Gordon Feil, C.G.A. Ltd. v. R. - TCC: Payments to “corporation sole” a mere conduit to tax debtor

Gordon Feil, C.G.A. Ltd. v. R. - TCC:  Payments to “corporation sole” a mere conduit to tax debtor

http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/110061/index.do

Gordon Feil, C.G.A., Ltd. v. The Queen (June 8, 2015 – 2015 TCC 140, Woods J.).

Précis:  Gordon Feil, C.G.A. Ltd and Leslie Feil, C.G.A. Ltd., carried on a joint venture as Feil & Co.  Gordon and Leslie Feil were brothers.  Each corporation received requirement to pay in respect of Gordon Feil in respect of a tax debt of $93,645.  Notwithstanding that Feil & Co. made three payments totalling $4,500  alleged by the Crown to be to Gordon Feil.  Both corporations were assessed for failure to remit the $4,500 pursuant to the requirement.  Two of the cheques were payable to “The Living Love Society” and one cheque was payable to “overseer, living love society.”  The Living Love Society purported to be a Nevada “corporation sole”, the overseer of which was Gordon Feil.  The Court held that the payments were a mere conduit to Gordon Feil and dismissed the appeals.

Decision:  The Court had little use for the “corporation sole” argument:

[25]        In addition, Mr. Feil’s testimony regarding a charitable donation appears to be untrue. On cross-examination, Mr. Feil denied that the Corporation Sole made a charitable donation that he deducted on his own income tax return.

[26]        This testimony appears to be contrary to evidence given on Mr. Feil’s examination for discovery in a similar matter involving Gordon Feil, C.G.A., Ltd. (2011-2834(IT)G). The following answers from the discovery were read in by the respondent:

Q. Okay. Now, did you claim donations to this charity on your personal tax return?

A. Either on mine or my wife’s. Some of the children that were supported were supported through personal accounts, some were supported through the Corporation Sole account.

Q. Okay. But these charitable donations made to Compassion Canada were not claimed on any tax returns filed by the Corporation Sole or Living Love probably because they didn’t file tax returns; right?

A. That’s right.

[27]        The evidence as a whole, and particularly the lack of evidence by the appellants, suggests that Mr. Feil set up the Corporation Sole as a conduit for his own personal expenses. I would also note that Mr. Feil’s corporation was a member of Feil & Co. and that Feil & Co. would have been aware through this connection that the Corporation Sole was just a conduit.

[28]        I would conclude that the respondent was correct to conclude that the cheques written by Feil & Co. were in fact payments to Mr. Feil that were contrary to the requirements to pay.

[29]        The appeals will be dismissed on this basis.