRA that the woodlot was not necessary to fulfill the house’s function as a residence.
