REASONS
FOR JUDGMENT
Boyle J.
[1]
The Appellant, Dino Agostini, has appealed from
his 2007 and 2008 reassessments in respect of :
(i)
the inclusion of unreported income in the
amounts of approximately $105,000 for 2007 and $160,000 for 2008 resulting from
a bank deposit analysis by Canada Revenue Agency (“CRA”);
(ii)
the denial of business
expenses in the amounts of approximately $15,000
in 2007 and $17,500 in 2008; and
(iii)
subsection 163(2) gross negligence penalties
assessed in respect of the unreported income in the amounts of approximately
$15,000 in 2007 and $20,000 in 2008.
[2]
The Appellant testified on his own behalf, along
with his mother, Maria Agostini, and his wife, Sonia Hamel. Marc Morin a
CRA auditor, testified for the Respondent.
[3]
As detailed below, I do not accept very much of
Dino Agostini’s evidence on the sources of the unreported income, the amount of
his income and the related expenses claimed as believable, reasonable,
credible, reliable or deserving of any material weight. His attempts to
corroborate his versions with supporting testimony from his mother and his wife
backfired spectacularly when neither of their evidence supported his testimony about
living with his mother to amass large savings, his parents paying all of his
personal expenses as an adult right down to choosing his clothes, receiving up
to $35,000 in cash gifts at his wedding, or keeping a safe with up to $140,000
in it in cash in his mother’s garage and then later in the home he shared with
his wife and their daughter. While I say more below about the reliability of
the evidence of his mother and wife at trial, it is clear that I must conclude
that either (a) Mr. Agostini had his mother who cannot read sign a document
prior to the hearing and wrongly held out to be a Solemn Declaration that
contained material and substantial untruths, or (b) his mother lied under oath
about her inability to read and/or never meeting an attorney or a notary.
[4]
There was little to nothing Mr. Agostini’s
lawyer could do to help him save his case or to save him from himself. She
definitely presented the evidence in the best possible light and she raised all
the correct legal arguments on the extent of the burden of proof on the
Appellant, the absence of any requirement for corroborating documentation, on
the fact that the burden with respect to penalties is on the Crown et cetera.
However, when asked, in argument, how she could help me reconcile the conflicting
evidence or work through the obvious credibility concerns raised, she was left
in the position of being able to say little more than that the evidence is what
it is and she would have to leave credibility issues to me. I did not need
long.
I.
The Evidence
A. The
bank deposit analysis unreported income
[5]
Mr. Agostini maintained that he has operated a
landscaping and snow removal business in Mount Royal since 1988 after finishing
high school, that he continued to live with his parents until 2004 when he married,
that his parents during this time paid for everything, including his mother
choosing and paying for his clothes, and consequently had saved up a very large
amount of cash, certainly as high as between $130,000 and $140,000 at one time
before 2004. This had not been mentioned at his initial August 2010 audit
meeting interview with CRA when specifically asked more than one question about
other possible sources of money or income. It was not mentioned in his February
2011 Notice of Objection. It was raised first in the Spiegel Sohmer 2012
submissions in support of the Objection filed by his then lawyers on his
behalf.
[6]
Mr. Agostini also maintains that he received a
$20,000 cash gift from his mother in 2007. This was not mentioned at the
initial August 2010 CRA interview even though specific questions had been
asked. This was not mentioned either in the February 2011 Objection. It was also
raised for the first time in the February 2012 submissions from his prior
counsel.
[7]
At the hearing of his appeal, Mr. Agostini
maintained that a third source of his available cash was the $30,000-$35,000 of
cash he and his wife received as wedding gifts at their 2004 wedding. This had
not even been mentioned in his Notice of Appeal. The Respondent and the trial
judge were not the only ones who learned of the cash wedding gifts for the
first time; this was clearly also news to his wife.
[8]
For the reasons that follow, I can only conclude
that, with respect to these three other sources of cash available to Mr.
Agostini in the years in question, most of the taxpayer’s evidence appears
contrived, while much of the supporting evidence of his mother and his wife
appears connived.
[9]
Mr. Agostini did not file a 2007 tax return when
due. He was assessed “arbitrarily” under
subsection 152(7) for 2007. He then filed an amended return. The evidence
available to the Court from the CRA shows that his 2007 amended return
information was referred for an audit because he filed an amended return after
a subsection 152(7) assessment was issued. That was the reason given in writing
by the CRA official who referred the matter for audit. There is no mention of a
tip or lead from an informant.
