Mazo – Tax Court of Canada finds that successful participation in a pyramid scheme gives rise to business income

Graham J found that whereas successful participation in a Ponzi scheme gives rise to property income, successful participation in a pyramid scheme gives rise to business income. His reasoning:

[A] participant in a Ponzi scheme is conned by the promoter into investing in something fake. A participant in a pyramid scheme is conned by the promoter into believing that the scheme will actually work and that he or she will profit through his or her own efforts [in recruiting “sales” people lower in the pyramid].

Neal Armstrong. Summaries of Mazo v. The Queen, 2016 TCC 232 under s. 248(1) – business and s. 9 – timing.