Laplante v. The Queen 2017 TCC 118 (English Translation)

Laplante c. The Queen

Database – Court (s)Judgments of the Tax Court of Canada
Dated2017-06-23
Neutral reference2017 TCC 118
File number2015-349 (IT) G
Judges and Taxing OfficersSylvain Ouimet
TopicsIncome Tax Act

Folder: 2015-349 (IT) G

ENTER :

 

DANIEL LAPLANTE ,

appellant,

and

HER MAJESTY THE QUEEN,

respondente.

 

Appeal heard on December 12 and 13, 2016, in Montreal, Quebec.

In front of : The Honorable Justice Sylvain Ouimet

Appearances :

 

Counsel for the appellant:e Serge Fournier

e Genevieve Theriault-Lachance

Counsel for the respondent:e Michel Lamarre

 

JUDGMENT

The appeal from the reassessment under the Income Tax Act for the 2008 taxation year is dismissed with costs.

Signed at Ottawa Canada, this 23 th dayof June 2017.

“Sylvain Ouimet”

Judge Ouimet

 

 

 

 

Reference: 2017 CCI 118

Date: 20170623

File: 2015-349 (IT) G

 

ENTER :

DANIEL LAPLANTE ,

appellant,

and

HER MAJESTY THE QUEEN,

respondent.

REASONS FOR JUDGMENT

Judge Ouimet

I. INTRODUCTION

[ 1 ] Mr. Daniel Laplante (“Mr.  Laplante  “) is appealing a reassessment, dated March 10, 2014, by which the Minister of National Revenue (“Minister”) added to his income for the year 2008 taxation of $ 2,593,412.50 as a taxable capital gain from the DL Trust. During the year 2008, following the disposition of its shares of DTI Software Inc. (“DTI”), the DL Trust realized a capital gain of $ 5,852,074. The taxable capital gain of $ 2,593,412.50 that was added to Mr. Laplante’s income              for the 2008 taxation year represents the total of the sums ($ 370 487.50 x 7) allotted by the DL Trust to certain of its beneficiaries on December 25, 2008, to Sylvie Laplante (“Mrs. Laplante  “), to Daniel Michaud (“Michaud”), Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Josée Rolland (“Mrs. Rolland”) and Élisabeth Rondeau (“Ms. Rondeau”).

II. ISSUES

[ 2 ] The issues are as follows:

  1. Is it correct that the Minister reassessed Mr.Laplantefor the 2008 taxation year after the expiry of the normal period for making such an assessment?
  2. Was the Minister rightfully added to Mr.Laplante’sincome  for the 2008 taxation year $ 2,593,412.50 as a taxable capital gain?

[ 3 ] In order to answer these two questions, I will have to answer in the first place the following question:

  1. Did Mr.Laplante, Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau participate in a simulation?

[ 4 ] The following people testified for Mr. Laplante during the trial:

–          Mr. Laplante ;

–          Ms. Laplante , Mr. Laplante’s sister and Mr. Michaud’s spouse;

–          Mr. Michaud, brother-in-law of Mr. Laplante ;

–          Marie-Claude Michaud, daughter of Mr. Michaud and Mrs. Laplante ;

–          Mrs. Rolland, cousin of Mr. Laplante ;

–          Pierre Laplante , brother Mr. Laplante ;

–          Ms. Rondeau, spouse of Mr. Laplante ;

[ 5 ] Mr. Michel Babeu, CPA, testified for the respondent at the trial.

III. RELEVANT LEGISLATIVE PROVISIONS

[ 6 ] The relevant statutory provisions are as follows:

Civil Code of Quebec

  1. – Simulation
  2. Simulation occurs when the parties agree to express their real will not in an apparent contract, but in a secret contract, also called a counter-letter.

Between the parties, the counter-letter prevails over the apparent contract.

  1. Third parties in good faith may, in their interest, avail themselves of the apparent contract or the counter-letter, but if there is a conflict of interest between them, the person who avails himself of the apparent contract is preferred.
  2. Mandate is the contract by which a person, the principal, gives the power to represent it in the performance of a legal act with a third party, to another person, the agent who, by the fact of his acceptance, obliges to exercise it.

This power and, where appropriate, the writing that states it, are also called power of attorney.

  1. At the end of the term of office, the mandatary is bound to render an account and to remit to the principal all that he has received in the performance of his functions, even if what he received was not due to the principal .

It owes the interest of the sums which it has received and which constitute the balance of the account, since the residence.

Interpretation Act, RSC 1985, c. I-21

Rules of interpretation

Property and civil rights

Bijural tradition and application of provincial law

8.1 Civil law and the common law are equally authoritative and are both sources of property and civil rights law in Canada and, if it is necessary to resort to rules, principles or concepts in the field of property and civil rights to enforce a law in a province, the rules, principles and concepts in force in that province, at the time of the application of the text.

Canada Evidence Act, RSC 1985, c. C-5

40  In all proceedings within the legislative authority of the Parliament of Canada, the evidentiary acts in force in the province in which the proceedings are conducted, including, the laws relating to the proof of service of a warrant, summons, summons or other document apply to these proceedings, except this Act and other federal statutes .

Income Tax Act, RSC 1985, c. 1 (5th Supp.)

  1. Meaning of gain in taxable capital and deductible capital loss – For the purposes of this Act,

(a ) [Taxable capital gain-general] subject to paragraphs ( a.1) to (a.3), the taxable capital gain of a taxpayer for a taxation year from the disposition of property is equal to one half of the capital gain realized for the year at the disposal of the property;

  1. (1)Meaning of Capital Gains and Capital Losses [and Losses on Business Investment] – For the purposes of this Act,

(a ) a capital gain of a taxpayer, for a taxation year, from the disposition of property, is the gain, determined in accordance with this Subdivision (up to the amount of any gain that would not have, notwithstanding the phrase “other than a taxable capital gain from the disposition of property”, in paragraph 3 ( a ) and paragraph 3 (b ), included in calculating his income for the year or for any other taxation year), that the taxpayer has drawn, for the year, the disposition of a property belonging to him, with the exception of:

[…]

  1. (1)General rules [calculation of gain and loss] – Except as expressly provided in this Part,

(a ) the gain of a taxpayer from a disposition of a property for a taxation year is the amount, if any, by which

(i) if the property is disposed of in the year, the amount, if any, by which the proceeds of disposition exceed the total adjusted cost base of the property, for the taxpayer, calculated immediately before the disposition, and expenditures in respect of the extent to which they were incurred or made by him in order to make the disposition,

[…]

sure :