[10]
It is Mr. Agostini’s positon, supported by the
testimony of his wife, that he was audited because his wife contacted the CRA
during a difficult period of separation in their marriage, during which she was
in significant mental distress, to inform them he was not reporting all of his
income. He maintains that he was told about this by the CRA auditor. While I
accept that Sonia Hamel appears to have been deeply troubled during this period
of separation and aggressively hostile towards Mr. Agostini and their daughter
(she stole their dog and killed it with poison) the preponderance of the
evidence leads me to conclude that a report by Ms. Hamel to CRA was not the
reason why he was audited. This is not, of itself, a material issue to the substantive
issue of Mr. Agostini’s liability for the assessment, but it is another
discrepancy relevant to the overall credibility of the testimony of Mr.
Agostini and his wife.
[11]
At the August 2010 first interview with CRA Mr.
Agostini said that he only accepted cheques in his business and would not
accept cash. He said he did not have accumulated savings or cash on hand, nor
receive any large sums in the prior years. He said that he only had the one
Caisse Populaire account, only deposited his business income, rental income and
child benefits into it, and had made no substantial non-business deposits. He
said he did not have any other bank account, not even a closed account.
[12]
Mr. Agostini’s position at the hearing is that
he had saved more than $130,000 in cash from his landscaping and snow removal
business while living frugally with his parents from 1989 until 2004 when he
married his wife. This is mathematically possible but would be quite an accomplishment
given the very modest reported income over those years.
[13]
Mr. Agostini and Sonia Hamel had a daughter in
1998. Yet, he maintains that they did not live together and that he continued
to live with his parents until he married in 2004. He maintains that his
parents continued to pay virtually all of his personal expenses as well as
provide him with full room and board. His wife testified that he continued to
live with his parents and not with her and their daughter, until 2004.
According to them, she lived alone with her son and their daughter surviving on
government social assistance. They both maintained that he did not pay any child
support or provide any other financial assistance to her.
[14]
Unfortunately for Mr. Agostini, his mother could
not have been clearer nor have appeared more honest and candid in her testimony
that her son did not live at her home after the birth of his daughter in 1998.
She testified that he moved out and lived with Ms. Hamel and their daughter as
a family in the apartment on the second floor of her (Mrs. Agostini) parents’
house. She was equally clear and credible in saying that she did not regularly
choose or pay for her son’s clothes when he was a working adult living at home.
She simply let him live with the family and eat the meals she prepared for the
family. In the questionable Solemn Declaration she signed in 2012, she only
stated that he paid no rent.
[15]
Mr. Agostini maintains that he kept this very
large amount of accumulated cash savings from his very modest landscaping
business in a large safe he purchased in 1991 when he started accumulating
excess cash. He submitted a photocopy of a handwritten receipt on a locksmith’s
business form. It hardly provides any information; there is no description,
model or other information beyond “Coffre Fort Cadena”.
He did not provide an original to the Court nor did he ever show an original to
his counsel. He showed, with his hands, that the safe was about 18 to 24 inches
in size in each direction. He said it remained at his parent’s house for a
while after he moved out in 2004 until he moved it to his home. Nonetheless,
his mother claims to have never seen such a safe nor was she ever aware her son
even owned one. Similarly, his wife was never aware that he claimed to own a
safe even though he says he took $95,000 from it to make a down payment on
their triplex, along with another $9,000 to replace its roof, and had deposited
$30,000-$35,000 of their wedding gift money in it. The safe was not mentioned
in the initial CRA interview nor in the Notice of Objection. No reason was
offered for keeping a free-standing safe with that amount of money in it in a
garage at the house instead of in the presumably more secure and occupied house.
Mr. Agostini had his mother sign a Solemn Declaration in February 2012 which
was submitted with the Spiegel Sohmer submissions. It refers twice to the
existence of a safe owned by him at her house, once in connection with an
attempted break-in to the safe in 2010 long after he moved out. When she was
asked about this, she insisted she could not read and had never been in a
lawyer or notary office, nor had anyone from a lawyer or notary office attended
on her. Her testimony was quite clear: there was no such safe.
