http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/100776/index.do
Kang v. The Queen (January 27, 2015 – 2015 TCC 18, Tardiff J.).
Précis: Between them the taxpayers were assessed for more than $3,000,000 in unreported income from a jewellery/currency exchange business in their 2007 taxation years. During a raid more than $2,500,000 in cash in the aggregate was found on their premises. CRA reconstructed their income using an indirect audit method. The Court accepted CRA’s position and the appeals were dismissed with costs.
Decision: This lengthy (244 paragraphs) decision does not pose any real legal issues. The taxpayers were assessed for more than $3,000,000 in unreported income in their 2007 taxation years. While all of the taxpayers reported modest taxable incomes more than $2,500,000 in cash was seized in searches of their premises:
[35] During these searches on April 17, 2007, large amounts of cash were seized as per the details provided below:
|
A - Residence of Mr. Kang
Can$339,500
US$39,530
TOTAL
|
Can$339,500
Can$44,645
Can$384,145
|
|
B – Residence of Mr. Tang
Can$450,000
US$52,600
TOTAL
|
Can$450,000
Can$59,406
Can$509,406
|
|
C – On the premises of Bijouterie Yong Meer inc.
Can$61,840
US$703,422
EUROS 18,700
TOTAL
|
Can$61,840
Can$794,445
Can$28,656
Can$884,941
Can$778,902
Can$1,663,843
|
CRA reconstructed their income using the indirect audit method. The Tax Court accepted CRA’s reconstruction with some changes. The Court also sustained the imposition of gross negligence penalties under subsection 163(2) of the Income Tax Act.
As a result the appeals were allowed to reflect some adjustments. Costs were awarded to the Crown.