Date: 20111028
Docket:
T-372-11
Citation:
2011 FC 1232
[UNREVISED ENGLISH
CERTIFIED TRANSLATION]
Ottawa, Ontario, October 28,
2011
PRESENT: The Honourable
Mr. Justice Scott
BETWEEN:
|
|
IN THE MATTER OF THE INCOME TAX ACT
and
|
|
|
IN THE MATTER OF NOTICES OF ASSESSMENT BY THE MINISTER OF
NATIONAL REVENUE UNDER THE INCOME TAX ACT, THE CANADA PENSION PLAN
AND THE EMPLOYMENT INSURANCE ACT
|
|
|
AGAINST:
|
|
|
MEDHI TEHRANI
3718
Roger Lemelin
Saint-Laurent, Quebec H4R 2Z5
|
|
REASONS FOR
JUDGMENT AND JUDGMENT
I. Introduction
[1]
This is an application for review of an order for immediate collection
under subsection 225.2(8) of the Income Tax Act, RSC 1985, c 1 (5th
Supp) (ITA) filed by Medhi Tehrani (applicant). The purpose of the application is to set aside the order for immediate
collection issued by the Federal Court on March 7, 2011 (Order), which
allowed Her Majesty the Queen (respondent) to take the actions described in paragraphs 225(1)(a)
to (g) of the ITA.
[2]
The
applicant is also seeking to have all writs of
seizure issued by the Court following the Order set aside and all seizures
pursuant to these writs released. He also seeks the cancellation of all legal hypothecs
registered against his assets and the setting aside of all proceedings or other
measures, regardless of their nature, undertaken under the terms of the Order.
[3]
For the following reasons, the Court dismisses this application for
review of the Order.
II. Facts
A. The audit of
Yvon Talbot
[4]
In
June 2009, Yvon Talbot, auditor at the Enforcement Division (auditor), Canada
Revenue Agency (CRA), began an audit of the applicant’s file for the years 2004
to 2008.
[5]
At
the time of the audit, the applicant was a shareholder in the companies 9163-4840
Québec Inc. (with delivery truck rental as the reported activity), 9140-0333
Québec Inc. (a holding company) and 9187-3729 Québec Inc. (with the renovation
of non-residential immovables as the reported activity).
[6]
The
applicant had also performed the duties of vice-president of the Montréal Aviron
Technical Institute for several years. This company belongs to his brother, Reza
Tehrani. Its work is based in the field of teaching and personal and public
training.
[7]
The
auditor reviewed the applicant’s assets. They essentially included bank
accounts, accounts receivable and investments, jewellery, vehicles and
immovables. The auditor also noted a loan of $340,000 from the applicant to 9119-5594
Québec Inc. as an investment. Copies of two cheques were filed in a bundle as Exhibit E
in the respondent’s motion record, volume 1. The investment project did
not materialize as hoped and the applicant requested reimbursement. Ms. Cocos, a majority shareholder and director of 9119-5594
Québec Inc. told the auditor that she and her husband, Mr. Brinza, had started to reimburse the applicant in August 2010,
in payments of $5,000 to $10,000.
[8]
The
auditor identified another sum owed by 9132-3394 Québec Inc. The applicant confirmed
to the auditor that the amount of $220,000 has been owing to him since 2004. The
company 9132-3394 Québec Inc. belongs to the applicant’s mother, Fourogh
Rezmahand, as it appears in the enterprise register, a copy of which is
submitted as Exhibit G in the respondent’s motion record, volume 1.
[9]
The
auditor also noted the purchase in 2008 of a 2003 Mercedes for $69,982.50.
Copies of payments made are filed as Exhibit H in the respondent’s motion
record, volume 1.
[10]
The
auditor determined that the net value of the applicant’s assets has fluctuated
over the years in the following manner:
1.
Year
2004 – $326,998
2.
Year
2005 – ($65,100)
3.
Year
2006 – $241,577
4.
Year
2007 – $56,297
5.
Year
2008 – $54,113
[11]
In
addition, the auditor noted that, based on certain bank accounts and credit
card statements, the applicant spent $1,223,275 during the same period.
[12]
The
applicant also received shareholder benefits totalling $1,556,266. They came in
part from 9140-0333 Québec Inc., of which the applicant was a majority shareholder and sole director at the time
of the audit. Since it was created in 2004, 9140-0333 Québec Inc. has never filed
an income tax return with the CRA. The auditor identified numerous
cheque withdrawals made by the applicant, for his personal benefit, from the
bank accounts of 9140-0333 Québec Inc.