[16]
Mr. Agostini maintains that he received a
$20,000 cash gift from his mother in 2007. It is mentioned for the first time
in his lawyer’s submissions in support of his Objection. He stated that it came
from an inheritance she received upon the death of her father; her handwritten note
is to the same effect. However, in her testimony, she said it came from several
different sources including from the sale of her country house, from her
accumulated savings having worked since she arrived in 1957, from the sale of
her mother’s house, and from the sale of her father-in-law’s house after he
passed away. While it is possible Mrs. Agostini may have been confused or
unclear, none of these several sources described at the hearing appear to be
even indirectly from an inheritance upon her own father’s death who, she said,
died in 2004.
[17]
Further, a page from her bank book was offered
in evidence, it showed a $23,000 cheque reduced her balance in June 2007. The
bank book tendered did not show any significant deposits preceding this withdrawal
by cheque of most of the money in this account. No copy of the cheque was
offered in evidence. Mrs. Agostini said she had made the cheque out to her
son Dino Agostini who refused to take her gift as a cheque but wanted cash
instead. She then described taking that same cheque to the bank teller and
asking that it be given to her in $100 bills. She said she used the extra
$3,000 for her own needs and gave $20,000 to her son Dino. She did not try to
explain why she would have made the cheque out to her son for $23,000 if she
only intended to give him $20,000. She was clear that this was the same cheque
she made out to her son that was used by the bank for her $23,000 cash
withdrawal. She did not write a cheque to herself or to cash. I saw no evidence
whatsoever of this $20,000 cash being deposited into Mr. Agostini’s bank
account.
[18]
In his testimony at trial, Mr. Agostini
testified he and his wife had also received $30,000-$35,000 of cash as wedding
gifts in 2004 which he added to his accumulated cash savings. Neither he nor
his prior lawyers had even mentioned this before; this simply came out when he
was on the witness stand. He described having had a “big
Italian wedding” with 200 to 250 guests. He said that he paid for the
wedding, which cost, in total, about $9,000. He did not offer any supporting
evidence from any of the guests. As mentioned above, his bride said they did
not really receive any cash as wedding gifts but only gifts in kind, and she
referred to having a wedding gift registry or two for the approximately
80 guests at their wedding. She also said that only she and the taxpayer’s
mother planned and organized the wedding and not her husband-to-be. She was
also clear that his mother was involved because his parents paid the wedding
expenses.
[19]
Mr. Agostini’s version of events literally does
not add up. While he claims to have had up to $140,000 in cash saved in his
safe, he claims to have used it to spend significantly more, including in 2002
a $95,000 down payment on their triplex, a $9,000 replacement roof for it, and
his $52,000 F350 pickup truck which he claims to have purchased for cash in
2005 (though no written record relating to his truck was offered into
evidence). He also used to withdraw cash from this safe whenever he had bills
to pay which he would first deposit in his bank account and then pay his bills
with it. No attempt was made by the taxpayer to reconcile any deposits with any
bill payments from the bank account, nor to provide another explanation for first
depositing this cash into the bank account. These amounts would have left the
safe empty well before 2007.
[20]
The seemingly magical qualities of this safe,
beyond only being visible to the taxpayer, became truly apparent when CRA
discovered that, contrary to what he said at his first interview, he also banked
at CIBC. This was obvious from a review of his Caisse Populaire deposits as he
made a $75,000 transfer from a CIBC account to his Caisse Populaire account in early
2007. He maintains that he had taken another $75,000 of his accumulated savings
and deposited them into a CIBC account which he later transferred to his Caisse
Populaire account. He explained that he did not mention it to CRA because he
had closed the account. In fact, the CIBC account had remained active and in
use until December 2007. He said he used $70,000 or more of this $75,000
transfer to pay personal expenses which he did not describe: this certainly
appears somewhat inconsistent with his claims of frugality.
[21]
The evidence falls short of satisfying me on a
balance of probabilities:
(i)
that the taxpayer accumulated any material
amount from the after-tax profits of a 20 customer lawn maintenance and snow
plow business or his net after-tax rental income from the other two units in
his triplex;
(ii)
that there was a safe maintained by him at his
parent’s house which was later moved to his house;
(iii)
that his parents made a $20,000 gift to him in
cash; or
(iv)
that any material amount of cash was received as
wedding gifts.
[22]
Further, even if any of these alleged sources of
cash existed, no attempt was made by Mr. Agostini to specify, detail or
reconcile how, when or if they were ever deposited into the Caisse Populaire
account and would be relevant to the deposit analysis.
