Sidhu v. M.N.R.
A-871-91
Mahoney J.A.
17/9/93
4 pp.
Failure to keep records-Application to set aside Tax Court decision upholding Minister's decision to disallow deduction of wages claimed to have been paid by partnership-Applicant carrying on farming business with partners which employed seasonal workers who were often transient, illiterate, uneducated-Although employees paid on seasonal basis, sometimes cash advances made to employees for necessities by partners or partnership-Cash advances necessary as such workers often not having bank accounts, making it difficult to cash cheque-At end of season some payroll cheques signed over to partners and redeposited in personal and partnership bank accounts in recognition of advances-Tax Court Judge holding if taxpayer in business failing to keep records, books of account, as required by Income Tax Act, s. 230 cannot expect Revenue Canada to allow claims for expenses-Whether conclusion based on finding applicant not discharging onus to establish on balance of probabilities wages paid or on finding failure to keep proper records fatal to claimed deduction-Application allowed-Conclusion based on failure to keep records-Income Tax Act, s. 230(1) requirement to keep records absolute, but failure to do so resulting in liability to conviction of offence under s. 238(2), not in conclusion unrecorded transaction not occurring-Failure to record transactions handicap to taxpayer seeking to discharge burden of proving took place, but trial judge must decide on balance of probabilities, having regard to all evidence and its credibility whether any, none or all took place-Income Tax Act, S.C. 1970-71-72, c. 63, ss. 230(1), 238(2) (as am. by S.C. 1988, c. 55, s. 181).