[13]
The
applicant also received benefits from the company 9187-3729 Québec Inc., of
which he was the sole shareholder at the time of the audit. Since its creation,
9187-3729 Québec Inc. had never filed an income tax return. However, it did so
on August 16, 2010, since it filed income tax returns for 2007 and 2008, as
it appears in a copy of the returns filed in the respondent’s motion record,
volume 1, as Exhibit I. Following the filing of these income tax
returns, notices of assessment totalling $34,956.46 were issued against 9187-3729
Québec Inc. This amount remains outstanding to date.
[14]
The
auditor noted numerous cheque withdrawals made by the applicant, for his
personal benefit, from the bank account of 9187-3729 Québec Inc. He treated
these amounts as shareholder benefits.
[15]
The
audit established that the applicant received unreported income of $3,108,468.81
for all the years audited.
[16]
On
March 11, 2010, notices of assessment totalling $1,365,808.25 were issued
against the applicant.
[17]
On
March 11, 2010, the applicant filed an objection against these notices of
assessment (respondent’s motion record, volume 1, as Exhibit J).
B. Collection
investigation by André Laurendeau
[18]
As
it appears in his affidavit of March 3, 2011, André Laurendeau, Resource
and Complex Case Officer at the CRA, confirmed having prepared an analysis of the
possibility of collecting the applicant’s debts. It mentions that as far as the
CRA is aware, the assets belonging to the applicant and his companies are those
described below:
1.
Immovable
at 3718 Roger-Lemelin Avenue, Montréal. This immovable was
acquired by 9140-0333 Québec Inc. on June 4, 2004, for $894,000 and resold
by it on November 17, 2006, to Medhi Tehrani for $1, subject to the hypothec,
as it appears in the deeds of sale and the index of immovables, copies of which
are filed as Exhibits AA and BB in the respondent’s motion record, volume 2.
According to an assessment conducted by ABMS for the Bank of Montréal on March 11,
2009, this immovable has a fair market value of $1,075,000. It is charged with two
hypothecs, one in the amount of $550,000 published on June 3, 2004, and
the other in the amount of $250,000 published on May 4, 2009, which may
leave $325,000 in equity (respondent’s motion record, volume 2, Exhibit B).
On June 14, 2010, the applicant’s mother published a hypothec in the
amount of $300,000 on the said immovable, as it appears in the deed of hypothec,
a copy of which is filed as Exhibit C of the respondent’s motion record,
volume 2.
2.
Immovable
12068-12072A, Joseph-Casavant Street, Montréal. The applicant
purchased this immovable on June 27, 2006, for the price of $375,000, as
it appears in the deed of sale filed as Exhibit D of the respondent’s
motion record, volume 2. According to the 2010 property assessment roll, this
immovable has a value of $340,900, as it appears on the said roll, a copy of
which is filed as Exhibit E of the respondent’s motion record, volume 2.
It is charged with a hypothec with the Royal Bank in the amount of $200,000, published
on June 29, 2006, which could leave $140,900 in equity. However, the
applicant’s mother published a hypothec of $200,000 on this immovable on June 14,
2010, as it appears in the deed of hypothec reproduced in the respondent’s
motion record, volume 2, as Exhibit F.
3.
Company
9163-4840 Québec Inc. This company has been incorporated since December 10,
2005. According to its balance sheet of November 30, 2008, 9163-4840
Québec Inc. reported assets valued at $75,610 including $1,040 in cash, $52,324
owed by the shareholder, equipment valued at $8,851 and a deposit of $13,395. As
to liabilities, they amount to $24,154, leaving the shareholders’ net worth at $51,456.
This company only filed income tax returns for the taxation years of 2006 and
2007. These returns were filed late, on December 20, 2007, for the year
2006 and on March 17, 2009, for the year 2007. After these returns were
sent, notices of assessment in the amount of $31,496.41 were issued against
9163-4840 Québec Inc. on March 1, 2010. On March 31, 2010, 9163-4840
Québec Inc. filed amended income tax returns showing an increased amount. The
company disputes the amount claimed in the notices of assessment.
4.
