Ms. McLeod’s is another example of a fake business loss scheme. Many of these are in the TCC now. A group called “Fiscal Arbitrators” was the main advocate but many others modeled on them.
The idea is that you are not taxable because you are an agent for yourself. (The argument’s more involved but, as Justice Woods said, it’s “pure nonsense”.)
Ms. McLeod “was employed by Edmonton Public Schools.” She earned employment income of about $43,000. In 2009, she claimed a net business loss of $157,196.40. It was totally false — she had no business; she had no expense; she had no loss. CRA assessed her a penalty of $24,184.93. Justice Woods said the penalty was good.
The TCC is hostile to these false claims and has no sympathy for the taxpayers who get involved. As Woods J said:
“[31] I am not persuaded by an argument based on sympathy. I accept that the penalty is higher in this case than it would be in others, but the participation of Ms. McLeod in this scheme is reprehensible. The victims in this case are Canadian taxpayers – not Ms. McLeod.”
For similar decisions, see: Chénard v. The Queen, 2012 TCC (Bedard), Bhatti v. The Queen, 2013 TCC (C. Miller), and Janovsky v. The Queen, 2013 TCC (V. A. Miller).
See McLeod v. The Queen, 2013 TCC (Woods)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df31785058701ef8%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fmcleod-v-the-queen-2013-tcc-woods-employees-do-not-listen-to-false-business-loss-schemes-the-penalties-will-ruin-you.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Morgan v. The Queen, (2013 TCC Woods) — If you don’t report income, you could pay a 20% penalty, even if all tax was withheld
24/7/2013
Mr. Morgan retired. His employer gave him the funds from his pension. Some went to a locked-in RSP. $143,510 went to him directly and the balance, $36,102, the employer transferred to an RRSP for Mr. Morgan’s wife.
Mr. Morgan hadn’t reported some trust income in two of the 3 earlier tax years. Those failures made him liable for a penalty under ITA s. 163(1) on the amount of his pension that he took directly. But, though the $36,000 transferred to his wife’s RSP was taxable and Mr. Morgan didn’t report it, the TCC said he had been diligent enough in complying with the tax law. He thought the amount was not taxable and no one told him otherwise. So, the TCC said he didn’t have to pay a penalty on the $36,000 RSP contribution.
In excusing Mr. Morgan from penalty on the $36,000, Justice Woods was moved, no doubt, by her view that:
“[25] … the penalty can be particularly harsh if source deductions have been taken because there is often no intent to avoid the payment of tax. Counsel for Mr. Morgan suggested in argument that the source deductions in this case were sufficient to pay the entire tax owing. This is certainly plausible since Mr. Morgan apparently had no other income in 2009.
“[26] In circumstances such as this, where there is no apparent intent to avoid the payment of tax, it seems excessive to impose a 20 percent penalty on top of Part I tax.”
The Department of Finance drafts tax laws. It knows that this rule is harsh but it thinks that it is proper to keep it as it is. For a fuller discussion, see my Canadian Tax Highlights article on the Knight case.
See Morgan v. The Queen, (2013 TCC Woods)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df1b42540af9a84%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fmorgan-v-the-queen-2013-tcc-woods-if-you-dont-report-income-you-could-pay-a-20-penalty-even-all-tax-was-withheld.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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R. v. InfoSpec Systems Inc., (2013 BCCA Frankel) — It’s OK to sell “zapper” software, knowing that its only use is to delete cash register sales to evade taxes — But the Government will change the law on 01Jan 2014
21/7/2013
InfoSpec sold “zapper” software. It was convicted of fraud under s. 380 of the Criminal Code of Canada. (It wasn’t convicted of the charge of tax evasion.) It appealed the fraud conviction saying that “the sale of software designed to assist a third-party to commit fraud is not itself fraud.” (Para. 3). The BC Court of Appeal agreed and over-turned the conviction.