[23]
Mr. Agostini has not satisfied the Court
on a balance of probabilities with reasonable, credible and consistent evidence
that the unexplained bank deposits in question were from a source that was not
taxable. While supporting, corroborating evidence in writing or from another
witness is not required of a taxpayer to discharge his burden of proof, it can
prove very helpful.
B. The
business expenses
[24]
CRA’s reason for disallowing the claimed
expenses is that they were entirely undocumented and unvouchered as to having
been incurred, been paid, or been related to his lawn maintenance and snow plow
business. In addition, he had claimed capital cost allowance (CCA) on the full
cost of his $52,000 truck as Class 10 instead of placing it in Class 10.1 which
limits the depreciable amount of such a vehicle to $30,000. He had also
deducted $1,600 of lawn mowing and trimming equipment in full in 2007 instead
of capitalizing it and claiming CCA.
[25]
Mr. Agostini maintains that he cannot produce
any supporting documents for his business expenses (or its revenues) because
his wife broke into his home and took all his business and tax records for
several years when she was separated from him and distressed, and after she
reported to CRA that he was not reporting all his income. This was not
mentioned by him at his first interview with CRA nor in his Notice of
Objection, though he claims the CRA auditor told him of his wife’s contact. He
said he first became aware of this after CRA contacted him to begin an audit.
Apparently, his house had been broken into earlier and he had not noticed these
were missing until he went to his desk and opened the drawer to retrieve them
for CRA. He went to the police station a few days after being contacted by CRA
and filed a police report that his tax returns and bills for the prior 4 or 5
years had also been taken in a previous break-in.
[26]
A very sketchy supplemental police report was
offered in evidence dated January 2010. It makes no reference as to when the
break-in occurred or was first reported, nor was the initial police report offered
in evidence despite the Respondent having asked for it more than once in the
history of this case.
[27]
Mr. Agostini first said that the break-in occurred
in 2010, which is very unlikely given that the supplemental police report was
filed in the first half of January 2010. It can be observed that the date of
the supplemental police report was cut-off in the copy submitted to CRA by his
prior counsel. In cross‑examination, he said the break-in occurred in
2007, which seems a most unlikely time to steal tax returns or many business
records for 2007 or 2008.
[28]
Mr. Agostini said he became aware of the
break-in when he was at his girlfriend’s (during his time of separation from his
wife) when police called him to say there had been a break-in at his house. He
went home to find his screen broken and could see that someone had gone through
his house. He then called the police to make a report that his house had been
broken into.
[29]
Mr. Agostini also maintained to CRA and the
Court that someone had broken into, or tried to break into, his safe at his
parent’s house in 2010. He did not wish to name his suspect. His wife, who
admitted to trying to kill him, to kidnapping their dog and killing it (for
which she served jail time), and to multiple attempts to take her own life, did
not admit to ever trying to break into the safe she was not aware of. His
mother, who was not aware of any such safe, was similarly unaware of any
break-in at her house (notwithstanding her signed Solemn Declaration which
refers to it).
[30]
Sonia Hamel testified that she broke into her
husband’s house in 2009. According to her, she went to his wardrobe closet, and
went to the box in which he kept his tax returns and related documents for 2007
and 2008 and destroyed them with his shredder at his home. She did not say she
took or destroyed any of his business, banking or financial records. She
testified that she broke into his house only that once and did not break into
his parent’s house.
[31]
While it is certainly arguable that the nature
and amount of expenses claimed appear reasonable for a one-person lawn
maintenance and snow plow business, and CRA did not deny them on the basis that
they were unreasonable, there is an extreme dearth of credible evidence that
such a business was even carried on by Mr. Agostini and was the source of any
material portion of the income in dispute. The Court heard his testimony that
he carried on a business with 20 customers in Mount Royal. He described it in a
schedule to his 2008 tax return as a landscaping business he carried on under
his own name. It is first referred to in the evidence as Dino’s Landscaping in
the February 2012 Spiegel Sohmer submissions, which also attaches a copy
of a cheque dated January 2012 to Dino’s Landscaping for $1,330 for one year
services for a client from June 2010 to June 2011. It is referred to in the
Notice of Appeal as Dino’s Landscaping/Paysagement. Mr. Agostini’s wife
and mother described him as being active in that business. That is really all
of the evidence the Court has of such a business. There is no letterhead or
bill head, bill pad, fee schedule, advertising materials, business cards or
flyers, credit card or bank statements, receipts or warranties for equipment
purchases, his truck or his plow, not even a photograph of his truck with a
plow attached and maybe a name and phone number on it, or anything similar. No
sensible explanation was offered for not even trying to locate any supporting
evidence from his banks, credit card issuers, customers, suppliers et cetera.
