Canada v. Chopp
A-87-95
Denault J.A. (ex officio)
13/11/97
4 pp.
Appeal from Tax Court decision allowing appeal from reassessment in respect of 1989 taxation year-Erroneous posting of payment of part of purchase price of new home ($28,490.37 cheque issued by taxpayer's daughter on corporation's bank account while taxpayer away on vacation) as corporate expense while should have been debited to shareholder's loan account-When error discovered in 1991, corporate expense disallowed, and taxpayer reassessed to increase income on basis corporation had conferred benefit on him as shareholder pursuant to Act, s. 15(1)-In allowing appeal, Tax Court Judge interpreted Act, s. 15(1) as providing benefit may be conferred within meaning thereof without actual knowledge or intent where shareholder or corporation ought to have known benefit was conferred and did nothing to reverse benefit-And even where genuine bookkeeping error, court may conclude error should have been caught by corporation or shareholders or outside auditors-Evidence reasonably supporting Tax Court Judge's finding posting of amount as corporate expense when should have been debited to shareholder's loan account due to taxpayer's ignorance and innocence in not knowing error had been made-No reason to intervene with respect to Tax Court Judge's interpretation of Act, s. 15(1)-In Long v. Canada, [1997] T.C.J. No. 722, Tax Court Judge found simple error (failure to adjust loan account), readily susceptible of correction, not creating taxability, adding bookkeeping error of which sole shareholder not aware and which he did not sanction and that was not in accordance with company's established practices not constituting in reality method, arrangement or device for conferring benefit or advantage on shareholder qua shareholder-Appeal dismissed-Income Tax Act, S.C. 1970-71-72, c. 63, s. 15(1) (as am. by S.C. 1988, c. 55, s. 8).