As the BCCA said: “The issue on this conviction appeal is whether criminal liability for defrauding the public attaches to the act of selling a type of computer software called a ‘zapper’, knowing that its only purpose is to assist its purchaser to evade payment of federal and provincial taxes by under-reporting income.” (Para. 1)
The BCCA relied on the fact that “the law does not prohibit the making, possession, or sale of a zapper.” It noted that though the Criminal Code prohibits “the possession, making, or selling of certain things capable of being used to commit crimes”, software that deletes sales is not on the list. (Para. 21) So, the Court concluded that InfoSpec’s sales were not prohibited by law and it did nothing illegal by selling the software. (Para. 22)
The BCCA felt stronger in its view because there was no evidence that the Manitoba restaurants, to which InfoSpec sold the zappers, ever used the software. (Para. 20) Still, the Court said that even if a Winnipeg restaurant had used the software to evade taxes, InfoSpec’s sale would not be a crime. Rather, InfoSpec could be guilty of tax evasion as a “party” who helped the restaurant in its tax fraud. (Para. 23) (It seems that after the BCSC conviction, at least one of the Winnipeg restaurants did plead guilty to using this software in Manitoba.)
This decision may only have short-term relevance. In its 21 March 2013 Budget announcement, the Federal Government proposed: “new administrative monetary penalties and criminal offences under the Excise Tax Act (i.e., in respect of GST/HST) and the Income Tax Act to combat this type of tax
evasion.” The proposals will be effective as early as 01 January 2014 and will cover “the use, possession, acquisition, manufacture, development, sale, possession for sale, offer for sale or otherwise making available of [Electronic Suppression of Sales] software”. See Department of Finance, Budget 2013 “Annex 2: Tax Measures: Supplementary Information and Notices of Ways and Means Motions”.
Quebec and Manitoba have such laws already. See ss, 34.1 and 34.2 of Quebec’s Tax Administration Act, RSQ c A-6.002 and s. 18.1 of Manitoba’s The Tax Administration and Miscellaneous Taxes Act, C.C.S.M. c. T2
See R. v. InfoSpec Systems Inc., (2013 BCCA Frankel)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df3428e9ef0de7d8%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fr-v-infospec-systems-inc-2013-bccafrankel-its-ok-to-sell-zapper-software-knowing-that-its-only-use-is-to-delete-cash-register-sales-to-evade-taxes-but-the-government-will-change-the-law-on-01jan-2014.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Fisher v. The Queen, (2013 TCC, Paris) – When is a debt bad so that you can claim a capital loss?
19/7/2013
This is a helpful case because it repeats the tests for “when a debt owing to the taxpayer had become bad” so that the taxpayer could claim a capital loss. Paris J. relied on the FCA decision Rich v The Queen 2003 FCA 38 (CanLII), where Rothstein J. (now on the SCC) said:
“[12 ] The assessment of whether a debt is bad is one based upon the facts at a particular point in time, …
“[13] I would summarize factors that I think usually should be taken into account in determining whether a debt has become bad as:
“1. the history and age of the debt;
“2. the financial position of the debtor, its revenues and expenses, whether it is earning income or incurring losses, its cash flow and its assets, liabilities and liquidity;
“3. changes in total sales as compared with prior years;
“4. the debtor’s cash, accounts receivable and other current assets at the relevant time and as compared with prior years;
“5. the debtor’s accounts payable and other current liabilities at the relevant time and as compared with prior years;
“6. the general business conditions in the country, the community of the debtor, and in the debtor’s line of business; and
“7. the past experience of the taxpayer with writing off bad debts.
“This list is not exhaustive and, in different circumstances, one factor or another may be more important.
“[14] While future prospects of the debtor company may be relevant in some cases, the predominant considerations would normally be past and present. If there is some evidence of an event that will probably occur in the future that would suggest that the debt is collectible on the happening of the event, the future event should be considered. If future considerations are only speculative, they would not be material in an assessment of whether a past due debt is collectible.
“[15] Nor is it necessary for a creditor to exhaust all possible recourses of collection. All that is required is an honest and reasonable assessment. Indeed, should a bad debt subsequently be collected in whole or in part, the amount collected is taken into income in the year it is received.”
(Quoted in Fisher at para. 41.)
See Fisher v. The Queen, 2013 TCChttps://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Dffec3b74fcdc1%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Ffisher-v-the-queen-2013-tcc-paris-when-is-a-debt-bad-so-that-you-can-claim-a-capital-loss.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Piersanti v. The Queen, (2013 TCC, V. Miller) – CRA may reassess you using documents it gets in a criminal investigation, even if it couldn’t use the documents in a criminal prosecution
19/7/2013
In this case Justice Valerie Miller said that CRA may use documents it gets in a criminal investigation to assess the taxpayer’s income tax obligation, even if the evidence couldn’t be used for criminal prosecution. In this view, she seems to disagree with Justice D’Arcy, who thought that such evidence might be inadmissible on a GST reassessment. See Cambridge Leasing v. The Queen.
