The taxpayer was a director, shareholder and employee of a corporation ("Northern"). He resigned from his directorship and employment in 2001. In that year, Northern declared a $3.7 million bonus, withheld and remitted source deductions from this amount and recorded a loan to it from the taxpayer for the remaining amount of the bonus. In 2002, the taxpayer directed that $350,000 be paid by Northern to each of two corporations controlled by the taxpayer or his wife (purportedly for management services provided by them to Northern notwithstanding that these corporations were not organized until 2002), and the balance to him.
The taxpayer's position was that the two $350,000 amounts paid to the two corporations (who included these amounts in their 2002 returns) were not income to him. Jorré J. found at para. 79 that the taxpayer had received these two amounts in 2001 in light of the withholding and remittance of source deductions on the full $3.7 million amount of the bonus, the booking by Northern of a loan back to it of the net bonus proceeds and the absence of any evidence that this was done without his knowledge or consent.