Docket: 2011-1407(IT)G
BETWEEN:
RENAUD BERGERON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on December 10, 2012, at Montreal, Quebec.
Before: The Honourable
Justice Patrick Boyle
Appearances:
|
For the Appellant:
|
The
Appellant himself
|
|
Counsel for the Respondent:
|
Emmanuel Jilwan
|
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
JUDGMENT
The appeal from the reassessments made under
the Income Tax Act with respect to the Appellant’s 2006 and 2007
taxation years is dismissed, with costs, in accordance with the Reasons for
Judgment attached hereto.
Signed at Ottawa, Canada this 18th day of January 2013.
"Patrick Boyle"
Translation
certified true
on this 1st day of
March 2013.
Erich Klein,
Revisor
Citation: 2013 TCC 13
Date: 20130118
Docket: 2011-1407(IT)G
BETWEEN:
RENAUD BERGERON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Boyle J.
[1]
This appeal relates to
Mr. Bergeron’s involvement in a transfer of the Immigrant Investor Program (“IIP”) operations of Canaccord Capital to
Industrial Alliance in 2005. The agreements provided, among other things, that
the Appellant, who had managed the program at Canaccord, would move to Industrial
Alliance as an independent contractor so that he could continue to manage the
transferred accounts. At the time of the transfer, Mr. Bergeron was entitled to
certain deferred “honoraires de fermeture” (hereinafter “closing fees”) in respect of the transferred IIP accounts.
As part of these transactions Mr. Bergeron provided indemnities and guarantees
relating to the transferred accounts.
[2]
The taxpayer’s position
is that certain amounts subsequently received by him in respect of closing fees
for the transferred accounts were capital gains for 2006 and 2007. The
Respondent’s position is that these amounts were ordinary income. In addition,
the taxpayer questions whether the reassessment for 2006 was made within the
prescribed limitation period.
[3]
It is clear from the
evidence, including the documentary evidence, that the rights to, and interests
in, Canaccord’s IIP were transferred by Canaccord to Industrial Alliance. The
same documents make it clear that Mr. Bergeron was to become an independent
contractor responsible for, among other things, managing the transferred IIP
accounts. The terms of Mr. Bergeron’s contract for services were set out in a letter
agreement among Mr. Bergeron and Industrial Alliance and Leduc & Associés
signed before the transfer in 2005. The agreement provided that, following the
transfer, Mr. Bergeron was to enter into a contract for services whereby he
would join Leduc & Associés for a two‑year period. In 2008, the 2005 arrangement
was further documented, in a more detailed fashion and retroactively. Both of
these agreements provide for payment of the amounts in question to Mr. Bergeron
under his contract for services. The closing fees relating to the transferred
accounts were to be paid to Mr. Bergeron at the rate of 75% of such fees
received for the year ending August 31, 2006 and 50% thereof for the year
ending August 31, 2007.
[4]
No one from Canaccord
Capital testified, nor was Mr. Bergeron’s employment contract with Canaccord
Capital put in evidence. No one from Industrial Alliance or Leduc &
Associés testified either.
[5]
At the time of the 2005
transfer, Mr. Bergeron had certain entitlements to the deferred closing fees,
which Canaccord Capital would have been required to pay to him when the
underlying investments matured. It was these rights that Mr. Bergeron was
protecting through his new arrangements with Industrial Alliance and Leduc
& Associés.
[6]
It is clear that the
amounts at issue in the appeals for the 2006 and 2007 taxation years are
amounts paid in accordance with subparagraphs 2(a) and (b) respectively on the
third page of the July 18, 2005 letter agreement entered into by Mr. Bergeron,
Industrial Alliance and Leduc & Associés, which dealt with closing fees.
The amounts in question are also clearly identified and computed as closing
fees on the Leduc & Associés cheques to Mr. Bergeron for those amounts. There
is simply nothing in the evidence before me to support a conclusion that these
amounts were paid on any other basis or that there was a disposition of capital
property by Mr. Bergeron to Industrial Alliance or Leduc & Associés. It is
clear that from the legal contracts that these amounts were paid to him in accordance
with the terms of his contract for services and that they are therefore
properly taxable on income account.
[7]
Absent a disposition of
capital property, section 42 of the Income Tax Act dealing with
guarantees is, by its terms, simply not applicable here.
[8]
The reassessment with
respect to Mr. Bergeron’s 2006 taxation year was not statute‑barred. The
evidence clearly confirms that the reassessment was issued within the normal
three‑year reassessment period.
[9]
Mr. Bergeron’s objection
filed with the Canada Revenue Agency, Appeals, was successful to the extent both
of not having the amounts reported as capital gains taxed twice–as ordinary
income and as capital gains–and of having the penalties imposed in the reassessments
removed in their entirety.
[10]
The appeal
is dismissed, with costs.
Signed at Ottawa, Canada this 18th day of January
2013.
"Patrick Boyle"
Translation
certified true
on this 1st day of
March 2013.
Erich Klein,
Revisor
CITATION: 2013 TCC 13
COURT FILE NO.: 2011-1407(IT)G
STYLE OF CAUSE: RENAUD BERGERON v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: December 10, 2012
REASONS FOR JUDGMENT BY: The
Honourable Justice Patrick Boyle
DATE OF JUDGMENT: January 18, 2013
APPEARANCES:
|
For the
Appellant:
|
The Appellant himself
|
|
Counsel for the
Respondent:
|
Emmanuel Jilwan
|
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the
Respondent: William F. Pentney
Deputy
Attorney General of Canada
Ottawa,
Canada
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