Here’s what happened in Piersanti: CRA investigated Mrs. Piersanti for criminally hiding GST collected for shopping centre rent. CRA prosecuted her for tax evasion. She plead guilty. CRA also reassessed Mrs. Piersanti for unreported income tax, using the evidence it got in the GST criminal investigation. She said the Tax Court shouldn’t allow CRA to use that evidence because CRA couldn’t use it to prosecute her, because of the SCC decision in Jarvis. Justice Miller disagreed with Mrs. Piersanti and allowed the evidence. She said:
“[20] As of July 1999, the predominant purpose of [the CRA auditor’s] investigation was the determination of the Appellant’s penal liability under the ETA. The documents received as a result of the Requirements was in furtherance of that investigation. Such evidence may be excluded from the prosecution of an offence: R v Ling, [2002] SCC 74 at paragraph 5. However, the issue before this court is the determination of the Appellant’s income tax liability not her penal liability.
“[21] The CRA may conduct both an audit and an investigation concurrently. They are not mutually exclusive: Ling (supra) at paragraph 30. …
“[22] … although an audit and an investigation could be conducted concurrently, the results of the audit could not be used in furtherance of the prosecution. However, the results of the audit can be used in relation to an administrative matter, such as a reassessment: Romanuk v The Queen, 2013 FCA 133 at paragraph 7.
“[23] It is my view that the Appellant’s rights under section 7 and 8 of the Charter are not violated by using the information from the Requirements to raise the reassessments at issue. In fact, the use of Requirements is one of the tools the CRA has to further an audit. Her section 7 and 8 rights may have been violated by using the information from the Requirements to prosecute her under the ETA but that would have been a question for the Superior Court of Justice to decide at the Appellant’s trial for GST evasion: Romanuk at paragraph 8. The Appellant chose not to raise that defence at the proceedings before the Superior Court of Justice.”
So, relying on the FCA’s decision in Romanuk v. The Queen, Miller J. said CRA could use the evidence it got in its GST criminal investigation to reassess Mrs. Piersanti’s income tax. (Justice Miller was the TCC judge in Romanuk, whose decision the FCA upheld.)
In Romanuk, the FCA (Webb JA, who used to be a TCC judge) said:
“In paragraph 103 of Jarvis, the Supreme Court also confirmed that “…it is clear that, although an investigation has been commenced, the audit powers may continue to be used, though the results of the audit cannot be used in pursuance of the investigation or prosecution”. Since the audit powers may continue to be used, even though the results cannot be used in relation to an investigation or prosecution, the results can be used in relation to an administrative matter, such as a reassessment.
“The use of such information or documents in administering the [ITA] and reassessing the appellant does not violate her rights under either section 7 or 8 of the Charter because the CRA has the right to continue to use its audit powers provided that the information or documents are only used for the purposes of administering the [ITA].”
See Piersanti v. The Queen, 2013 TCC (Affirmed on appeal (28 Oct 2014) Piersanti v. Canada, 2014 FCA 243.)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df2bdd091a620bb8%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fpiersanti-v-the-queen-2013-tcc-v-miller-cra-may-reassess-you-using-documents-it-gets-in-a-criminal-investigation-even-if-it-couldnt-use-the-documents-in-a-criminal-prosecution.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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McCreight v. Canada (Attorney General), (2013 ONCA, Pepall) – You can sue CRA for misfeasance, abuse of process and negligence but that doesn’t mean you will win
18/7/2013
This is another procedural case dealing with taxpayer rights to sue CRA. It is a technical decision; it doesn’t say CRA did wrong. It simply says that the tax advisors are entitled to a court trial for their abuse of process and negligence claims against the CRA investigators.
