Hokhold - Tax Court of Canada denies bad debt deduction where the timing and specific identity of the bad debts were unidentified
Partly as a delayed consequence of CRA’s seizure of computers and dental equipment of a dental practice and the misplacing of records when his practice subsequently was closed, the dentist was only able to collect a portion of the revenues that he had included in his 2005 to 2008 returns. However, he was denied a bad debt deduction.
First, he was unable to identify which specific debts had gone bad. Paris J stated:
I cannot see how the Appellant in this case could have made such a determination [of uncollectibility] without knowing who his debtors were or what amount they owed him.
Furthermore, his missing records precluded him from identifying the specific year in which those debts went bad, as explicitly required by s. 20(1)(p)(i).
Neal Armstrong. Summary of Hokhold v. The Queen, 2017 TCC 217 under s. 20(1)(p)(i).