The CRA assessed the appellant on the full amount of the gain. (In the example, that would be the $160,000 of the inflated price.) In fact, the evidence suggested that the appellant only got a $10,000 participation fee per property. As the appellant took part in eight of these flips over two years, CRA assessed him for about $1.1 million of business profits, plus interest and gross negligence penalties.
Had the appellant confessed, the evidence suggests his total gain subject to tax would only have been about $80,000 of participation fees. Instead, he claimed that he was the victim of identity theft but the evidence was wholly against him. So this case shows how you can suffer a much worse punishment for taking part in a fraud than the amount you stand to gain.
Pyontka c. La Reine 2014 CCI 374 (D'Auray)