(iii) subject to subsection (1.1), the amount from which the person may claim the deduction, in the case of an individual – other than a trust, on the prescribed form filed with the return of income referred to in this Part for the year and, in any other case, in the return of income under this Part for the year, up to the lesser of

(A) a reasonable amount as a provision in respect of any part of the proceeds of disposition of the property that is payable to the corporation after the end of the year and that it is reasonable to consider a portion of the amount determined under subparagraph (i) for that property,

(B) the product of 1/5 of the excess determined under subparagraph (i) for that property and the amount, if any, by which 4 exceeds the number of taxpayer’s previous taxation years that end after the disposition of the property;

[…]

104 (13) Recipient Income – The following applicable amounts are to be included in computing the income of the beneficiary of a trust for a taxation year:

(a ) in the case of a trust that is not described in clause ( a ) of the definition “trust” in subsection 108 (1) , that part of the amount that, other than the paragraphs (6) ) and (12), would represent his income for his taxation year ending in the particular year that became payable to the beneficiary in the trust year;

[…]

104 (24) Amount payable – For the purposes of subsections (6), (7), (7.01), (13), (16) and (20), subparagraph 53 (2 ) ( h ) (i .1) and subsections 94 (5.2)and (8), an amount is deemed not to have become payable to a recipient in a taxation year unless it is paid to the recipient during the taxation year year or that the beneficiary was not entitled during the year to demand payment.

[…]

110.6 (2.1) Capital gains deduction – qualified small business corporation shares – An individual – other than a trust – who is resident in Canada throughout a taxation year and who disposes in that taxation year year or a previous taxation year and after June 17, 1987, shares that are then qualified small business corporation shares may deduct, in computing its taxable income for the particular year, the amount it may request and not exceed the lesser of

(a ) the amount determined by the formula in paragraph (2) ( a ) in respect of the individual for the year;

(b ) the amount, if any, by which its cumulative gains limit at the end of the particular year exceeds the amount deducted under subsection (2) in computing its taxable income for the particular year;

(c ) the amount, if any, by which its annual earnings limit for the particular year exceeds the amount deducted under subsection (2) in computing its taxable income for the particular year;

(d ) the excess that would be calculated under paragraph 3 (b ) in respect of the individual for the particular year (to the extent that it is not included in computing the amount determined under paragraph (2) ( d ) in respect of the individual) in respect of capital gains and capital losses if the only property referred to in paragraph 3 (b ) were the qualifying small business corporation shares of the individual.

152 (4) Assessment and reassessment [limitation period] – The Minister may make an assessment, reassessment or additional assessment of tax for a taxation year, together with interest or penalties, that are payable by a taxpayer under this Part or give notice in writing that no tax is payable for the year to any person who has filed a return of income for a taxation year. Such assessment may be made after the expiry of the normal reassessment period applicable to the taxpayer for the year only in the following circumstances:

(a ) the taxpayer or person filing the return,

(i) has made a misrepresentation of the facts by negligence, inattention or willful default, or has committed any fraud in filing the return or providing any information under this Act,

(ii) has submitted to the Minister a waiver, in the prescribed form, during the normal reassessment period applicable to the taxpayer for the year;

IV. FACTS

A. The context

[ 7 ] In 1995, DTI was founded by Mr. Laplante and two partners. In 2004, as DTI’s revenues began to be interesting, Mr.  Laplante and his two associates participated in an information session offered by accounting firm Chamberland Hodge, who was in charge of DTI accounting at the time. . Following this meeting, Mr.  Laplante and his associates decided to form a trust each. Mr. Laplante established the DL Trust in November 2004 [1] and the three newly formed trusts acquired a portion of the capital stock of DTI.

[ 8 ] According to the trust deed of DL Trust, Mr. Laplante , Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau were all beneficiaries of the trust. The three children of Mr. Laplante , parents, in-laws and her godfather and godmother were also beneficiaries of the trust [2] .

[ 9 ] In January 2008, all outstanding shares of DTI were sold to a German company. By disposing of its DTI shares, the DL Trust realized a capital gain of $ 5,852,074. At the time of the sale, DTI was a small business corporation as defined in subsection 248 (1) of the Income Tax Act             (“LIR”) and its shares were qualifying small business shares under subsection 110.6 (1) of the Tax Act. In this context, pursuant to the relevant provisions of the Tax Act, one-half of the trust’s total capital gain of $ 2,926,037 was not taxable in the hands of the trust. The other half, $ 2,926,037, was taxable in the hands of the DL Trust, unless it was allocated to its beneficiaries. In this case, it became taxable in the hands of the beneficiaries.

[ 10 ] On December 25, 2008, a resolution of the Trustees [3] was signed by the three trustees of DL Trust, namely Mr. Laplante , his mother and a friend of Mr.  Laplante . Under the terms of this resolution, the DL Trust awarded Mr.  Laplante an amount of $ 258,605.31 and each of his three children an amount of $ 75,000. Ms.  Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante and Mrs. Rolland each received $ 370,487.50. Ms. Rondeau was awarded $ 375,000. At the time of the awards, Mrs.  Laplante        , Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau were entitled, under subsection 110.6 (2.1) of the Tax Act, to a capital gain exemption of 375,000 $.

[ 11 ] Following these powers, between December 25 and 28, 2008, Mr.  Laplante gave Mrs. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau a check from the DL Trust for $ 370,487.50. In the minutes that followed the delivery of the checks, all the checks were endorsed and given to Mr.  Laplante , and Mrs.  Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau all signed a gift certificate donating $ 370,487.50 to Mr.  Laplante .

[ 12 ] Chamberland Hodge, Mr. Laplante’s accounting firm , prepared, at the expense of Mr. Laplante , the tax returns for the 2008 taxation year of Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau.

[ 13 ] Mr. Laplante paid the alternative minimum tax that had to be paid by Mrs. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau following the attributions of the 25 December 2008. The alternative minimum tax that has been recovered in subsequent taxation years has been retained by the latter. The amount recovered by recipients ranged from $ 20,000 to $ 40,000, depending on their level of income.

[ 14 ] In subsequent years, Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante and Ms. Rolland all received an additional award of $ 4,512.50. Ms.  Laplante , Mr. Michaud, Marie-Claude Michaud and Marjolaine Michaud gave this amount to Mr. Laplante . Pierre Laplante kept it and Mrs. Rolland could not confirm whether she had given the money to Mr. Laplante or not.

