The taxpayer, a lawyer, received a four-year sentence and was suspended from practising law as a result of his conviction for obstruction of justice in respect of his defence of a client. The Court disallowed the claim of input tax credits connected with the taxpayer's legal fees. Because the taxpayer was already suspended from the practice of law when the fees were incurred, they could not have been incurred in connection with any commercial activity.
The taxpayer's argued that referral fees he received for referring clients to other lawyers was a commercial activity entitling him to the input tax credits, but the Court found there was no connection between that activity and the fees he incurred in his criminal defence.