Agostini v. R. - TCC: Court upholds net worth assessments in the face of taxpayer’s far-fetched evidence

Agostini v. R. - TCC:  Court upholds net worth assessments in the face of taxpayer’s far-fetched evidence

http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/111578/index.do

Agostini v. The Queen (August 31, 2015 – 2015 TCC 215, Boyle J.).

Précis:   This was a more than usually colourful net worth assessment case involving, inter alia, a wife ratting on her husband to CRA, the taxpayer’s mother contradicting the taxpayer’s evidence on the stand and an alleged safe full of cash that no one else in the family claimed to have ever seen.  Put simply, Mr. Agostini attempted to defeat net worth assessments for 2007 and 2008 on the basis that prior to his marriage in 2004 he had lived frugally with his parents who paid most of his expenses (including buying clothes for him).  This he alleged had allowed him to accumulate a large horde of cash ($140,000) which he kept in a safe in his mother’s garage.  His mother denied that he lived at her home after the birth of his son in 1998, denied buying his clothes and claimed to have no knowledge of the safe.  And then there was the fact that his mother was illiterate and Mr. Agostini had her make a declaration in which she lied for his benefit.

It was all too much of an opera buffa for Justice Boyle who dismissed the appeal with costs.

Decision:  This decision is an exemplary exercise in the dissection of net worth assessment evidence and will also benefit the reader looking for some light tax reading.  Nevertheless Justice Boyle sums up the whole sordid mess in two pithy paragraphs:

[3]             As detailed below, I do not accept very much of Dino Agostini’s evidence on the sources of the unreported income, the amount of his income and the related expenses claimed as believable, reasonable, credible, reliable or deserving of any material weight. His attempts to corroborate his versions with supporting testimony from his mother and his wife backfired spectacularly when neither of their evidence supported his testimony about living with his mother to amass large savings, his parents paying all of his personal expenses as an adult right down to choosing his clothes, receiving up to $35,000 in cash gifts at his wedding, or keeping a safe with up to $140,000 in it in cash in his mother’s garage and then later in the home he shared with his wife and their daughter. While I say more below about the reliability of the evidence of his mother and wife at trial, it is clear that I must conclude that either (a) Mr. Agostini had his mother who cannot read sign a document prior to the hearing and wrongly held out to be a Solemn Declaration that contained material and substantial untruths, or (b) his mother lied under oath about her inability to read and/or never meeting an attorney or a notary.

[4]             There was little to nothing Mr. Agostini’s lawyer could do to help him save his case or to save him from himself. She definitely presented the evidence in the best possible light and she raised all the correct legal arguments on the extent of the burden of proof on the Appellant, the absence of any requirement for corroborating documentation, on the fact that the burden with respect to penalties is on the Crown et cetera. However, when asked, in argument, how she could help me reconcile the conflicting evidence or work through the obvious credibility concerns raised, she was left in the position of being able to say little more than that the evidence is what it is and she would have to leave credibility issues to me. I did not need long.

It was no surprise that the appeal was dismissed with costs.