B. The testimonies

(1) Daniel Laplante

[ 15 ] Mr. Laplante is the first trustee of the DL Trust. In this capacity, he is the sole permanent trustee of the trust and is the one who appointed the two temporary trustees of the trust. In his testimony, Mr.  Laplante said that what he loved most in life was sharing. His desire has always been to share the fruits of a successful business venture with family members. He also said he was not materialistic and did not think he would live long enough to spend all his money.

[ 16 ] Mr. Laplante stated that he made the decision to establish DL Trust following his participation in an information meeting with accounting firm Chamberland Hodge. At this information meeting, Mr. Laplante learned that since the DTI shares were qualifying small business shares within the meaning of subsection 110.6 (1) of the ITA, it became possible for the beneficiaries of a a trust that holds shares in DTI to benefit from a capital gains exemption of $ 375,000 in the event that amounts are allocated to them. Therefore, the creation of a trust would allow Mr. Laplante        to give the beneficiaries of the trust not a taxable amount of $ 375,000, so about half of that amount actually, but rather $ 375,000 tax-free. For example, he could give his family members twice as much money by creating a trust.

[ 17 ] In June 2008, following the sale of the DTI shares by DL Trust, a memo was prepared by Mr. Babeu, an accountant at Chamberland Hodge. Mr. Laplante said that he did not remember receiving this memo or asking Mr. Babeu that such a memo be prepared. According to Mr.  Laplante , the note was probably prepared by Mr. Babeu following a request from him to know approximately the minimum tax that should be paid by the beneficiaries in the event of an award. He could thus determine the sum he was going to give them in reality. Mr. Laplante        also ignored whether the beneficiaries of the trust had already used their capital gains exemption when the memo was prepared and did not ask Mr. Babeu to obtain this information. He stated, however, that he assumed that Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau had not used their capital gains exemption before the December 25, 2008 grant.

[ 18 ] According to Mr. Laplante , following a meeting with Mr. Babeu and following his advice, tax planning was put in place. Through the information obtained at this meeting, Mr. Laplante was able to explain to the beneficiaries of the DL Trust what was a capital gains exemption and the alternative minimum tax.

[ 19 ] With respect to the Trustees’ Resolution of December 25, 2008 [4] , Mr.  Laplante stated that the decision as to the amount that would be awarded to each of the beneficiaries was made in order to maximize the exemption. capital gains of each of the beneficiaries, with the exception of its children.

[ 20 ] Mr. Laplante said that he met with Ms. Laplante , Mr. Michaud, Marie-Claude Michaud and Marjolaine Michaud at their residence to discuss the awards of December 25, 2008. At this meeting, which took place shortly before on December 25, 2008, he informed them that they were beneficiaries of the DL Trust and that as such they would all receive a sum of money in the near future. He also explained to them what the tax consequences of this transaction would be for them. He also explained to them that they were entitled to a capital gains exemption and that they should pay an alternative minimum tax. During the meeting, Ms.  Laplante        Michaud, Marie-Claude Michaud and Marjolaine Michaud told Mr.  Laplante that they were going to refuse the amounts of money that had to be attributed to them. At the family Christmas party on December 25, 2008, Mr.  Laplante told them that if they wanted to give him back the checks, they could donate them and donate them. Ms. Laplante , Mr. Michaud, Marie-Claude Michaud and Marjolaine Michaud endorsed the checks for Mr.  Laplante . Following the endorsement of the checks, Mr.  Laplante had the gift certificates printed and signed by each of them to formalize the donation.

[ 21 ] With respect to Ms. Rolland, Mr. Laplante stated that he met with him at the restaurant to discuss the December 25, 2008 award. He told her that as a beneficiary of the DL Trust, she was going to receive an amount of money soon. As for Ms. Laplante’s family , he explained to Mrs. Rolland the tax consequences of this transaction for her. He also explained to her that she was entitled to a capital gains exemption and that she should pay an alternative minimum tax. He would have asked her what she was going to do; she told him that she would let him know.

[ 22 ] On the occasion of the family Christmas party on December 25, 2008, Mr. Laplante presented the check for $ 370,487.50 to Mrs. Rolland, who would have endorsed it and signed a deed of gift.

[ 23 ] As for Pierre Laplante , Mr. Laplante said that he met him for the first time regarding the award of December 25, 2008 at the Christmas family party on December 25, 2008. That’s when he announced to Pierre Laplante that he was a beneficiary of the DL Trust and that it was in this capacity that he received the check for $ 370,487.50. Mr. Laplante discussed the tax consequences of the attribution with him as he did with Mrs. Laplante’sfamily  and with Mrs. Rolland.

[ 24 ] Mr. Laplante said that he wrote the deeds of donation at the Christmas family party on December 25, 2008. At that time, he had with him, on a USB key, an example of a deed of gift. He used a computer that was on site to make the necessary changes and print the records. Mr. Laplante claimed that he had an example of a gift certificate on a USB key because one of his family members, probably Ms. Laplante , had already told him of his intention to give him the amount of the gift . attribution. He contacted Mr. Babeu to obtain his advice. Mr. Babeu advised him to have gift certificates signed by the beneficiaries.

[ 25 ] According to Mr. Laplante , it was only after the signing of the deeds of gift that he offered to Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud and Mrs. Rolland to pay the expenses for the production of their tax returns, as well as their minimum tax, all in consideration of their donations.

[ 26 ] According to Mr. Laplante , each of the beneficiaries who received an award on December 25, 2008 was able to use his capital gains exemption, which they could never have done otherwise. According to him, they were all happy to use their exemption and to donate the amounts received from DL Trust. For Mr. Laplante , the beneficiaries still benefited from the situation since they kept the replacement minimum tax that was refunded to them. Moreover, concerning the minimum tax, Mr. Laplante        stated that he paid the alternative minimum tax for each of the beneficiaries as well as the costs associated with the filing of their tax returns. According to him, this was the least of the things given the donations received from these beneficiaries.

[ 27 ] As for the awards of $ 4,512.50, they were made in order to maximize the capital gains exemption of Mrs. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre  Laplante , Mrs. Rolland and Ms. Rondeau. Mr. Laplante said that they all kept this amount.

(2) Daniel Michaud

[ 28 ] Mr. Michaud is the husband of Mrs. Laplante , who is Mr. Laplante’ssister . He is also the father of Marie-Claude and Marjolaine Michaud. Mr. Michaud said that he was informed of the existence of the DL Trust a year or two before the sale of Mr. Laplante’s company in 2008. However, at that time, he did not know that he was one of the beneficiaries. of the trust. According to Mr. Michaud, it was only during a meeting at his home in December 2008 that Mr. Laplante taught him and told Ms. Laplante that he had sold his company and that they were beneficiaries of the DL Trust. At this meeting, Mr. Michaud also learned that he, Ms.         Laplante and Marjolaine and Marie-Claude each received between $ 365,000 and $ 375,000 from the DL Trust.