Investments. The applicant contributes to a registered retirement savings plan
(RRSP) that he has had with the Royal Bank of Canada since 2003. This RRSP has
not been cashed to date. In 2008, the applicant received interest income
of $2,011.75 according to a T-5 statement issued by the Royal Bank, a copy of
which is filed as Exhibit G in the respondent’s motion record, volume 2.
This interest comes from an investment with an estimated value of $100,000 and a
deemed interest rate of 2% per year. In 2009, the applicant received interest income
of $581.35 according to a T-5 statement issued by the Royal Bank, a copy of
which is filed as Exhibit H in the respondent’s motion record, volume 2.
This interest comes from an investment with an estimated value of $29,000 and a
deemed interest rate of 2% per year. In 2010, no T-5 statement was issued by
the Royal Bank, as it appears in the statement of worksheets for the year 2010,
a copy of which is filed as Exhibit I in the respondent’s motion record,
volume 2. Mr. Laurendeau found that the applicant had liquidated his
investments at the Royal Bank during the years 2009 and 2010.
5.
CIBC
Wood Gundy Account. On February 19, 2010, the applicant
withdrew $30,935.14 from his account after receiving his notice of assessment. The
statement of account is reproduced as Exhibit J in the respondent’s motion
record, volume 2. He withdrew $8,219.89 from this same account on March 19, 2010. Following
this withdrawal, the account balance was $4.32 (Exhibit K of the
respondent’s motion record, volume 2).
6.
Creditor. The applicant
holds debts totalling $560,000 against 9119-5594 Québec Inc. and 9132-3394
Québec Inc.
7.
Motor
vehicle. Last, the applicant purchased a 2003 Mercedes for
$69,982.50.
[19]
Mr. Laurendeau
stated that the applicant’s conduct toward the taxation authorities and his
actions after receiving notices of assessment led him to believe that collection
of the CRA’s debt could be in jeopardy if the Court were to allow the
application. The applicant’s mother published hypothecs after the notices of
assessment were issued and the applicant liquidated several investments. These
facts weigh against allowing the applicant’s application to set aside the Order.
In addition:
1.
On
June 22, 2010, Mr. Laurendeau called the applicant to ask him why the
hypothecs were published. The applicant confirmed that he owed a debt to his
mother. Being then aware of her son’s tax debt, she took measures to protect
herself by publishing these two hypothecs.
2.
During
a telephone conversation with Mr. Laurendeau on July 5, 2010, the
applicant told him that he had liquidated several investments in 2008 to
purchase a car (2003 Mercedes). On April 6, 2011, the applicant wrote in
his affidavit that he is no longer the owner of the vehicle since he sold it to
Messod Bendayan on January 12, 2010, for $27,000 in cash. Mr. Bendayan
stated, during a telephone conversation with Mr. Laurendeau, that he had obtained
a discount on the sale price of the vehicle since he paid for it in cash.
3.
Finally,
Mr. Laurendeau analyzed the applicant’s bank accounts. He noted on May 20, 2009, that
the balance of account 06941-5038211 at the Royal Bank of Canada was $58,115.52
(see the history of this account as Exhibit A of André Laurendeau’s additional
affidavit of July 13, 2011). Between May 20, 2009, and July 8,
2010, eight transfers/withdrawals were made, leaving a balance of $105.06 in
the account. Some of these transfers/withdrawals were made after the audit. Mr. Laurendeau
did not have all the exhibits related to these transfers; he could not identify
where the funds were transferred to. However, following the seizure executed on
the applicant’s account on March 9, 2011, the CRA received a total of
$771.69.
C. Application
under section 225.1 of the ITA
[20]
In
its ex parte application filed without a personal appearance on March 4,
2011, the respondent requested the Federal Court’s authorization to take forthwith
the actions provided under section 225.1 of the ITA so as to collect
and guarantee payment
of $1,406,269, with interest compounded daily at the rate
prescribed under the ITA, owed by the applicant.
D. Order of the
Federal Court
[21]
On
March 7, 2011, the Federal Court allowed the respondent’s application in
its entirety. The Court then decided that there were reasonable grounds to
believe that granting a delay to the applicant to pay the said amount would jeopardize
collection in whole or in part.
III. Issue
·
Are
there reasonable grounds to believe that the collection of the amounts claimed would
be jeopardized in whole or in part if the Court were to allow the application
for review of the Order and grant the applicant a delay in payment?
IV. Legislation
[22]
The
relevant legislation is reproduced in the Annex to these reasons.
