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Showing posts from April, 2011

One Large Tax Bill

Thursday, April 28, 2011 ...please explain where the money for these deposits came from... In Nowak v. The Queen (2011 TCC 3) the Tax Court of Canada addressed the issue of the Canada Revenue Agency's reassessments of an individual with unreported income.The facts of the case are cloudy for a number of reasons. The taxpayer's records of his income and expenses were incomplete and inconsistent. He was reluctant to answer questions posed by the auditor. And documents provided by the taxpayer raised more doubts and questions in the mind of the judge. The CRA claimed the taxpayer had unreported income in excess of $290,000 during the two tax years in question. The auditor determined these amounts from an analysis of banking records. In essence, the records showed deposits that were clearly not reported as income.As the judge notes, the burden is on the taxpayer to demonstrate the money received is not income subject to tax.In this case the judge writes,[25] The first issue is …