[ 29 ] At the same meeting, Mr. Laplante told them about the capital gains exemption and the minimum tax that would be payable as a result of receiving the amounts allocated. Mr. Laplante also told them that the minimum tax would be refundable in subsequent years based on their income. During the meeting, Mr. Michaud and Ms.  Laplante informed Mr. Laplante of their intention to refuse the amounts he wanted to give them. Mr. Michaud and Ms.  Laplante did not feel comfortable accepting this amount. For Mr. Michaud, this money was Mr. Laplante’s money         . There was no question that he kept the amount of money that would be allocated to him. Mr. Michaud said that their decision had already been made and Mr.  Laplante had been informed. In cross-examination, Mr. Michaud mentioned that there was talk at the meeting of the possibility that he and Ms.  Laplante would give Mr. Laplante the checks they would receive from the DL Trust. It was anticipated that in such a case Mr. Laplante would write “a letter of donation” and that it was he who would pay the minimum tax.

[ 30 ] On December 25, 2008, at the Christmas family party, Mr. Michaud was presented with a check for $ 370,487.50 [5] by Mr.  Laplante . At the same party, Mr. Michaud endorsed the check and gave it to Mr. Laplante . He also signed a document, but he does not remember which document it is. It appears, however, that the document in question is the deed of donation since it was signed on the same date as the check, that is to say on December 25, 2008 [6]        . When Mr. Michaud was asked why he had not simply refused the check, the latter replied that he thought “it was his personal fault,” and that he wanted to “give it to him”. him personally, “speaking of M.  Laplante .

[ 31 ] Mr. Michaud said that he had been agreed in advance with Mr. Laplante, at the first or second meeting, that if he and Mrs.  Laplante decided to make a donation in his favor, it is Mr. Laplante who would take care of the production of their tax returns for the year 2008 as well as the payment of the related expenses. It was indeed Mr. Laplante’s accountant , Mr. Babeu, who took care of the filing of the Michaud family’s tax returns for the 2008 taxation year. However, Mr. Michaud stated during his testimony do not know Mr. Babeu.

[ 32 ] In cross-examination, Mr. Michaud confirmed that Mr. Laplante paid the minimum tax. In subsequent years, Mr. Michaud has recovered about twenty thousand dollars in respect of this minimum tax, amount he has not given to Mr.  Laplante . Finally, Mr. Michaud also said that he received another amount from the LD Trust in 2010. Mr. Michaud did not remember the amount, but did not deny that it could have been about $ 4,500. He said that this amount was given to Mr. Laplante , but he did not remember how.

(3) Sylvie Laplante

[ 33 ] Ms. Laplante is the spouse of Mr. Michaud and the sister of Mr.  Laplante . She corroborated certain facts mentioned by Mr. Michaud in his testimony. Like Mr. Michaud, she said that it was during a first meeting in December 2008 that Mr. Laplante informed all members of his family, including Mr. Michaud and their two daughters, that he had sold his company and that they were beneficiaries of the DL Trust. Ms. Laplante knew they would each receive approximately $ 375,000. She also confirmed that the minimum tax and the capital gains exemption were discussed at this meeting. However, Ms. Laplante’s testimony        is more precise than that of Mr. Michaud on certain points. Ms.  Laplante confirmed that her two daughters were present at the meeting, which Mr. Michaud was unable to confirm. As for the minimum tax, she learned from Mr.  Laplante , during this meeting, that they were seven years to recover, clarification that Mr. Michaud had not made.

[ 34 ] According to Ms. Laplante , at the first meeting in December 2008, Mr.  Laplante asked members of his family if they agreed to give him their tax exemptions. Ms. Laplante also understood that for them to do so, under the tax rules, they had to first receive the amount of money from the DL Trust. Mr. Laplante also told him that if they gave him the amount, he would pay the tax they would have to pay and then they could recover the tax and keep it. At the same meeting, Ms. Laplante        agreed to receive the amount of the DL Trust, use its capital gains exemption and donate the amount to Mr.  Laplante . She said she wanted to contribute financially to her brother’s future plans because he was not talking about retirement. She said she was very happy that he was able to help her.

[ 35 ] According to Ms. Laplante’s testimony , it appears that Mr. Laplantehas given him the option of keeping this amount of money. However, Ms. Laplante mentioned that Mr. Laplante knew her well and that, as a result, he knew full well that she would give him the amount of money she would receive from the DL Trust.

[ 36 ] At the second meeting in December 2008, Mr. Laplante gave her a check for $ 370,487.50 that she would have immediately endorsed. Mrs.  Laplante, however, has no memory of the subsequent donation, although she has nevertheless confirmed that it is his signature found on the deed of gift [7].

[ 37 ] Ms. Laplante also confirmed that Mr. Laplante had paid his minimum tax for 2008, which was refunded and then retained by him in subsequent years. She recovered an amount of approximately $ 20,000, which she felt was more than enough to have done her brother a service and to help with her projects.

[ 38 ] Ms.  Laplante also stated that, in the years following the 2008 taxation year, she and her husband and two daughters were allotted an amount of approximately $ 4,500 from the Trust. DL, which would have been given by each of them to Mr. Laplante in the same way as in the case of the first allocation, by handing Mr.  Laplante the checks received from the trust to complete the amount of $ 375,000. , ie the amount of the exemption of each of them. According to Ms. Laplante , for the 2008 tax year, Mr. Laplante’saccountant was responsible for filing his family’s tax returns.

(4) Marie-Claude Michaud

[ 39 ] In 2008, Ms. Michaud was a design student at the university and lived with her parents. Ms. Michaud confirmed that during a first meeting in December 2008, Mr. Laplante announced to his family that they would each receive a sum of money from the DL Trust. She said it was a gift she would receive as a beneficiary of the DL Trust. Unlike her parents, she said there was no mention at that first meeting of the amount of money they would receive. Mrs. Michaud also contradicted her parents on another point; she said it was during the second meeting and not at the first meeting that Mr. Laplante       informed family members that there would be a minimum tax payable upon receipt of the check and that he would pay for it. As for the capital gains exemption, she said she did not remember what that was. Ms. Michaud does not recall having discussions with members of her family regarding the attributions following the first meeting with Mr.  Laplante .

