Date: 20090303
Docket: A-68-08
Citation: 2009 FCA 63
CORAM: DÉCARY J.A.
SEXTON J.A.
BLAIS J.A.
BETWEEN:
VASUNDARA
RAGHAVAN
Appellant
and
HER
MAJESTY THE QUEEN
Respondent
Heard at Toronto, Ontario, on March 3, 2009.
Judgment delivered from the
Bench at Toronto,
Ontario, on March 3, 2009.
REASONS FOR JUDGMENT OF THE COURT BY:
BLAIS J.A.
Date: 20090303
Docket: A-68-08
Citation: 2009 FCA 63
CORAM: DÉCARY
J.A.
SEXTON J.A.
BLAIS
J.A.
BETWEEN:
VASUNDARA RAGHAVAN
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
BLAIS J.A.
[1]
At issue
in this case is whether the appellant, Vasundara Raghavan, can deduct certain
business expenses in excess of revenue reported in the 2001, 2002 and 2003
taxation years based on whether the appellant undertook a bona fide
business venture during those years, or, as the respondent, Her Majesty the
Queen, claims, whether she simply undertook to manufacture tax deductions for
those years.
[2]
The first purported
business carried on by the appellant during the relevant years was described as
a website consulting business which provided assistance to individuals setting
up their own websites. It started in 2001 and ceased its operations
approximately two years later. The second business was described as developing
an internet-based interactive educational program to be used by children and
parents. The business is still in operation in the development stage and is
expected to generate revenues at some point in the future.
[3]
Between
2001 and 2003, the appellant sought to deduct business losses totalling more
than $65,394.47. The majority of the business expenses she claimed were in the
form of hourly wages paid to the appellant’s three children between 14 and 23
years old at the time of the operation and to Ms. Sudha Kothandaraman, the
appellant’s former babysitter. These wages totalled approximately $61,000 over
the relevant taxation years and the wages were paid in cash on an irregular
basis. Other expenses included costs for computers and supplies, home related
expenses, life insurance premiums and the appellant’s husband’s professional
engineering dues.
[4]
The
appellant claims that the website consulting business brought in gross revenues
of $3,300.55. The educational program business did not bring in any revenue as
it was still in development.
[5]
The
Minister of National Revenue disallowed the business expenses claimed in excess
of the revenues reported for each taxation year. The respondent suggests that
the appellant was not engaged in a bona fide business and is simply
attempting to manufacture tax deductions.
[6]
At trial,
Justice Woods concluded that the website consulting business was not a bona
fide commercial activity and dismissed the appeals for 2001 and 2002
taxation years. She further went on to find that the educational program was a
commercial activity but only allowed $2,000 in deductions. In coming to her
decision, Justice Woods made several strong statements regarding the
inconsistent, vague and unreliable nature of the evidence and the testimony of
the appellant and her husband.
[7]
We are of
the opinion that the Tax Court Judge followed the required analysis by
determining that there was no commercial activity with respect to the website
consulting business but accepted that there was an educational program
development business by giving the appellant the benefit of the doubt.
[8]
In our
view, the trial judge carefully reviewed the evidence provided by the parties;
in reviewing the trial judgment, we see no error that justifies the intervention
of our Court.
[9]
In
conclusion, the appellant’s arguments fall short of demonstrating that the Tax
Court Judge made a palpable and overriding error or applied the incorrect legal
test in her judgment. On this basis I would dismiss the appeal with costs.
“Pierre Blais”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET:
A-68-08
STYLE OF CAUSE: VASUNDARA
RAGHAVAN v. HER MAJESTY THE QUEEN
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: MARCH 3, 2009
REASONS FOR JUDGMENT
OF THE COURT BY: (DéCARY, SEXTON & BLAIS JJ.A.)
DELIVERED FROM
THE BENCH BY: BLAIS J.A.
APPEARANCES:
Mrs. Vasundara Raghavan
FOR THE APPELLANT
Mr. Craig Maw
FOR THE RESPONDENT
SOLICITORS OF RECORD:
Vasundara Raghavan
FOR THE APPELLANT
Mississauga, Ontario
John H. Sims, Q.C.
FOR THE RESPONDENT
Deputy Attorney General of Canada
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