The plaintiffs advised taxpayers on Scientific Research & Experimental Development (SR&ED) claims. CRA prosecuted them for fraud and conspiracy under the Income Tax Act and the Criminal Code. They said (and a judge agreed) that CRA did not give them a chance to make any exculpatory submissions before laying charges and that the CRA investigator “had sworn the information in support of the charges ‘primarily to retain possession of [documents seized under warrants, beyond the 1 year period the Criminal Code allows if charges aren’t laid.]’” (Para. 6.) The criminal court later discharged the plaintiff tax advisors. So the advisors then sued, saying “that the CRA investigation had been mishandled and had resulted in the laying of false charges.” (Para. 9) The advisors’ spouses also claimed damages, under a rule in the Family Law Act.
The plaintiffs made several claims. Some the OCA said they cannot win and so they may not pursue them. For other claims, the plaintiffs are allowed a trial.
Malicious prosecution: The OCA said that the malicious prosecution claim had no chance to succeed and should not go ahead. There are four tests for malicious prosecution:
“in order to succeed in an action for malicious prosecution, a plaintiff must prove that the prosecution was: (i) initiated by the defendant; (ii) terminated in favour of the plaintiff; (iii) commenced or continued without reasonable and probable cause, and; (iv) motivated by malice or a primary purpose other than that of carrying the law into effect.” (para. 43)
The OCA said the plaintiffs could not meet the fourth test. Although the CRA had laid charges so that it could keep the documents, it did so to help with prosecution. That does not amount to malice. (Para. 44.)
Abuse of process: On a technicality, the plaintiffs were allowed to continue this claim. (Para. 50)
Negligence: As yet, the law does not require CRA investigators to be careful in conducting criminal investigations. But the OCA relied on the SCC decision in Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, which says police may owe a duty to suspects of crime. So, the OCA said the same rule could apply to CRA criminal investigations. (Para. 61) So, this claim can go to trial with the claims for abuse of process and “misfeasance in public office”. (Para. 63)
Family law claims: s. 61 of Ontario’s Family Law Act allows near kin, including spouses, children and siblings, to make their own claims for losses arising from injuries to their kin. So, the spouses of the tax advisors were themselves plaintiffs in this case. The OCA said the spouses could not win and their claims were struck (could not go ahead). The spouses’ claims were based on emotional harm to the tax advisors but the claims didn’t refer to a recognized psychiatric illness. (Para. 69) The more important reason for disallowing the claim, though, was that the harm pleaded arose from being subject to criminal investigation. The OCA said “stress or upset caused by participation in the criminal process does not attract any recoverable damages”. (Para. 70).
Keep in mind that cases such as this say that you can sue CRA; they don’t say you will win. When one of these cases finally goes to trial, the court may still say that CRA owes no legal duty of care to suspects when prosecuting tax evasion cases. Or the court might say that CRA could be responsible for “abusing the process” of the law or for misfeasance and negligence but only in extreme cases, and not one like this.
See McCreight v. Canada (Attorney General), 2013 ONCAhttps://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df3e34b1027e7a68%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fmccreight-v-canada-attorney-general-2013-onca.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Goulet v. The Queen (2013 TCC, Graham) – You can get a GST new housing rebate for a renovation but only if it guts the old house
17/7/2013
Mr. Goulet renovated his house and garage, almost doubling its size. He applied for the HST new housing rebate. He didn’t get it.
You are entitled to a new housing rebate if you “substantially renovate” your home. But the TCC said that to qualify as a “substantial renovation”, “The definition essentially requires that the existing house be gutted.” (Para. 15.) An addition, to qualify, must “incorporate [the] existing house to the point where the addition was essentially the new premises and the existing house was a minor aspect of the total.” (Para. 16.) “‘An addition that doubles square footage by adding a few rooms in any direction will not qualify for a rebate…'” even if “there were many changes made to the existing house.” (Paras. 13 and 15.)
See Goulet v. The Queen, (2013 TCC, Graham)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df380badbf9bd17c%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fjuly-17th-2013.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Chadwick (2013 FCA, Near) – A divorce decree after April 1997 may not wreck your right to child support deductions
16/7/2013
Before May 1997, the Income Tax Act allowed the paying spouse a deduction for child support payments, while the spouse who got the payments had to include them in her income. As of May 1997, child support is no longer taxable or tax deductible.
What happens if your child support agreement was made before May 1997 but changed later? That was Mr. Chadwick’s case: the spouses signed a separation agreement in 1996; it had Mr. Chadwick pay his wife child support. In 1998, the child support was incorporated in a divorce order. Did that 1998 order make the support payments no longer deductible? Justice Paris in the Tax Court thought it did. The FCA disagreed.