[ 40 ] At the second meeting, Mr. Laplante gave a check to each member of his family. According to Ms. Michaud, Mr. Laplante already knew that the whole family was going to give him the checks. It would only be when the check was received that she and her family members would have asked her how they could do it. Mr. Laplante told them to sign the back of the check and had them sign a gift certificate. According to Ms. Michaud, Mr.  Laplantealready had the gift certificates in his possession at that time, because he already knew they were going to give him the checks.

[ 41 ] As for the reason for giving the check to Mr.  Laplante , Ms. Michaud stated that it was by personal choice and added that at the time she gave the check she was a student and did not would not necessarily know how to invest it. She preferred to give him back the check.

[ 42 ] Ms. Michaud also confirmed that, in subsequent taxation years, she recovered and kept the minimum tax paid by Mr. Laplante for the 2008 taxation year. She also stated that she received a second grant of the DL Trust in 2014 and 2015.

(5) Josée Rolland

[ 43 ] Mrs. Rolland is the cousin of Mr. Laplante . During the 2008 taxation year, she worked as a social worker in a hospital center. Towards the end of 2008, Ms. Rolland participated in two meetings with Mr.  Laplante regarding the allocation that was to be made to her by the DL Trust. The first meeting took place in a restaurant in the weeks or months prior to December 2008. At this meeting, Mr. Laplante        told him that she was a beneficiary of the DL Trust and that there will be an award soon. According to Ms. Rolland, however, there was no question of the amount of the award at this meeting. Between the first meeting and the second meeting, Mrs. Rolland and Mr. Laplante met several times. According to his testimony, it was during one of these meetings that Mr. Laplante told him the amount that was going to be attributed to him and that she told him that she would give it to him.

[ 44 ] Ms. Rolland claimed to have told Mr.  Laplante , when handing the check, that the amount seemed “far too big” and that, although it was now his money, she would like to be able to give him back. Mr.  Laplante would have immediately replied that he was going to “look at that”. Mrs. Rolland said that she did not feel comfortable with the idea of keeping such an important amount of money, having personally invested neither time nor money in Mr. Laplante’s company . Mr. Laplante        had worked “super strong” and had “taken a lot of risks”, which is why she wanted to give him back the money. She also confirmed that in 2015 she received a second award, much less than the 2008 award – about $ 40,000, as she recalled – that she did not hand over to Mr. Laplante .

[ 45 ] Like the other beneficiaries, Ms. Rolland said that she and Mr.  Laplantediscussed tax concepts at their first meeting. At this meeting, Mr. Laplanteexplained to him what the capital gains exemption was and told him that it could only be used once in a person’s life. Regarding the exemption, Ms. Rolland mentioned that Mr.  Laplante knew that she had never used his capital gains exemption. However, she contends that she no longer remembers whether Mr. Laplante or one of his accountants asked her clearly whether she had used it.

[ 46 ] Ms. Rolland mentioned that the alternative minimum tax was also discussed during the first meeting with Mr. Laplante , as well as his possible recovery. According to her, Mr. Laplante told him not to worry about it, that he was going to “fix it with that”, and therefore, that he was going to pay the tax resulting from the attribution. Unlike the other witnesses, Ms. Rolland submits that she was the one who asked Mr. Laplante to have his tax return for the 2008 taxation year prepared by Mr. Laplante’s accountants because, usually, his statements were prepared. by his mother, who is not necessarily comfortable with such a level of complexity.

[ 47 ] Following this first meeting, a second meeting was held with Mr.  Laplante on the occasion of the Christmas family party on December 25, 2008. It was during this second meeting that Mrs. Rolland received from Mr. Laplante a check for $ 370,487.50 [8] as a result of the trust made by DL Trust. It was also during this meeting that she would have immediately endorsed the check and handed it to Mr. Laplante . Moreover, as she had already mentioned to Mr.  Laplante his intention to give him back the sum, it had already in hand a deed of donation, which was signed by Mrs. Rolland a few minutes after the handing of the check [9]        .

[ 48 ] Following the signing of the deed of gift, Mr. Laplante reported on the situation and reiterated his intention to pay Ms. Rolland the minimum tax. Mr. Laplante actually paid Mrs. Rolland the minimum tax. Ms. Rolland received the refund of this tax – an amount of approximately $ 35,000 – in subsequent taxation years. She said that she kept that amount in full.

(6) Élisabeth Rondeau

[ 49 ] Ms. Rondeau is a career human resources manager and is the spouse of Mr. Laplante . Ms. Rondeau’s testimony was very brief since she said that she did not remember much of the circumstances surrounding the December 2008 awards. She indicated that she recalled receiving a check for $ 370,487.50 on December 26, 2008, or about that date, to have endorsed her and handed her to her husband. However, she does not remember the act of donation or even to have signed it [10] . As a result of this donation, the check was deposited by Mr. Laplante in the joint account of the couple. She recalled having discussions with Mr. Laplante        about the 2008 award, but without giving more details.

(7) Pierre Laplante

[ 50 ] Pierre Laplante is Mr. Laplante’s brother . In 2008, he worked in a long-term care center in the city of Montreal. Unlike the other recipients who received an award in December 2008, Pierre Laplante did not have a meeting with Mr. Laplante before the resolution of the Trustees of December 25, 2008. During a family reunion on the occasion of the Christmas party In 2008, Mr.  Laplante presented him with a check for $ 370,487.50 [11] while explaining that the check was awarded to him following an award made by DL Trust. This was the first time he had heard of this award.

[ 51 ] Pierre Laplante said he had thought for a few moments after receiving the check and finally decided to give it to Mr. Laplante . It was out of the question for him to keep this check since he was raised according to the saying “we harvest what we sow”. He had also seen Mr. Laplante spend sleepless nights working hard for his business, so he said the thing to do was not to accept the check. He, too, was happy to be able to contribute to his brother’s success by handing him the check.

[ 52 ] Once the decision was made, Mr. Laplante suggested that he make a donation. Mr. Laplante then printed a deed of gift and made him sign after he endorsed the check received from the trust. Following the signing of the deed of gift, Mr. Laplante told Pierre Laplante that he was going to pay the replacement minimum tax for him and that he was going to take care of the preparation of his tax return for the year 2008. However, it is only during a discussion with the accountants of Mr. Laplante concerning the preparation of his declaration of income for that year that Pierre Laplante        learned about the capital gains exemption and the alternative minimum tax.

[ 53 ] Pierre Laplante confirmed that he received and retained approximately $ 40,000 in respect of the refund of the alternative minimum tax paid by Mr.  Laplante for the 2008 taxation year. He also received, in 2011, and retained an amount of $ 4,512 allocated to it by the trust. It retained this amount because it was a smaller amount compared to the $ 370,000 allocated in 2008.

