The Court:—The appellant was convicted in Provincial Court of wilfully evading the payment of federal taxes imposed by the Income Tax Act by failing to declare taxable income in the amount of $141,917.23 for the taxation years 1979 and 1980 thereby evading payment of taxes in the amount of $48,557.63 contrary to paragraph 239(1)(d) of the Income Tax Act.
During the years 1979 and 1980, the appellant filed personal income tax returns in which he declared the sums of $19,413.25 and $29,815.10 respectively. He did not declare an additional $141,917.23 of taxable income received during those two years. It is conceded that this latter sum is taxable income but it is submitted on behalf of the appellant that he had incurred losses in his farming operations, particularly with respect to his one-third interest in a partnership farming Squirrel Island, which more than offset the additional tax liability that the undeclared income attracted.
On this appeal the Court is restricted to questions of law alone and this submission has been taken away from the appellant by the findings of fact of the trial judge. He found that the appellant had conveyed his farming operations, including his partnership interest in Squirrel Island, to a limited company he controlled, called Westland Farms Limited. The losses, in the main, were incurred at the Squirrel Island operation, and accordingly were available to Westland and not the appellant for income tax purposes.
Counsel for the appellant submitted that there was no credible evidence to support the finding that the appellant's interest in Squirrel Island was conveyed to Westland, but this is not the test. There must be no evidence to raise a question of law and here there was evidence that the Squirrel Island operation was a Westland operation and that the income from that operation was received by Westland and reported as part of its income in its income tax returns. Squirrel Island made no payments to the appellant personally from its operations, but it did make payments to Westland and to its other two partners, Felix Lucier and Edgewood Farms. In addition, there was evidence upon which the trial judge could properly find that the appellant transferred to Westland all his farming operations including his one- third interest in pumps located at Squirrel Island and his one-third interest in prepaid land rentals made on behalf of Squirrel Island.
Part of the undeclared income consisted of $31,400 in wages paid to the appellant by Westland for his services. It was submitted by counsel for the appellant that the trial judge misdirected himself as to the onus of proof on the Crown when he found that "the defendant knew or ought to have known that he was receiving wages in 1978, 1979 and 1980 which he was not declaring". Counsel submitted that it was necessary for the Crown to establish mens rea on the part of the appellant and that this direction contemplated negligence. Although the use of this language is unfortunate, looking at the reasons as a whole, it is clear that the trial judge applied the proper standard that the appellant wilfully evaded the payment of taxes by not declaring sums that he knew to be income and thereby evaded payment of taxes thereon. Wages are clearly income and these amounts were recorded in the appellant's books in what was described by the trial judge as "a very tidy office at his own home farm where his records were kept in an orderly fashion”. The complaint about lack of mens rea founders when it appears, as the trial judge found, that the balance of the undeclared income was made up of income of Westland that the appellant appropriated, interest on a promissory note, and most significantly, interest on $75,000 in cash that he had transferred by courier to the Cayman Islands.
Accordingly, although leave to appeal is granted, the appeal is dismissed.
Appeal dismissed.