misrepresentation

The taxpayer, who had been assessed beyond the normal reassessment period to treat a capital gain from the disposition of real property as a business profit, moved pursuant to ss. 53 and 65 of the Tax Court of Canada General Procedure Rules to have the Crown’s Reply struck on the basis that such reporting could not be a misrepresentation for purposes of s. 152(4)(a)(i), because misrepresentation (in light of the French version) meant a misrepresentation of fact, whereas the characterization of the gain was a question of mixed fact and law.

In order to avoid B.C. provincial income tax on a capital gain of $336.2 million which was realized on a sale in 2002 of a control block of a TSX-listed company (Future Shop), before closing the holders transferred their Future Shop shares to a newly-incorporated Yukon company (”Wesbild”) with non-resident directors. Its 2002 return indicated “OC” [outside Canada] as its jurisdiction.

The Minister's reassessment of the taxpayers' 1988 taxation year beyond the normal reassessment period, on the basis that various claimed expenses were household expenses, was not permitted. Bowman T.C.J. stated (at para.

The taxpayer, who underreported his income in his returns but pleaded (p. 5197) that "he honestly believed in the truth of the information contained therein" at the time he filed them, was validly reassessed by the Minister beyond the six-year limitation period referred to in s. 42(4) of the 1948 Act, which permitted the Minister to reassess at any time where the taxpayer had "made any misrepresentation or committed any fraud in filing the return". Dumoulin J. stated (at p.

In preparing the taxpayer's return, the taxpayer's accountant erroneously reported the taxpayer's share of a capital gain as $71,139.42 rather than $711,394.25.

Before going on to find that the taxpayer had made a misrepresentation attributable to neglect or carelessness, Heald D.J. rejected the view that a number reached through a mathematical calculation is not a fact and, therefore, cannot constitute a misrepresentation. He instead accepted the Crown's submission (at p. 6049) that "any incorrect statement amounts to a 'misrepresentation'".