(8) Michel Babeu

[ 54 ] Michel Babeu was a tax advisor and partner at Chamberland Hodge since 2002. He said that he first met with Mr.  Laplante in 2005, as part of the creation of an estate freeze facility with the help of a family trust. According to Mr. Babeu, in 2007 negotiations had taken place for the sale of the DTI shares. In early 2008, Mr. Babeu met with Mr. Laplante , who told him that, given the price he received for his DTI shares, he could “grow income” for DL Trust beneficiaries. A memo was presented to Mr.  Laplante in March 2008. This memorandum was modified and given again to Mr.  Laplante        during a meeting between the end of June and the beginning of July 2008. The memo was a tax planning document and was intended to convey to Mr.  Laplantevarious considerations relating to the disposition of his shares. of DTI, including the disposition of the DTI Shares held by DL Trust. The memo also contained a scenario allowing maximum potential tax savings for all beneficiaries of the trust. This scenario was different from the one presented in March 2008 because Mr.  Laplante wanted to “push more money” to his family members.

[ 55 ] In order to be able to complete this memo, Mr. Babeu was required to obtain certain information about the beneficiaries from the tax authorities. With Mr. Laplante’s permission , he contacted the beneficiaries to obtain their authorization. Mr. Babeu obtained this authorization from most of the beneficiaries.

[ 56 ] In addition, it was recommended that Mr. Laplante take certain steps according to a specific schedule in order to allow Mr. Babeu to complete the memorandum. Thus, Mr. Babeu had to obtain from Mr. Laplante , for May 5, 2008, the tax declarations relating to the 2007 taxation year of the beneficiaries concerned by the possible attribution, as well as prepare authorizations in order to be able to confirm their balances. taxable, verify their available capital gains deduction amount as well as their accumulated cumulative losses on investments and losses that can be carried forward.

[ 57 ] The memorandum also dealt with the consequences that an award could have for certain beneficiaries. According to the note, these consequences included the possibility of having to pay back the old-age pension, to lose the child tax benefit, to reduce the deductibility of medical expenses, to lose a property tax refund, to lose scholarships. studies and ultimately lose the GST-QST credit.

[ 58 ] The information mentioned in the memo was important to Mr. Babeu, because it allowed Mr.  Laplante to know the consequences of an attribution for the beneficiaries, and that allowed him to transmit this information to them. avoid any discomfort or misunderstanding. In addition, scenarios were to be completed in May 2008 for each beneficiary to forecast the tax impacts of the planning.

[ 59 ] Mr. Babeu confirmed that individual scenarios were prepared for the majority of beneficiaries. According to Mr. Babeu, these scenarios did not reflect the will of the trustees. They were a source of information about the consequences of possible awards and were intended to assist the trustees in their selection of future awards.

[ 60 ] E etween 18 and 25 December 2008, Mr.  Laplante contacted Mr. Babeu and mentioned to him that some recipients wanted to give him the amounts received from the Trust DL. Mr. Babeu told Mr. Laplante that he had to document the donations so that they could support a tax audit, and he provided him with an example of a deed of gift.

V. Position of the parties

A. Position of the respondent

[ 61 ] The respondent’s position can be summarized as follows:

  1.  Mr. Michaud, Ms. Laplante , Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau would all have accepted the same mandate from Mr. Laplante and thus acted as nominees. Each of the mandates consisted, first of all, in accepting the amount of money to be remitted by Fiducie DL as a result of the grants of December 25, 2008. Upon receipt of the amount, they were to remit to Mr.  Laplante . To be able to hand over the full amount of the attributions to Mr. Laplantethey had to use their personal capital gains exemption. According to the Minister, by accepting such a mandate, they all had a legal obligation to remit the amount received from Fiducie DL to Mr.  Laplante .
  2.  The warrants were given in December 2008, at the first of two meetings with Mr. Laplante regarding future awards, except in the case of Mr. Pierre Laplante . In his case, the agreement was concluded on the same day as the handing over of the check by Mr. Laplante on December 25, 2008.
  3.  According to the Minister, in accepting Mr. Laplante’smandates  , Mr. Michaud, Ms. Laplante , Marie-Claude Michaud, Marjolaine Michaud, Pierre  Laplante , Ms. Rolland and Ms. Rondeau participated in a simulation as defined in Article 1451 of the Civil Code of Québec [12] (hereinafter “CcQ”). Therefore, they agreed to express their real will in secret contracts, either in the mandates mentioned above, and not in the apparent contracts. In this case, the apparent contracts are attributions and deeds of gift in favor of Mr.  Laplante .
  4.  Finally, with these mandates , Mr. Laplante and Mr. Michaud, Ms.  Laplante , Marie-Claude Michaud, Marjolaine Michaud, Pierre  Laplante , Ms. Rolland and Ms. Rondeau would have wanted to deceive the Minister. The purpose of the simulation was to allow Mr. Laplanteto receive the amounts of $ 370,487.50 allocated to the beneficiaries on December 25, 2008, free of any taxes. This was possible thanks to the capital gains exemption enjoyed by each beneficiary. The Minister argued that, according to the evidence, Mr.  Laplante knew that none of the beneficiaries had used its capital gains exemption before the Trustees’ resolution was passed on December 25, 2008.

B. Position of Mr. Laplante

[ 62 ] Mr. Laplante’s position can be summarized as follows:

  1.  The assessment being appealed has been made out of time by the Minister. Therefore, the Minister had to prove, on the balance of probabilities, that in filing his 2008 tax return Mr.  Laplantemisrepresented the facts by negligence, inattention or willful default, or yet he has committed fraud.
  2.  According to counsel for Mr. Laplante , the Minister failed to demonstrate, on the balance of probabilities, that each of the beneficiaries acted as nominees for Mr. Laplante . For the latter, the fact that each of the beneficiaries chose not to keep the amount received from the DL Trust and to donate it to Mr. Laplante.is an unusual situation, a particular phenomenon, but it is not enough in itself to prove that there were simulations. For the Court to reach this conclusion, two elements must be present, a material element and an intentional element. In this case, there are no secret acts, there are only actual acts. These acts are the duties of the trustees that were made to the beneficiaries and the deeds of gift that they signed in favor of Mr. Laplante .
  3.  According to counsel for Mr. Laplante , there is a simulation when the intention of the parties is not in conformity with the apparent act. However, in this case, he argued, the intention of the parties was consistent with the apparent act. According to their testimony, all the beneficiaries wanted to donate the amount received from Fiducie DL to Mr. Laplante . No evidence to the contrary has been made. Therefore, the fate of this appeal rests entirely on the credibility of the witnesses. However, despite some weaknesses in their testimony, for the most part, he argued, the witnesses did not contradict each other. As a result, the Minister has failed to prove on the preponderance of the evidence that there are two essential elements to the existence of a simulation.

