https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/365827/index.do
Peerenboom v. The Queen (March 15, 2019 – 2019 TCC 61, Bocock J.).
Précis: The taxpayer received funds in 2007 and 2008 from a company (“Hive”) which CRA treated as income in his hands. The taxpayer argued that the funds were received by him as agent either for his wife or for a corporation he controlled. The Court rejected the taxpayer’s evidence with the exception of amounts paid to repair the shutters of a condo owned by his wife and rented by Hive (which the principal of Hive admitted had been damaged by one of his employees) ($27,385.00). As there was mixed success there was no order as to costs (subject to the parties’ right to make submissions within 30 days).
Decision: The underlying case was not complex:
[1] The Minister of National Revenue (the “Minister”) reassessed the appellant, Mr. Peerenboom, for unreported income in the 2007 and 2008 taxation years under the Income Tax Act, R.S.C. 1985, c.1, as amended (the “Act”). In the original reassessment, the sums of $176,755 and $168,302 were included in Mr. Peerenboom’s income for the two years, respectively. After objection, the Minister reduced the unreported other income for 2007 from $176,755 to $8,175.00.
- (b)Basis for Appeal in brief
[2] Mr. Peerenboom brings this appeal on the basis that while all remaining amounts were indeed received by him from the payor, The Hive Inc. (“The Hive”); all such sums, were nonetheless received by him as agent for other parties: his wife, Mrs. Peerenboom, and/or his personal real estate holding company, Mandrake Properties Inc. (“Properties”). Mr. Peerenboom is the manager and sole shareholder of Properties which owns various commercial and industrial properties. Further, even if Mr. Peerenboom received the sums for himself, appellant’s counsel asserts that there was no source of income because there was no pursuit of profit by Mr. Peerenboom to procure such sums to that end. The Minister has not assessed Mr. Peerenboom under section 15(1) or of the Act, as having received a benefit. Moreover, the payments from The Hive were not related to Mandrake Management Consultants, an executive search firm owned by Mr. Peerenboom.
In the end the case boiled down to credibility and, on balance, the Court rejected most of the taxpayer’s evidence:
[45] Overall, the reimbursement of “expenses” totalling some $145,000, excluding the shutters (item #13), is generally inexplicable for several reasons. There was no reliable evidence before the Court the “expenses” related to concordant business, employment or property income. The shutter repairs aside, all asserted expense items were en bloc, vague and unrelatable to a credible and subsisting justification and reason for their incurrence. Certain connective tissue is missing. There is little reliable documentation or probable and consistent evidence for receiving, as agent, such sums as reimbursements. A supportable and understandable relationship with The Hive relevant to reimbursement on that basis is also missing. Therefore, the assessed sums are, more likely than not, other income relating to an undertaking in the nature of the consulting trade. This is how Mr. Peerenboom originally described them: “for services rendered”. Similarly, the payor classified them as consulting fees when paying them. The Minister’s reasons (later assumptions) when classifying the sums as such have not been demolished, but for the shutter replacement costs involving Mrs. Peerenboom’s Condo.
[46] In light of the mixed results on the appeal, the Court shall make no order as to costs. This provisional cost determination is subject to the receipt of contrary written submissions from either of the parties within 30 days of this judgment. As a result of any such submission, the Court may determine otherwise. If it does not, this provisional award of costs shall become final without the need for any further order.
In view of the mixed success there was no order as to costs (subject to the parties’ right to make submissions within 30 days).