V. Positions
of the parties
A. Position
of the applicant
[23]
The
applicant submits that there are no reasonable grounds in this case to believe
that the collection of the amounts claimed by the CRA would be jeopardized
under subsection 225.2(2) of the ITA. The Court must verify whether it is
reasonable to believe that such grounds exist.
[24]
He
presented an overview of the case law and reiterated seven important points that
justify the validity of his application.
[25]
In Danielson v Canada (Deputy Attorney General),
[1987] 1 FC 335, [1987] FCJ No 519 at para 7 (Danielson), Justice
McNair wrote: “The test of whether ‘it may reasonably be considered’ is
susceptible of being reasonably translated into the test of whether the
evidence on balance of probability is sufficient to lead to the conclusion that
it is more likely than not that collection would be jeopardized by delay”. The
applicant argues that the Court could not make such a finding in this case.
[26]
It is also alleged that subsection 225.2(2) of the ITA only applies
in exceptional cases. According to the applicant such circumstances do not
exist in this case (Deputy Minister of National Revenue, Taxation v
Shelley Dawn Quesnel, 2001 DTC 5602, at para 23 (Quesnel), citing
Canada v Laframboise, 86 DTC 6396).
[27]
Mere suspicions are not sufficient to find that granting a delay
to the applicant would jeopardize the collection of amounts owed (Naber (Re),
[2004] 2 CTC 360).
[28]
The applicant also claims that the inability to pay is not
sufficient justification to enable the respondent to take exceptional measures using
the ITA (see Danielson, above).
[29]
The applicant points out that the respondent has the burden to justify
the decision granting the Order for immediate collection (see Quesnel,
at para 25). The respondent must show that there are “reasonable grounds
for believing that the taxpayer would waste, liquidate or otherwise transfer
his assets so as to become less able to pay the amount assessed and thereby jeopardizing
the Minster’s debt” (see Canada v Golbeck, [1990] FC No
852, 90 DTC 6575 (Golbeck)). The applicant argues that he did not
attempt to waste, liquidate or transfer his assets so as to avoid paying the
amounts claimed by the CRA and evade his responsibilities to the taxation authorities.
[30]
The applicant points out that the long delay between issuing the notices
of assessment on March 11, 2010, and filing the application for authorization
to proceed forthwith on March 3, 2011, shows that granting a delay to pay
the amounts claimed from him while the assessments are being disputed would in
no way jeopardize the collection of the said amounts.
[31]
The applicant further claims that his actions do not prove in any
way that he does not intend to pay his tax debt if it is upheld despite his objection.
[32]
The applicant considers that his loss of status as majority
shareholder and director of 9140-0333 Québec Inc. and 9187-3729 Québec Inc. is
not relevant in justifying an application for immediate collection. In fact,
these are private companies and the shares he holds are of minimal value. A
third party would not benefit from them.
[33]
Furthermore, the applicant denies that he disposed of the shares in
9140-0333 Québec Inc. and/or ceased to act as director. He argues that the
changes that were reported to the Quebec enterprise register were without his
knowledge. This is why he intends to undertake the proceedings required to
remedy this situation.
[34]
In addition, he states that some clarifications must be made to the
respondent’s statements with respect to the liquidation of his investments. As it
appears in paragraphs 20 to 28 of the affidavit of Mr. Laurendeau, the
applicant had approximately $140,000 at some point between 2008 and 2010.
[35]
It should be noted that the investments that the respondent refers
to in her application for immediate collection were withdrawn prior to issuing
the notices of assessment. According to Mr. Laurendeau’s statements, approximately
$100,000 was withdrawn in 2008 and 2009, before the notices of assessment were
issued. The amounts withdrawn were therefore not intended to jeopardize the future
collection of the amounts that were to be assessed later.
[36]
The applicant withdrew $66,000 in 2008 to purchase a 2003 Mercedes.
This withdrawal was prior to the audit.
[37]
As for the other withdrawals, the applicant points out that they
were purely one-time withdrawals and reiterated that they were partly reinvested
in his RRSP.