[32]
Given the particular dearth of evidence, its
significant inconsistencies, and the obvious credibility concerns, I am far
from being satisfied on a balance of probabilities that:
1) Mr. Agostini’s business records were taken by his wife and/or
shredded during a break-in; or
2) there was a break-in or an attempted break-in at his parents’ house
in 2010.
[33]
In these circumstances, I am left quite
uncertain that there was a landscaping and snow removal business at all,
notwithstanding the Minister of National Revenue’s (the “Minister”) assumption. If there was, I am not
satisfied on a balance of probabilities with reasonable, credible and
consistent evidence that the claimed expenses were incurred and paid, or if
they were, whether they related to that business.
C. Penalties
[34]
Mr. Agostini was assessed so-called gross
negligence penalties under subsection 163(2) in respect of the unreported
income. No penalties were assessed in respect of the disallowed expenses.
[35]
Mr. Agostini’s positon is simply that he did not
have any unreported income. He does not argue this was a reasonable oversight,
misclassification, mischaracterization or mistake, or that he otherwise had
exercised any form of due diligence.
[36]
The Respondent assessed penalties on the basis
that Mr. Agostini’s omission of including the unreported income assessed was
done knowingly, or that it resulted from gross negligence, given that the
amount was multiples of his reported income, he had not filed his 2007 return
until after a so-called arbitrary assessment was issued, he appeared very aware
of his business but was quite vague on specifics when asked, and his failure to
fully report his income occurred in more than one year – he was a repeat
offender.
D. Credibility
of evidence
[37]
Overall, Mr. Agostini’s testimony is almost
completely unsupported and it is riddled with obvious and inexplicable
inconsistencies; in addition, the evidence of his mother and his wife is vague,
evasive, inconsistent, non-specific and unhelpful. Hence, I cannot accept any
material portion of his evidence that is not corroborated with clear,
reasonable, consistent and credible evidence from another source. The testimony
of his wife and his mother fell far short of doing that with respect to the
unreported income, the existence of the safe, and the gifts of cash from his mother
and his wedding guests. Mr. Agostini offered no supporting evidence for his
expenses and the testimony of his wife is insufficient to support his
explanation of why he was unable to produce any.
II. Law
and Analysis
[38]
The law places the burden of proof on the
taxpayer with respect to the income tax assessed. In this case, I do not
believe the taxpayer’s evidence even rises to the level of the prima facie
case required to initially “demolish” any of the
Minister’s assumptions that are material to the assessments in question. The evidence in support of the
Appellant’s version of events certainly does not rise to a balance of
probabilities or more likely than not level.
[39]
In order to succeed in a tax appeal, a taxpayer
is not required to offer supporting or corroborating evidence, including
supporting documentation. A taxpayer can succeed on his own testimony if the
judge finds it credible, reasonable and sufficient. See for example the Supreme
Court of Canada in Hickman Motors Ltd. v. The Queen., [1997] S.C.R. 336,
the Federal Court of Appeal in House v. Canada, 2011 FCA 234, and former
Chief Justice Bowman of this Court in Merchant v. The Queen, 98 DTC
1734. This is not one of those cases; Mr. Agostini is not one of those
witnesses. The testimony of his mother and wife is quite insufficient in these
particular circumstances, as are a questionable photocopy of a locksmith receipt
and a sketchy police report.
[40]
Given my findings of fact set out above, Mr.
Agostini cannot succeed on the merits of his appeal from the additional tax
assessed resulting from his unreported income and the disallowed expenses.
[41]
His appeal of the penalties assessed still
remains to be decided. The burden is on the Respondent with respect to the
requirements of subsection 163(2) that there have been an omission or a false
statement in a return or answer, and that it was made knowingly or was
attributable to gross negligence. Simply because the taxpayer has not
discharged his burden of proof or prevailed with respect to the substantive income
tax issue, it does not follow that penalties are justified. See, for example, Syscomax
Inc. v. The Queen, 2014 TCC 202 at paragraph 23.