VI. ANALYSIS

[ 63 ] In principle, the legal relationships established by a taxpayer must be respected in tax matters. However, under the principle set out in Shell Canada Ltd. v. Canada [13] , the courts are not bound by the designation given to a legal transaction if it does not adequately reflect the true legal effects of the transaction. This is the case, for example, when the courts come to the conclusion that the legal process is a sham [14] . In such a case, the Court may determine the new qualification to be given to a legal transaction between the parties on the basis of the true legal effects of the transaction for the parties.

[ 64 ] Pursuant to section 8.1 of the Interpretation Act [15] , in order to ensure the application of the ITA in the province of Quebec, this Court may have recourse to the rules, principles and concepts in force in Quebec. Therefore, in the application of the ITA in Quebec, the Minister may apply the provisions of the CCQ to determine whether there is a situation where the qualification to be given to a legal transaction between the parties does not adequately reflect the actual legal effects of the transaction between the parties. This would be the case in a simulation situation defined in article 1451 of the CCQ

[ 65 ] In the event that the Minister demonstrates the existence of a simulation, pursuant to article 1452 of the CCQ [16] , being a third party in good faith, he may, in his interest, avail himself of the apparent contract or the secret contract. However, based on the principle set out in Shell , supra, the Minister must assess the actual legal relationship between the parties. In the case of a simulation, the actual legal effects of an operation between the parties are found in the secret contract. Therefore, if there is a simulation, the Minister must assess the legal effects of the secret contract.

[ 66 ] In this case, the Minister is of the opinion that the legal effects of the donations of Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau in favor of Mr.  Laplante do not adequately reflect the true legal effects between the parties because they had a legal obligation to remit to Mr.  Laplante the amounts received from the DL Trust, because they had been mandated to receive them by Mr. Laplante .

[ 67 ] I must therefore determine whether Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau accepted Mr. Laplante’s term of office  and therefore participated in a simulation.

A. The Prescription

[ 68 ] Under subparagraph 152 (4) (a) (i) of the ITA, where a reassessment is made by the Minister after the expiry of the normal reassessment period, the Minister must prove that the the taxpayer negligently, inattentionally or intentionally omitted, misrepresented the facts by filing his income tax return. As a result, the Minister had first to prove that Mr. Laplante was negligent, inattention or willful omission, misrepresenting the facts by failing to include in his 2008 income taxable capital of $ 2,593,412.50. To do this, the Minister had to prove that Mr.  Laplante and Ms. Laplante        , Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau participated in a simulation, which is the question that must be addressed to answer the second question in dispute. The decision that this Court must make on the two issues in dispute is therefore based on the same evidence.

B. The simulation

[ 69 ] Under article 1451 of the CCQ, there is a simulation when parties agree to express their real will not in an apparent contract, but in a secret contract. In order to conclude that a simulation exists, two elements must be present: a material element and an intentional element. The material element is the existence of two distinct acts, the apparent act, which contains what the parties wish to make others believe, and the secret act, which expresses the true agreement. The intentional element consists of the will to deceive the third parties about the existence or the content of a convention. [17]

(1) Hardware element

[ 70 ] In this case, the apparent acts are acts of donation. Their existence was not questioned by the parties at the hearing.

[ 71 ] As for the secret acts, according to the Minister, these would be the mandates given by Mr. Laplante to Mrs. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau.

[ 72 ]         By virtue of article 2130 of the CCQ, the mandate is the contract by which a person, the principal, gives the power to represent it in the performance of a legal act with a third party to another person, the agent, who, by the fact of his acceptance, obliges himself to exercise it. Under the first paragraph of article 2184 CCQ, at the end of the term of office, the mandatary is required to remit to the principal all that he has received in the performance of his duties. It was established by the Supreme Court of Canada in Victuni v. Minstre du revenu (Quebec) [18] that the true owner of the money received as part of the fulfillment of a mandate is the principal. [19]

[ 73 ] In this case, I am of the opinion that the evidence is sufficient to enable me to conclude that, on the preponderance of the evidence , Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau each agreed to a term of office of Mr. Laplante , the essential elements of which were to receive from DL Trust an amount of $ 375,000 and to remit this amount to Mr. Laplante.        thereafter. To do this, they all had to use their capital gains exemption, which was just as essential. In return, they were able to retain the alternative minimum tax recovered in subsequent taxation years.

[ 74 ] Ms. The plant gave the most accurate evidence of all the family members as to what happened at the first meeting with Mr.  Laplante . Throughout her testimony, Ms. Laplante did not distinguish between herself and her family. She used the singular and the plural alternately. Since she said that Mr. Laplante had met his entire family at the same time, which Mr. Laplante confirmed , I concluded that Mr.  Laplante had the same discussion with the whole family. Nothing in the testimony of Ms.  Laplante and Mr.Laplante        did not allow me to conclude otherwise.

[ 75 ] Ms. Laplante said in her testimony that Mr. Laplante asked them to give him their capital gains exemption. She confirmed that the exemption of capital gains and minimum tax was discussed at the meeting. Ms. Laplanteunderstood that, in order to do what Mr. Laplante asked  , they had to receive the money from DL Trust first. Ms.  Laplante knew they would each receive approximately $ 375,000. Ms. Laplante said that they agreed to receive the amount of the DL Trust, to give Mr. Laplante        their exemption from capital gains and to give back the amounts received. She said she was very happy to be able to help her brother.

[ 76 ] For the most part, but in less detail, these facts were confirmed by Mr. Michaud. As for Marie-Claude’s testimony, I give her very little weight since she contradicted her parents on a few points. Indeed, unlike her parents, she said that there was no question, at the first meeting, the amount of money they would receive. In addition, she also contradicted her parents by saying that Mr. Laplante did not inform his family members that they would have to pay a minimum tax until after the check was received. meet. She also contradicted her mother on another point. According to her, Mr. Laplante        told them he would pay the minimum tax at the second meeting and not at the first meeting. As for the capital gains exemption, she said she just did not remember what it was.