“While a child support amount payable under an agreement or order made prior to May 1997 is generally subject to the old regime, there are four exceptions to this rule: … when: (i) the parties file a joint election; (ii) the pre-May 1997 agreement or order is varied; (iii) another agreement or order is made after April 1997, the effect of which is to change the total child support amounts payable; or (iv) the pre-May 1997 agreement or order specifies a particular day after April 1997 as the commencement day of the agreement or order.
“On the specific facts of this case, the parties demonstrated a clear intention to incorporate the provisions of their Agreement in the uncontested and on-consent Divorce Judgment that followed. The fact that a relatively minor item was not in the Divorce Judgment and that the length of the obligation to pay child support was prolonged due to the operation of the Divorce Act is not, in my view, sufficient to negate the clear intention of the parties.” (Paras. 4 and 7)
See Chadwick (2013 FCA, Near)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Df17625e0d889%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fchadwick-2013-fca-near-a-divorce-decree-after-april-1997-may-not-wreck-your-right-to-child-support-deductions.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Black Sun Rising Inc., 2013 FC (Harrington) – You are liable to imprisonment if you don’t comply with CRA audit demands, but Crown must prove beyond reasonable doubt that your failure was deliberate
14/7/2013
CRA auditors can demand that you answer questions, give access to your books and records, or give documents or information about another taxpayer. (ITA ss. 231.1 and 231.2.) If you refuse to comply with CRA’s demands, it may apply to the Federal Court for an order forcing you to comply. If you ignore that Court order, CRA can ask the Court to find you are in “contempt of court”. The penalty for contempt includes imprisonment. (ITA s. 231.7) So, the Court demands that the CRA prove contempt “beyond a reasonable doubt.”
In this case, the taxpayers seemed to be hiding behind their accountant in failing to give CRA the accounting records it sought. But Justice Harrington didn’t think the evidence was strong enough to prove deliberate contempt of the Court’s order because:
“Although certainly not timely, evidence was provided in this case before the contempt hearing, not at the sentencing stage. Furthermore, on the Minister’s own evidence, there has been an effort to comply, including an offer to meet which was not taken up.” (Para. 35)
So, the Court didn’t hold the taxpayers in contempt yet. But the taxpayers still had to comply with the Court’s order, and, if they did not, the CRA could bring a contempt motion again. (Para. 36)
See Black Sun Rising Inc., 2013 FC (Harrington)https://www.facebook.com/v2.6/plugins/like.php?action=like&app_id=190291501407&channel=https%3A%2F%2Fstaticxx.facebook.com%2Fx%2Fconnect%2Fxd_arbiter%2F%3Fversion%3D46%23cb%3Dfb0abeea165fd4%26domain%3Dwww.yasny.ca%26is_canvas%3Dfalse%26origin%3Dhttps%253A%252F%252Fwww.yasny.ca%252Ff3aa7165cc24bfc%26relation%3Dparent.parent&container_width=0&href=http%3A%2F%2Fyasny.ca%2F2%2Fpost%2F2013%2F07%2Fblack-sun-rising-inc-2013-fc-harrington-you-are-liable-to-imprisonment-if-you-dont-comply-with-cra-audit-demands-but-crown-must-prove-beyond-reasonable-doubt-that-you-were-deliberate.html&layout=button_count&locale=en_US&sdk=joey&share=false&show_faces=false&width=90
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Da Huang (2013 FCC, Simpson) – If you can show legal sources for part of the money CBSA seized from you at the border, it should give it back
This is an important case for people who fail to report having $10,000 or more of cash when crossing Canada’s borders.
Under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the Canada Border Services Agency can seize your cash or negotiable instruments if you don’t report having them when you cross the border. (See my article on the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.)
Until this case, the Federal Court of Canada had said that CBSA could (and must) keep all the seized money, even if you could show that some of it was from legal sources. In this decision, Justice Simpson refused to follow the earlier cases. With 6 strong points she gave her convincing reasons for saying that CBSA should return the part of the seized money you can show came from legal sources. (Para. 28.)
Read Da Huang (2013 FCC, Simpson). The FCA upheld this decision. See Canada (Public Safety and Emergency Preparedness) v. Huang, 2014 FCA 228