The individual taxpayer (“Raich”), who was a senior tax partner of a Montreal law firm, sought and received reimbursement from the firm’s management company (Spiegel Sohmer Inc, of which Raich was the largest shareholder) for 97/218 of the $169,000 cost of the Montreal wedding of Raich’s daughter in 2012. This amount was calculated by him on the basis that 97 of the 218 guests at the reception were clients, business contacts or partners of Raich. In maintaining that the reimbursed amount was deductible in computing its income, Spiegel Sohmer Inc. submitted that such expenses were incurred “in order to solidify the professional and commercial relations of Mr. Raich with his clients” (para. 30, TaxInterpretations translation).
In finding that the reimbursed expenses were non-deductible, and that their reimbursement gave rise to a taxable benefit to Raich, Bourgeois JCQ noted that no former partner of Raich had testified as to what discussions had occurred regarding the expense reimbursements and the business opportunity arising from the marriage of Raich’s daughter, and stated that it accordingly was impossible for the Court “to determine if such event presented an important promotional aspect to the firm” (para. 43).