A Southside couple who claimed Canada Revenue Agency (CRA) had targeted them out of jealousy and envy has lost their court case after a lengthy trial at the Prince George provincial courthouse.
Nathan and Elly Foote took the CRA to court in March 2010.
Summarizing the couple’s allegations, Justice Lisa Warren said the couple alleged CRA officials, "motivated by jealousy and envy, conjured up a
scheme to inaccurately inflate Mr. Foote's net income so as to unjustifiably pursue criminal charges against him, and reassess him hundreds of thousands
of dollars in tax arrears, penalties and interest."
The Southside couple had been living on a ranch property in Southbank since the early 1970’s. They had a horse logging and horse ranching business, as
well as a summer horse camp for girls.
All three businesses were under Nathan Foote's name and, in 2002 or 2003, they were transferred to the couple's three daughters as part of a plan to
retire, but without payment in return, according to the Prince George Citizen.
Each of the couple's daughters received notices of assessment in the amount of $46,500 in unpaid taxes in 2009. The reason was the transfer of the
property at a time when their father was indebted to the CRA for unpaid taxes.
In 2006, the CRA launched an audit for the couple.
The auditor found that the couple had been deliberately understating their revenues and overstating their expenses to minimize their taxes, and
the matter was handed over to the CRA's criminal investigations branch.
In March 2007, 11 CRA officers accompanied by a uniformed RCMP officer appeared on the couple’s property with a search warrant. They searched
for evidence over a nine-hour period, according to the Prince George Citizen. The CRA then referred the matter to the federal public prosecutor with a
recommendation that criminal charges for tax-evasion related offences be laid.
Officials also issued claims for unpaid taxes, penalties and interest adding up to nearly $400,000, prompting Foote to declare bankruptcy. In the end,
however, no charges were laid against Foote and he was discharged from bankruptcy, releasing him from his debt to the CRA.
In a 59-page decision outlining the events and allegations, Warren agreed officials did make mistakes in their analyses of the couple’s finances but
asserted much of the problem was to do with the state in which the Footes kept their records, according to the Prince George Citizen. Consequently, the
mistakes and erroneous assumptions made by CRA officials "do not warrant the drawing of any inference of malice."
Moreover, Warren dismissed the Footes' allegations of conspiracy, explaining that there were many different CRA officials involved at different stages and there was no direct evidence to support an agreement among them to conjure up a scheme.