Source Evidence

"In this case, there is also a problem in identifying the source of the amounts that were transferred to Mr. Deyab and his family during the years in question. This is best illustrated by the summary prepared by the CRA auditor. The largest transfer in issue was during the 2010 taxation year. Approximately $2 million was transferred to Mr. Deyab and his family from a particular BMO Harris Private Banking Account of M.D. Consulting. In the summary prepared by the CRA auditor, she also noted that there was a contribution of $3 million to this particular account on June 30, 2010 (which was prior to the transfers to Mr. Deyab and his family that are in dispute for 2010).\n\nThe paper trail for the source of the $3 million that was transferred into the account of M.D. Consulting (and that appears to have been used to fund the transfers of approximately $2 million to Mr. Deyab and his family in 2010) does not lead back to Mr. Deyab. The trail simply does not disclose the source of these funds.\n\nThe source of this money was identified by the CRA auditor as a particular bank account. This bank account was an account of the numbered company referred to above. The only banking statement for this particular account that is in the record is for the period ending April 30, 2007. The closing balance in this account as of April 30, 2007 was less than $2,000.\n\nAs well, according to the BMO Harris Private Banking Statement for the account of M.D. Consulting from which the transfers in issue in this appeal were made to Mr. Deyab and his family in 2010, $3 million was transferred to this account on April 27, 2010 (approximately 2 months earlier than the date noted by the CRA auditor). The source for this $3 million was identified in this statement as a different account than the one identified by the CRA auditor. The only bank statement for the account identified in the BMO Harris Private Banking statement as the source for the $3 million is the statement for the period ending March 30, 2007. This account is also identified as an account of M.D. Consulting. According to this statement, there was less than $70,000 in this account as of March 30, 2007. Neither the trail identified by the CRA auditor nor the trail disclosed by the BMO Harris Private Banking Statement disclose the source of the $3 million transferred to the account of M.D. Consulting.\n\nThe other documents introduced by Mr. Deyab to support his personal contributions to M.D. Consulting also do not provide much assistance. The main documents that Mr. Deyab was relying on are letters from BMO Harris Private Banking. These letters indicate that there was in excess of $4 million in the account for the numbered company as of September 20, 2005, and that there was in excess of $1.5 million in the personal account of Mr. Deyab’s family as of November 21, 2014. The snapshot views of amounts in these accounts as of particular dates do not assist in determining when or whether these amounts were transferred to M.D. Consulting. To that end, Mr. Deyab also included a letter from BMO Harris Private Banking dated November 30, 2010 that confirmed that the following amounts were transferred from the account for Mr. Deyab and his family to M.D. Consulting:\n\nduring the fiscal year ending March 31, 2007: $1,150,662\n\nduring the fiscal year ending March 31, 2008: $580,786\n\nduring the fiscal year ending March 31, 2009: $60,000\n\nIt would appear from the reconciliation of the shareholders’ loan account (which did not include the amounts withdrawn by Mr. Deyab in issue in this appeal) that amounts totalling approximately $4.5 million were included as debits to the shareholders’ loan account during the years in issue. The total amount transferred to M.D. Consulting, as set out in this letter, ($1,791,448 = $1,150,662 + $580,786 + $60,000) is less than the amount debited to the shareholders’ loan account. Therefore, these transferred funds could not cover the amounts debited to the shareholders’ loan account, without even considering the amounts that were withdrawn by Mr. Deyab that are in issue in this appeal.\n\nIn another letter dated September 4, 2014, BMO Harris Private Banking confirmed that the total sum of $3,154,531 “was transferred from personal investment accounts in the name of Ralph, Mona, Waleed, Tamer and Hany Deyab to various personal accounts in the same names and corporate accounts in the name of MD Consulting 2005 Inc. These transfers took place from the period beginning January 1, 2007 to March 31, 2011.”\n\nThis letter unfortunately is lacking in details concerning when the amounts were transferred and to whom the amounts were transferred. Since the letter indicates that the amounts were transferred to other accounts in the names of the individuals and to the corporate accounts for M.D. Consulting, it is not possible to determine what portion of the approximately $3 million was transferred to M.D. Consulting.\n\nDuring the hearing of this appeal, Mr. Deyab emphasized that there was no dispute that he transferred substantial sums to M.D. Consulting. He argued that this was evidence that was not considered by the Tax Court Judge. However, the details concerning the exact amounts transferred and the timing of the transfers are missing. The Act requires a specific amount in order to calculate a taxpayer’s income, not a general and vague description of uncertain amounts. Simply stating that he transferred unspecified substantial amounts to M.D. Consulting is not sufficient to support a finding that Mr. Deyab was repaying amounts that were payable to him when he withdrew the amounts in issue.\n\nIt is also clear that Mr. Deyab did not maintain a shareholder loan account for M.D. Consulting that accurately included the amounts in issue, and that even the reconciliation that was completed for the purposes of his objection and appeal did not include the substantial transfers from M.D. Consulting to Mr. Deyab and his family that are the subject of this appeal."