[ 77 ] In the case of Ms. Rolland and Pierre Laplante and their testimonies, I am of the opinion that Mr. Laplante offered them the same mandate. As in the case of Ms. Laplante’s family , all the essential elements of the mandate were discussed by Mr. Laplante in his discussions with Ms. Rolland and PierreLaplante regarding the awards of December 25, 2008. However, unlike Ms. Laplante’s family members , in their case, they accepted the warrant only when the DL Trust’s check was delivered to Mr.  Laplante.        . I am of the opinion that by accepting the check and handing it over to Mr. Laplante after endorsing it, they have demonstrated their acceptance of the warrant.

[ 78 ] As for Ms. Rondeau, according to her testimony, it also appears that all the essential elements of the warrant were brought to her attention at a certain point, without anyone knowing when or by whom. In cross-examination, Ms. Rondeau stated that the notions of donation and capital gain vaguely told her something, that someone had told her about it, but that she was not able to explain it because Mr.  Laplante was in charge of family tax matters. She also said that the notion of minimum tax told her something, nothing more.

[ 79 ] Like all other beneficiaries, she accepted the DL Trust check; she donned it and handed it to Mr.  Laplante . Given the above, the interested nature of his testimony and that his testimony was vague, I am satisfied that on the balance of evidence, Ms. Rondeau also accepted a mandate from Mr. Laplante in handing him the check received from DL Trust after endorsing it.

(2) Intentional element

[ 80 ] The intentional element is the willingness of the co-contractors to mislead third parties as to the existence or content of a convention. However, it is not necessary to show that the co-contracting parties wanted to mislead the minister by means of simulation [20] . The willingness of the co-contractors to mislead third parties is established by demonstrating the existence of a secret contract that would not have been disclosed to the third party, in this case the Minister.

[ 81 ] In the present case, there is no evidence that Mr.  Laplante disclosed to the Minister the existence of the mandate granted to Mrs.  Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud Pierre  Laplante , Mrs. Rolland and Ms. Rondeau. On the contrary, Mr. Laplante’s position  is that he never gave a mandate to Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre  Laplante , Mrs. Rolland and Ms. Rondeau. . According to Mr.  Laplante , the DL Trust made allocations and the sums thus awarded were then given to him in the form of donations, nothing more.

[ 82 ] As for Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Ms. Rondeau, the evidence shows that they never disclosed to the Minister that they had accepted a mandate from Mr.  Laplante . They never revealed to the Minister that they had accepted Mr. Laplante’s proposal to receive $ 375,000.00 from DL Trust and give it to him.

[ 83 ] According to the evidence presented at the hearing, the parties have not disclosed the existence of warrants to the Minister and have never even intended to do so.

VII. Conclusion

[ 84 ] In         my opinion, according to the evidence before me and on thepreponderance of the evidence , Ms. Laplante , Mr. Michaud, Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante , Ms. Rolland and Ms. Rondeau have all accepted a mandate from Mr. Laplante under which they were to remit to him the sum of $ 375,000 that was to be allocated to them by DL Trust. By donating this money to Mr. Laplante and not disclosing to the Minister that they had accepted such a mandate, they all participated in a simulation.

[ 85 ] As a result, the Minister properly assessed Mr. Laplante on the legal effects of the mandates he gave to Ms. Laplante , Mr. Michaud, Marie -Claude Michaud, Marjolaine Michaud, Pierre Laplante , Mrs. Rolland and Mrs. Rondeau. The Minister therefore correctly added to Mr. Laplante’s income  for the 2008 taxation year a taxable capital gain of $ 2,593,412.50, since Mr.  Laplante had mandated Ms. Laplante , Mr. Michaud , Marie-Claude Michaud, Marjolaine Michaud, Pierre Laplante        , Mrs. Rolland and Ms. Rondeau to receive on their behalf the sum of $ 375,000.00 from DL Trust.

[ 86 ] In view of the foregoing and my remarks in paragraph 69 above regarding the limitation issue, the Minister was correct in reassessing Mr. Laplante for the 2008 taxation year after the expiry of the normal period to establish such an assessment.

[ 87 ]         For these reasons, the appeal is dismissed, with costs.

Signed at Ottawa, Canada, this 23 th day of June, 2017.

“Sylvain Ouimet”

Judge Ouimet

 

REFERENCE:2017 CCI 118
FILE NO. OF THE COURT:2015-349 (IT) G
TITLE OF THE CAUSE:DANIEL LAPLANTE c HER MAJESTY THE QUEEN
PLACE OF HEARING:Montreal, Quebec)
DATE OF THE HEARING:December 12 and 13, 2016
REASONS FOR JUDGMENT BY:The Honorable Justice Sylvain Ouimet
DATE OF JUDGMENT:June 23, 2017

APPEARANCES:

 

Counsel for the appellant:e Serge Fournier

e Genevieve Theriault-Lachance

Counsel for the respondent:e Michel Lamarre

 

LAWYER REGISTERED ON THE FILE:

For Caller:

Name:e Serge Fournier

e Genevieve Theriault-Lachance

Cabinet:BCF sencrl

Montreal, Quebec

For the respondente:William F. Pentney

Deputy Attorney General of Canada

Ottawa, Canada

 

 

[1] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 1, p. 2.

[2] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 1, pp. 7-8.

[3]           Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 2, pp. 1-2.

[4] Supra, note 2.

[5] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 6.

[6] Ibid.

[7] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 5.

[8] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 8.

[9] Ibid.

[10] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 3.

[11] Exhibit A-1, Appellant’s Exhibit Book, Vol. 1, tab 4.

[12] Civil Code of Quebec, SQ 1991, c. 64.

[13] [1999] 3 SCR 622.

[14] Ibid. paragraph 39.

[15] RSC, 1985, c. I-21.

[16]             In this regard, see the decision of this Court in Bolduc v. Canada [GC], no. R. , 2002 CarswellNat 3720, 2003 DTC 221, at paragraph 15: “Nothing in the Act precludes the Minister from benefiting under the provisions of the CCLC and the CCQ in applying the Act in Quebec. on the effects of a contract entered into in Québec. In addition, section 1212 CCLC is a rule of evidence applicable in proceedings under the legislative authority of the Parliament of Canada exercised in the province of Quebec (section 40 of the Canada Evidence Act ). […] ”

[17] Jean-Claude Royer and Sophie Lavallée,Civil Evidence, 4th edition, Cowansville, Editions Yvon Blais, 2008, 1568.

[18] Victuni c. Minister of Revenue (Quebec),[1980] 1 SCR 580.

[19] Ibid.,P. 584.

[20] Transport H. Cordeau Inc. c. The Queen, 99 DTC 5765 (Federal Court of Appeal), paragraph 29.

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook
Share on google
Google+
Share on email
Email

Subscribe to our Newsletter

Stay up to date with daily tax developments.