[38]
The applicant argues that the hypothecs granted to his mother guarantee
the repayment of loans that had existed for some time. He points out that these
hypothecs were published three months after the notices of assessment were
issued and several months before the respondent’s application. As it appears in
Mr. Laurendeau’s sworn statement, the respondent had known since June 22,
2010, that hypothecs of $500,000 in value had been published on June 14,
2010, against the properties of the applicant or of his companies. The
respondent had been aware of their existence since June 22, 2010, and
filed her application only in March 2011. According to the applicant, the
time elapsed confirms that there was no urgency to collect the amounts. He
points to some excerpts of Mr. Laurendeau’s examination relating to the dates
and explanations provided to explain the 9 months that elapsed between learning
of the hypothecs and filing the application to obtain the Order.
[39]
The applicant further argues that he did not liquidate any of his
assets since the notices of assessment were issued so as to remove them from
his patrimony.
[40]
The respondent claims that the applicant made several misrepresentations.
The applicant allegedly failed to report $3,108,468.81 of income between the
years 2004 and 2008. The applicant explains that he is disputing this amount.
[41]
Further, the applicant argues that it is incorrect to claim that
he failed to report certain assets or facts during his meeting with the auditor
or during telephone conversations with the collections officer, Mr. Laurendeau.
[42]
No omission was made as to the 2003 Mercedes. In addition, the
applicant no longer owned the vehicle at the time of the June 22, 2010, conversation
with Mr. Laurendeau.
[43]
The applicant argues that he did not omit anything regarding the $340,000
that 9119-5594 Québec Inc. owes him.
[44]
The respondent’s allegations as to the applicant’s fiscal
behaviour are not conclusive, such as the applicant disputing the amounts
claimed and the merit of the notices of assessment. The courts have already
decided that the nature of an assessment and its merit are not relevant criteria
in obtaining an order for immediate collection.
[45]
In this regard, the applicant cites Minister of National
Revenue v Services M.L. Marengère Inc, 2000 DTC 6032 at para 64
(Marengère), which, in his view, confirms this principle in the
following terms: “the issue of the correctness of the assessments is one which
will be resolved in another forum”. He believes that the respondent’s allegations—that
the collection of the debt could be jeopardized if a delay were to be granted
to him while the objection to the assessments is taking place—cannot be accepted.
[46]
He claims that the evidence presented does not establish that
there is a risk that collection would be jeopardized. Moreover, there are reasonable
grounds to doubt that the criteria set out in section 225.2 of the ITA were
met. The applicant therefore argues that the Order was not justified and that
is why he requests that the Court allow his application and set aside the Order,
or alternatively, to change its content.
B. Respondent’s
position
[47]
A taxpayer seeking the review of an order for immediate collection
under subsection 225.2(8) of the ITA has the burden of showing that there
are reasonable grounds to believe that the criteria set out in subsection 225.2(2)
of the ITA were not met (see Marengère). In this case, the applicant cannot
discharge this burden.
[48]
The respondent in this case must persuade the Court, on the
balance of probabilities, that granting a delay could jeopardize collection of her
debt (see Marengère; Canada (Minister of National Revenue) v Blouin,
[2003] FCJ No 258, 2003 FCT 178 at para 3).
[49]
To determine whether the debt collection will truly be
jeopardized, the taxpayer’s conduct must be analyzed, while considering the
nature of the tax debt (Canada (Deputy Minister of National Revenue) v
Iura, [2001] BCJ No 68 at para 44). The taxpayer’s failure to
report income or the unorthodox way he conducts his business can also be taken
into consideration (Canada (Minister of National Revenue - M.N.R.) v Rouleau,
[1995] FCJ No 1209, 101 FTR 57 at para 8 (Rouleau)). The size of
the debt in relation to the reported income (Canada (Minister of National
Revenue) v Calb, [1997] FCJ No 1033, or the fact that the
taxpayer has made misrepresentations (Canada v Chamas,
2006 FC 1548, [2006] FCJ No 1933 (Chamas)) can also be taken into
consideration. The same is true if the taxpayer shelters a significant asset
from the taxation authorities or if all the assets are insufficient to repay
his tax debt (Golbeck), above; Canada (Customs and Revenue Agency) v
144945 Canada Inc, [2003] FCJ No 937, 2003 FCT 730).
[50]
In this case, the respondent alleges that the evidence filed in
support of her application to obtain the Order meets all the criteria because:
1.
The applicant did not report income totalling $3,108,468.81. The
applicant incurred personal expenses through his bank accounts and credit cards
amounting to $1,223,275. He appropriated funds from his companies 9140-0333
Québec Inc. and 9187-3729 Québec Inc. totalling $1,556,266.
