http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/111532/index.do
Mehravaran v. The Queen (August 24, 2015 – 2015 TCC 209, Rossiter C.J.).
Précis: Ms. Mehravaran was estranged from her husband for several years. Although they lived under the same roof they barely communicated. Her husband and her son, Amin, were engaged in businesses of importing goods, rugs, bicycles, boats, all-terrain vehicles and motorcycles. There is no indication in the decision whether she was involved in or aware of the business activities but apparently she gave her husband a power of attorney in 2000 which he somehow used in connection with the businesses. CRA did a net worth assessment of the businesses for the 2004 to 2006 taxation years for income tax purposes and the corresponding reporting periods for GST purposes. CRA allocated GST liability on the net worth basis to Ms. Mehravaran, her husband and son equally because “the Respondent was unable to allocate the responsibility with respect to GST except on an equal basis, such was the lack of records and accounts of the Appellant, the Appellant’s husband and Amin” [para. [7]]. The decision is silent on the allocation for income tax purposes. CRA also levied gross negligence penalties but these are not described in the reasons.
The Court accepted the net worth analysis (although it is not described in the reasons for judgment) and faulted Ms. Mehravaran for giving the power of attorney (although it is not clear from the reasons what, if anything, was done with it). As a result the appeals were dismissed but without any order as to costs.
Decision: The Court found Ms. Mehravaran as credible witness:
[14] The Appellant presented herself as a well spoken lady who had a sincere love for children, making them a priority in their life. She presented herself as a truthful person who wanted to present to the Court her life experiences and how the situation arose which placed her before the Court. She answered all questions directly, told her story, although in somewhat of an emotional manner when it involved very difficult issues such as care for her children or the infidelity of her husband; she described in detail the hardships of the relationship. She showed the resolve she had with respect to her religion and how her resolve with her religion led her to basically be a subservient spouse to her husband in all matters. She did not avoid answering difficult questions and maintained eye contact; she did not avoid any of the difficulties but was simply trying to present her side of the story and did so in a reasonable, calm and direct fashion. During cross-examination, albeit brief, she again responded in a fair and direct fashion answering all questions presented.
[15] I am, however, of the view that the law does not support the suggestion that a Power of Attorney can resolve a person such as the Appellant from a tax liability in the circumstances of this particular case.
Unfortunately there is no indication in the decision of what was done with the power of attorney.
Oddly enough the power of attorney was not placed in evidence:
[17] In the appeal before the Court the particulars of the Power of Attorney were not provided, nor was a copy of the Power of Attorney produced.
One would have thought that the Crown would have had to produce the power of attorney to justify gross negligence penalties against Ms. Mehravaran.
The Court’s conclusion was as follows:
[21] As noted, I do not believe that the Power of Attorney in this particular case can absolve the Appellant from a tax dispute. The Appellant must face and accept the consequences of the Power of Attorney she gave her husband and its use by the husband. We do not have the particulars of the Power of Attorney nor was a copy of it provided to the Court in the course of evidence, so we have not even had the opportunity to examine the extent of the Power of Attorney. Quite simply, the Appellant has failed to establish the Power of Attorney, its extent and how or why she should be absolved from its consequences to her in this tax dispute. Also, I have found that the net worth assessment was properly conducted. The appeal is dismissed.
There was no order as to costs although the income tax appeal was a general procedure appeal (the GST appeals were informal procedure appeals).