9250-9893 Québec Inc. v. R. - TCC: Court rejects evidence of safe full of cash

9250-9893 Québec Inc. v. R. - TCC:  Court rejects evidence of safe full of cash


9259-9893 Québec Inc. v. The Queen (July 22, 2015 – 2015 TCC 189, Masse D.J.).

Précis:    The appellant corporation ran a flea market and a swingers club.  A CRA auditor realized that it reported no cash transactions although he discovered some $38,000 in cash deposits to its bank account.  This appeal concerned GST on those cash deposits which CRA took to be additional business income.  Those amounts were recorded as payable to its shareholder, Mr. Belangér.  Mr. Belangér argued that the source of the deposits was cash that he stored in a safe in his home because he did not trust banks.

The Court did not find the evidence of Mr. Belangér credible and dismissed the appeal.

Decision:   The evidence of Mr. Belangér stretched credulity:

[9]             Daniel Bélanger testified. He is a business man. He is the appellant’s sole director and shareholder. At first, the appellant operated a liquidation centre, but that business was unsuccessful. Thus, the appellant established a swingers club in 2010. He admitted that he made cash deposits totalling $38,093 into the appellant’s bank account. He explained to us that since 1979 he had been putting money aside over the years. In the past, he had held multiple jobs as a server in bars and he told us that he was paid in cash. He put all the money he earned in a safe that he kept in his home. He did not spend the money he put aside, except to pay for his needs, and he never deposited it in the bank. He was raised not to trust banks. He saved all the time and did not indulge in the purchase of new items and trips. He never overspent.

While his wife, Ms. Fortin, testified in his support the Court was not persuaded:

[23]        In my view, the appellant did not show on the balance of evidence that his claims were plausible, reasonable, correct and coherent. A number of aspects of the evidence lead me to that conclusion.

a. It is highly unlikely that none of the appellant’s clients paid the appellant cash as Mr. Bélanger contends. This claim is not consistent with the reality of a modern small business.

b. Except for the testimony of Mr. Bélanger and Ms. Fortin, there is no evidence of a safe containing a substantial amount of cash. A photograph of said safe showing an amount of money would have been easy to obtain to submit to the Court.

c. Mr. Bélanger did not indicate the amount of money he inherited from his parents, or the date on which he received his inheritance, or the amounts he took from the safe over the years. In other words, there is no accounting for the amounts put in the safe and the amounts taken from the safe over the years. We do not know how much money they needed to support themselves. We do not know how much money is left in the safe.

As a result the appeal was dismissed.