2.
These companies are not meeting their fiscal obligations because 9140-0333
Québec Inc. has never filed any income tax returns since it was created,
whereas 9187-3729 Québec Inc. only filed returns after it received notices of
assessment. Assessments of $34,956.46 remain unpaid.
3.
The applicant is involved in two companies that produced invoices
of convenience to benefit other companies belonging to his brother, Reza
Tehrani. The applicant did not report his involvement in 9187-3729 Québec Inc. and
6092055 Canada Inc. to the auditor.
4.
The applicant provided false information regarding his income by
reporting higher income in his financing applications with financial institutions.
5.
In addition, after receiving the auditor’s draft assessment, the
applicant withdrew money and made transfers from his CIBC and Royal Bank of
Canada bank accounts.
6.
Three months after receiving the notices of assessment, the
applicant hypothecated his two immovables in his mother’s favour, all to
guarantee a debt that was allegedly contracted in 2005, more than six years
before, thereby wiping out any equity remaining on these assets.
[51]
In
the respondent’s view, the applicant’s claims are insufficient to dispute the validity
of the impugned Order. The applicant argues that the delay between the date
that the notices of assessment were issued and the date of obtaining the Order shows
that any other delay that he may be granted would not jeopardize the collection
of the tax debt. In response, the respondent reiterates that the hypothecs
published on the two immovables caused her injury. There was no other choice
than to obtain a declaration that the act may not be set up against her to attack
these acts. Article 1635 of the Civil Code of Quebec (CCQ) provides
a time frame of one year from the day on which the creditor learned of the
injury resulting from the publication to attack the validity of these acts or it
is forfeited. To be able to take this action, the CRA had to obtain the order
for immediate collection. Therefore, any other delay granted to the applicant would
cause it injury. The Court cannot agree with the applicant’s opposing argument that
the time elapsed would prove the lack of jeopardy. It was during the delay
between sending the notices of assessment and filing the application that the hypothecs
were published.
[52]
The
applicant claims that the loss of his status as majority shareholder and
director of 9140-0333 Québec Inc. and 9187-3729 Québec Inc. occurred after the
CRA’s audit and is therefore not relevant because these companies have no value.
The respondent argues, on the contrary, that the applicant should have informed
the auditor of this.
[53]
The
applicant submits that he answered all of the auditor’s and Mr. Laurendeau’s
questions. According to the respondent, the applicant’s misrepresentations may have an impact on the Court’s decision (see
Chamas at paras 25-27).
[54]
The
respondent argues that the applicant still refuses to disclose all of his
assets. Mr. Laurendeau made a request to this effect and the applicant did
not follow up on it. Since obtaining the Order and following the seizures executed
by the CRA, the applicant requested and was granted release of two seizures of rent
to help him make his hypothec payments. Since then, he asked for other releases
to pay his expenses. Mr. Laurendeau asked for a list of his assets. The
applicant did not provide this information. These actions are evidence of his
refusal to disclose all his assets to the CRA.
[55]
The
respondent argues that all these facts are sufficient to warrant upholding the Order.
VI. Analysis
[56]
In
an application filed under subsection 225.2(8) of the ITA, the respondent must
justify the Order. However, it is the taxpayer who has the initial burden of
proving that there are reasonable grounds to believe that the criteria for
issuing an order have not been met (see Rouleau at para 3; and
Canada v Duncan, [1992] 1 FC 713).
[57]
In Canada (Ministre du Revenu National) c. Fiducie
Dauphin, 2010 CF 1144, 2010 DTC 5194 (Fiducie Dauphin) the Court
writes in paragraph 24:
[Translation]
The
case law has recognized that the presence of one or more of the following
factors may justify a jeopardy collection order:
A. The fraud or the
unorthodox actions of the taxpayer …
B. The liquidation or
transfer of the assets by the taxpayer regardless of his intention …
C. The taxpayer’s lifestyle
that is incompatible with his tax debt …
D. The nature of the
assessments and the fiscal behaviour of the taxpayer …
[58]
In this case, the Court finds that the applicant did not establish
that there were reasonable grounds to believe that the respondent does not
meet the criterion set out in subsection 225.2(2)
of the ITA. For the following reasons, the Court upholds the Order.