[42]
The Courts have written in detailed fashion on
the scope and nature of the burden on the Minister with respect to penalties in
cases such as this and on the scope of gross negligence, including wilful
blindness. I wrote on it most recently in Sbrollini v. The Queen, 2015
TCC 178 at paragraphs 14 to 21. I wrote on it also in Haniff v. The Queen,
2011 TCC 112 at paragraphs 25 to 27. In both of those cases, I quote from and
rely on the Federal Court of Appeal decision in Lacroix v. The Queen,
2008 FCA 241, which in turn quotes from the Federal Court of Appeal decision in
Molenaar v. The Queen, 2004 FCA 349.
[43]
The Lacroix case raised similar issues
regarding evidence on the substantive issue that was found not to be credible,
and set out what was required in such circumstances for the Minister to
discharge its burden with respect to penalties. In Haniff, I wrote:
27 The
taxpayer's counsel is correct in pointing out that the onus is on the Crown of
proving gross negligence in support of such penalties. However, as stated most
aptly by Pelletier J.A. of the Federal Court of Appeal in Lacroix v. Canada,
2008 FCA 241, 2009 DTC 5029:
29 … In the case at bar, the Minister
found undeclared income and asked the taxpayer to justify it. The taxpayer
provided an explanation that neither the Minister nor the Tax Court of Canada
found to be credible. Accordingly, there is no viable and reasonable hypothesis
that could lead the decision-maker to give the taxpayer the benefit of the
doubt. The only hypothesis offered was deemed not to be credible.
30 The facts in evidence in this case are such that the
taxpayer's tax return made a misrepresentation of facts, and the only
explanation offered by the taxpayer was found not to be credible. Clearly,
there must be some other explanation for this income. It must therefore be
concluded that the taxpayer had an unreported source of income, was aware of this
source and refused to disclose it, since the explanations he gave were found
not to be credible. In my view, given such circumstances, one must come to the
inevitable conclusion that the false tax return was filed knowingly, or under
circumstances amounting to gross negligence. This justifies not only a penalty,
but also a reassessment beyond the statutory period.
...
32 What, then, of the burden of proof
on the Minister? How does he discharge this burden? There may be circumstances
where the Minister would be able to show direct evidence of the taxpayer's
state of mind at the time the tax return was filed. However, in the vast
majority of cases, the Minister will be limited to undermining the taxpayer's
credibility by either adducing evidence or cross-examining the taxpayer. Insofar
as the Tax Court of Canada is satisfied that the taxpayer earned unreported
income and did not provide a credible explanation for the discrepancy between
his or her reported income and his or her net worth, the Minister has discharged
the burden of proof on him within the meaning of subparagraph 152(4)(a)(i)
and subsection 162(3).
33 As Justice Létourneau so aptly put
it in Molenaar v. Canada, 2004 FCA 349, 2004 DTC 6688, at paragraph 4:
4 Once
the Ministère establishes on the basis of reliable information that there is a
discrepancy, and a substantial one in the case at bar, between a taxpayer's
assets and his expenses, and that discrepancy continues to be unexplained and
inexplicable, the Ministère has discharged its burden of proof. It is then for
the taxpayer to identify the source of his income and show that it is not
taxable.
[Emphasis added.]
[44]
In Sbrollini, I wrote:
[21] According to the Federal Court of Appeal, in circumstances
where the Crown satisfies the Court on a balance of probabilities that a
taxpayer earned unreported income, the taxpayer must then provide a credible
explanation for the discrepancy between reported and actual income. It will not
be sufficient to come up with a possible or even plausible explanation, as that
would very significantly increase the Crown’s burden of proof which is clearly
no greater than a balance of probability standard. The Crown’s standard of
proof is no greater because it involves a penalty or a degree of culpability.
The taxpayer must satisfy the Court that his or her explanation for not
reporting the additional income, whatever the reason is, was itself reasonable
for the particular taxpayer in the particular circumstances at the time of
filing his or her return, on a preponderance of the evidence relevant to his or
her explanation.
[45]
The comments of Justice Pelletier in Lacroix and
Justice Létourneau in Molenaar are wholly apposite in this case. The
Respondent has discharged its burden with respect to penalties and the penalties
were validly assessed. Mr. Agostini’s appeal with respect to the assessed
penalties will also be dismissed.
III. Conclusion
[46]
The taxpayer’s appeal with respect to the 2007
and 2008 assessments which added unreported income, disallowed expenses and
imposed penalties with respect to the unreported income is dismissed with
costs. If the parties cannot agree on the amount of costs within 30 days,
written submissions are to be filed with the Court within a further 30 days.
Signed at Toronto,
Ontario, this 31st day of August 2015.
“Patrick Boyle”
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