A British Canadian money manager who’s been at odds with the Canada Revenue Agency for more than a decade wants a judge to toss out a nearly $5 million bill for back taxes, saying the CRA never sent it to him and now it’s too late.
Whether Charles Shaker, 44, has to pay up may hinge on the proficiency of the CRA’s mail department.
An auditor concluded in March 2017 that the former Ottawa-area resident owed $3.8 million in extra taxes for 2008 and 2009, according to court records, based on calculations that he had derived millions of dollars in undeclared personal benefits like car and condo fee payments from a financial planning and consulting company he owned. With penalties and interest, the amount has grown to $4.8 million.
But in addition to disputing those numbers,Shaker alleges the CRA omitted a basic step: It never properly sent him notice that it had reassessed him, or any indication of the amount it wanted him to pay. He’s contesting the bill in Tax Court, asking a judge to set it aside.
“The CRA has proffered no evidence that it gave Mr. Shaker any notice whatsoever of the alleged tax debt,” his lawyers wrote in a separate but related proceeding last year.
“The CRA is legally required to provide the debtor with proper notice…. Accordingly, there is not, and never has been, any valid tax debt owed by Mr. Shaker.”
The CRA spent more than five years looking into Shaker’s dealings, and then issued a notice of reassessment to Shaker in March 2017, according to court documents. (Adrian Wyld/The Canadian Press)
The CRA wouldn’t comment directly on its dispute with Shaker, citing the ongoing court case and taxpayer privacy. It hasn’t yet filed its response in Tax Court and has obtained three extensions to the normal deadline.
CBC News emailed Shaker and his tax lawyer Jeff Pniowsky last month and earlier this month requesting comment. Criminal defence lawyer Brian Greenspan replied a week later — saying he’d “been requested to respond” — and that Shaker “vigorously and unequivocally denies any suggestion of impropriety or wrongdoing and will take appropriate action with respect to any renewed attempt to tarnish his reputation by an innuendo of suspicion.”
CRA could be ‘out of luck’
The CRA does indeed have to send a notice of assessment or reassessment — within required time frames — before it can start trying to collect on any debt, says David Rotfleisch, a Toronto accountant and tax lawyer who isn’t involved in the litigation.
“The CRA has the onus of proving, ‘Yeah, we sent it,'” he said. “It’s not a hard onus. They just have to show that someone mailed it,” to the most recent address that the taxpayer provided.
Otherwise, “the CRA is out of luck.”
Shaker appears to have landed on the CRA’s radar in 2010 largely because his name was on a leaked list of 130,000 people and entities with ties to confidential accounts at HSBC’s private bank in Geneva, according to court records from an earlier case.
Court files show the CRA wrote Shaker last year about his huge — and growing — tax bill. He says he never saw it because it was sent to the wrong address. (CBC)
A CBC News investigation last year found records in a number of tax-haven data leaks showing he at one point owned or was a director of several offshore companies in the British Virgin Islands and Barbados.
After the CRA spent more than five years looking into his dealings, it issued a notice of reassessment to Shaker on March 31, 2017, a tax officer says in a sworn statement filed in one of his earlier court cases.
But no such notice is included as an exhibit, and so far there’s no indication in any of the three separate court disputes between him and the tax agency that it mailed one to his address in London.
Shaker says in his sworn statement that he never received anything and that the first time he learned of his supposed debt was last year, when the CRA moved to seize proceeds from two downtown Toronto penthouses that had just sold for a combined $4.3 million. The agency claimed Shaker had an interest in the properties that could be recouped toward his alleged debt. But a judge disagreed, finding that his name was only on title for the condos because he was one of several trustees for the real owner.
That said, the onus is on taxpayers to provide the CRA with an up-to-date mailing address, says tax litigator Jenny Mboutsiadis, of the Toronto-based firm Fasken. Mboutsiadis, speaking generally, says it’s quite common for taxpayers to claim that they didn’t receive a notice of reassessment — and therefore have time to object to it. But the CRA doesn’t have to go far to rebut that.
“If the address on the reassessment is the same as the address on record with the CRA, then it’s valid,” she said. “The CRA will show a printout from its database showing the address they have for the taxpayer, and they’ll show another printout showing where it was mailed.”
Mishmash of addresses
In Shaker’s case, the court records show that CRA personnel were mailing notices and requests to a mishmash of addresses in London after he moved there in late 2009. In his sworn statements, he says he received some of that correspondence but far from all of it, since often the addresses were out of date.
Shaker’s lawyers don’t hold back in their pointed criticism of the agency’s efforts both in auditing him and in postal proficiency.
At one point, the CRA was addressing mail to Shaker’s apartment building on Hertsmere Road in London but omitting the actual suite number, and the mail was being returned to Canada.
“The apparent oversight … is, at its worst, a deliberate omission, and at its best, sheer incompetence,” the lawyers write in their court submissions.
In other correspondence filed in court, a lawyer for Shaker says: “There is a persistent lack of professionalism in the entire approach… We must question both the competence with which the audit is being carried out and the bias of those doing so.”
The lawyers are trying to have Shaker’s 2008 and 2009 reassessments set aside. A Tax Court judge will likely eventually rule whether the reassessments were properly sent, and if not, whether the CRA can exceed the normal three-year time limit for sending them.
Normally, the Income Tax Act requires the CRA to send out reassessments within three years of its initial assessment of someone’s tax return. After that, it has to show special circumstances like fraud or misrepresentations due to neglect or carelessness.
Send tips on this or any other story to zach.dubinsky@cbc.ca or call 416-205-7553.
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