[59]
By reiterating the time elapsed between issuing the notices of assessment
and obtaining the Order, the applicant is trying to persuade us that
granting a delay would in no way jeopardize collection of the CRA’s debt. I am
not so persuaded. The hypothecs granted to his mother
on two of his immovables for the purpose of securing his debts paralyze the CRA’s
possibility of collecting on his most significant assets. The CCQ provides a
delay of one year from the day on which the creditor learned of the injury
resulting from the act which is attacked to bring its declaration that
the act may not be set up against it for the hypothecs
granted. Granting the applicant’s application would jeopardize the CRA’s action.
[60]
In addition, the evidence before us establishes that the applicant
made numerous misrepresentations.
[61]
First, the applicant claims to dispute the notices of assessment issued
to him, which attributed a total income of $3,108,468.81 to him during the
years 2004 to 2008. He explains that his actions were due to his objection to
the amount calculated by the CRA.
[62]
The Court cannot accept this argument since the applicant did not
file any tangible evidence to establish that he was disputing the amount of
income that the CRA auditor attributed to him.
[63]
Second, the applicant failed to mention his involvement in 9187-3729
Québec Inc. and 6092055 Canada Inc. during his interview with auditor Talbot.
These companies are the originators of numerous invoices of convenience issued
to benefit the companies of the applicant’s brother. It appears, from the affidavit
of auditor Talbot, that 6092055 Canada Inc. claimed in its annual returns from 2005
and 2006 that it had no paid employees. It also does not have an employer number.
Nevertheless, during this same period, it issued invoices to several companies
belonging to Reza Tehrani, the applicant’s brother (see the invoices issued to Aviron,
9114-8536 Québec Inc. and 9044-6808 Québec Inc. as filed in the respondent’s
motion record, volume 1, as Exhibit W).
[64]
The auditor established that 3140-0333 Québec Inc. was an accommodator
for Aviron, which thereby received payments amounting to at least $305,902 during
the years 2004 to 2008. These amounts were reported as business expenses for
Aviron.
[65]
Auditor Talbot’s analysis established that 9187-3729 Québec Inc. issued
invoices of convenience to Aviron and 9044-6808 Québec Inc., as it appears in
the invoices filed in the respondent’s motion record, volume 2,
as Exhibit FF. It should be noted that 9187-3729 Québec Inc. has no employees
and does not have an employer number.
[66]
Third, the applicant made misrepresentations to some financial
institutions. On the credit application to lease a 2007 Mercedes from the Laval
Mercedes Benz dealership, the applicant indicated that Aviron was his employer and
that he had a gross salary of $100,000. He signed this application on April 18,
2007. In point of fact, the applicant received a salary from Aviron of $60,313 in
2006 and $63,815 in 2007 (see Exhibits L and M in the respondent’s motion
record, volume 1).
[67]
Furthermore, in the applicant’s credit file at the Bank of
Montréal, located at 9150 De l’Acadie Boulevard, Montréal, a letter from Aviron
dated March 10, 2009, stated that the applicant earned an annual salary of
$125,000 plus a car allowance of $1,063 per month. The applicant reported gross
income of $69,956 for the year 2008 (see Exhibits N and O of the respondent’s
motion record, volume 1).
[68]
The auditor considered the applicant’s credit file with the Bank
of Montréal located at 274 Dorval, Montréal. He noted that the applicant
reported to the bank an income of $70,000 for the year 2001 and an income of
$72,000 for the year 2002. The summaries are reproduced in the respondent’s
motion record, volume 1, as Exhibit P. In fact, the income reported
by the applicant to the CRA is $34,346 for the year 2001 and $34,529 for the
year 2002, as it appears in Exhibit Q filed in the respondent’s motion
record, volume 1.
[69]
In addition, the evidence filed by the respondent confirms the applicant’s
refusal to provide the list of his assets.
[70]
By applying the criteria stated in Fiducie Dauphin to this
case, the Court finds that there are reasonable grounds to believe that
granting the applicant
a delay to pay the amounts claimed may jeopardize collection of the CRA’s debt,
in whole or in part. The Court finds that the applicant
did not meet his burden of proving that there are reasonable grounds to believe that the respondent does
not meet the criteria set out in paragraphs 225(1)(a) to (g)
of the ITA.
VI. Conclusion
[71]
Therefore, the Court dismisses the application for review of the Order
and confirms the decision (Order) of Justice Lemieux dated March 7, 2011, with
costs.
Email this Content