Docket: A-241-16
Citation: 2017 FCA 134
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CORAM:
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DAWSON J.A.
WEBB J.A.
RENNIE J.A.
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BETWEEN:
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ANN KLUNDERT
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Appellant
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and
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HER MAJESTY THE
QUEEN
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Respondent
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Heard at Vancouver, British Columbia, on June 21, 2017.
Judgment delivered from the Bench at Vancouver, British Columbia, on
June 21, 2017.
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REASONS FOR JUDGMENT OF THE COURT BY:
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WEBB
J.A.
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Docket: A-241-16
Citation:
2017 FCA 134
|
CORAM:
|
DAWSON J.A.
WEBB J.A.
RENNIE J.A.
|
|
BETWEEN:
|
|
ANN KLUNDERT
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Appellant
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And
|
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HER MAJESTY THE
QUEEN
|
|
Respondent
|
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Vancouver, British
Columbia, on June 21, 2017).
WEBB J.A.
[1]
This is an appeal from the judgment of the Tax
Court of Canada (2016 TCC 130) dismissing Ann Klundert’s appeal from the
assessment dated June 25, 1999 issued under subsection 160(1) of the Income
Tax Act, R.S.C. 1985, c.1 (5th Supp.) (ITA). Section 160 allows the
Minister to assess a person for the tax liability of that person’s spouse if
property is transferred to that person by his or her spouse and provided that
the assessment is limited to the lesser of the amount of the tax debt of the
transferor (as determined under that section) and the amount by which the fair
market value of the property transferred exceeds any consideration given for
such property.
[2]
Ann Klundert’s spouse (Dr. Jack Klundert) is an
optometrist. During the years 1993 to 1997 he was practising in Ontario. For
each of these years he filed income tax returns claiming that he was not
obligated to pay income taxes on his income. In 2010 he was convicted of tax
evasion in relation to his failure to report income ranging from $241,625 to
$434,931 for these years. Dr. Klundert was also assessed under the ITA for
these years. His appeal of these assessments was not successful.
[3]
Prior to May 18, 1994, Dr. Klundert had directed
the Ontario Health Insurance Plan (OHIP) to deposit the payments for his
services into a joint bank account that he held with his spouse. Commencing May
18, 1994, he changed the instructions and directed OHIP to deposit the payments
for his services into Ann Klundert’s bank account (which was with same branch
as the joint account). From May 1994 to December 1997 a total of $959,403 was
deposited by OHIP into this account. For the taxation years 1993 to 1996 Dr.
Klundert had failed to pay income taxes of $993,730 under the ITA. As of
January 2012, the tax debt of Dr. Klundert was reduced to $145,357.
[4]
The only issues before the Tax Court were
whether the payments by OHIP to Ann Klundert’s bank account were transfers of
property made by Dr. Klundert and whether any consideration had been provided
by Ann Klundert for the deposits that were made to her account.
[5]
The Tax Court Judge found that the deposits made
to Ann Klundert’s bank account were transfers made to her by Dr. Klundert as
they were payments by OHIP for his services and she was the legal and
beneficial owner of these funds once they were deposited into her account. In
this appeal Ann Klundert raises the same arguments that were raised before the
Tax Court. We have not been persuaded that the Tax Court Judge committed any
error in determining that the funds became her property when they were
deposited into her bank account and therefore that Dr. Klundert transferred
property to her by directing OHIP to make these deposits.
[6]
The liability of Ann Klundert under paragraph
160(1)(e) of the ITA is limited to the lesser of:
(a) The amount by which the fair market value of the property
transferred to her exceeds the consideration given by her for the property; and
(b) The total liability of Dr. Klundert under the ITA in respect of the
taxation year in which the property was transferred or any preceding year.
[7]
There was no dispute that the relevant deposits
to Ann Klundert’s bank account totaled $959,403. There was also no dispute that
Dr. Klundert’s relevant tax liability was $145,367 as of 2012. Therefore, in
order for the limiting amount to the amount based on the fair market value of
the property transferred, the amount of the consideration given by Ann Klundert
would have to be in excess of $800,000. In light of this, Ann Klundert did not
pursue her arguments related to the consideration.
[8]
As a result the appeal will be dismissed, with
costs.
"Wyman W. Webb"
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