The infection is heading north!

[Burnaby49]

I'm a long-time Canadian reader, first-time poster. I'd lurking still except this case is too good to not pass around. Somehow one of our denser citizens picked up on your sovereign philosophy and ran with it notwithstanding the fact that Canada's legal and political history, along with its form of government, is quite different from yours and doesn't provide the same legal back-story which your sovereigns use as a defense of their position.

The case copied below is his recent Tax Court hearing. I've snipped the year-by-year court review of the income evaded in paragraphs 3-4. Essentially he ran his own garbage disposal company and simply reported no income in 1999 to 2001 when he was caught. Basically his defense was that the Canada Revenue Agency was after the wrong guy. He was just the "agent" for the "taxpayer", both of whom happened to live in the same body.

He got this nonsense from a seminar given by someone called Russell Porisky who convinced him that, as a "natural person", as opposed to the "person" defined in the Income Tax Act, he was not taxable on any compensation received because it was his private property.

In 2006 he was found criminally guilty of income tax evasion, on the basis of wilful blindness, on exactly the same issues and unreported income and apparently still refused to pay, hence the Tax Court hearing. The judge in the 2006 case got mixed up from time to time who was supposedly addressing the court because, when the defendant testified on his own behalf, he sometimes testified as the "agent" and other times as the "taxpayer". For example;

14. The accused was evasive in many aspects of his evidence and, at times, his answers simply defied logic. Examples of his include:

1. When asked whether he signed the 2001 tax return he replied that “the legal representative of the taxpayer signed it.”

2. At one point in his cross-examination when he was asked by Crown Counsel if he had signed a particular document he responded by asking “Who are you talking to?”

3. On another occasion he was asked if he had received a GST credit cheque in the amount of $207.00. He responded that “the taxpayer” had received it. He was then asked if he had cashed the cheque. He responded that “the taxpayer” did. He was then asked “Did the taxpayer give it to you?” The accused responded “No, the taxpayer gave it to the legal representative of the taxpayer and he cashed the cheque.” All the while the accused was referring to himself.

The judge noted in his decision that although the defendant claimed he was not a taxpayer he was careful to actually fill in some forms and records to keep his government benfits covered. While reporting no income for tax purposes he reported earnings of $38,000 for Canada Pension Plan purposes to ensure he got the equivalent of your Social Security. As the 2006 decision stated;

5. Despite claiming on his tax returns for 1999 and 2000 that his income was “N/A”, the accused claimed GST credits. He explained this by stating that “the taxpayer is entitled to any benefits which he is entitled to.”

6. In the year 2000 the corporate T4 summary, which was signed by the accused, showed Insurable Earnings for the accused of $38,000.00, the maximum for Canada Pension Plan purposes. The accused explained that this was inserted because “the taxpayer” wanted to maximize his Canada Pension.

7. While the accused stated that he believed he was exempt from the payment of tax he sought to maintain his right to contribute to the Canada Pension Plan and to receive GST credits. His explanation was that the “taxpayer” was a separate entity from himself as a “natural person.”


Citation: 2011 TCC 495

BETWEEN:

CHANDLER TURNNIR, Appellant,

and

HER MAJESTY THE QUEEN, Respondent.

COURT/JUDGE/DATE:

Tax Court of Canada, V.A. Miller J., October 20, 2011. (Docket: 2009-2342(IT)G)

COUNSEL:

Appellant for himself.
Selena Sit, for the respondent.

REASONS FOR JUDGMENT

V.A. Miller J.:—

[1] The Appellant has appealed the reassessment of his 1999, 2000 and 2001 taxation years in which the Minister of National Revenue (the "Minister") included unreported income in the Appellant's income as follows:

Year
Reassessment Employment/
Other Income Taxable
Dividends Interest
Income
1999
April 29, 2005
$ 64,200.00
$ 15,375.00

2000
March 7, 2002
April 29, 2005
$ 20,000.00
$444,000.00
$ 12,741.00
$ 3,750.00
$122.00
2001
April 29, 2005
$ 16,283.63
$ 4,500.00
$ 10,205.00


The Minister also assessed gross negligence penalties in each of the years and a late filing penalty for the 2000 taxation year.

[2] The Appellant reported nil income on his income tax returns for 1999, 2000 and 2001.

[3] In 2006, the Appellant was convicted by the Provincial Court of British Columbia of evading the payment of taxes by failing to report taxable income in the amount of $574,075 between December 31, 1999 and May 1, 2002. The Appellant's defence at the criminal proceedings was that he was a "natural person". [4] According to the Reply, the Minister made the following assumptions of fact when he determined the Appellant's income tax liability:

a) at all material times the Appellant was the sole shareholder, director and the president of Chandler Holding Ltd. ("Chandler") which was formerly known as Fair Garbage Disposal Ltd. ("Fair Garbage");

b) Fair Garbage changed its name to Chandler on February 18, 2000;

c) at all material times the Appellant was an employee of Fair Garbage and Chandler;

[SNIP]

[5] At the hearing of this appeal, it was the Appellant's position that he is the "authorized administrator of the legal person named" in the Reply. He stated that all of the assumptions were false because he is a "sovereign person" and as such he does not have to pay taxes unless it can be shown that there is a contract between him and the Government of Canada. It was his opinion that only government employees had to pay taxes. The Appellant made other statements which reflected his displeasure with the governments of Canada and British Columbia. He stated that he was not relying on the "natural person" argument which I note was his position in his Notice of Appeal.

[6] Subsequent to the hearing, the Appellant filed documents with the court which purported to show that there was a Security Agreement between him, "the flesh and blood living man" and the straw man / legal entity CHANDLER TURNNIR.

[7] The Appellant did not attempt to satisfy the burden of proof. Aside from stating that the assumptions were incorrect, he adduced no evidence to challenge the assumptions.

[8] The Appellant's argument that he is a "sovereign person" and cannot be taxed unless there is a contract between him and the government is without merit. The Income Tax Act (the "Act") does not distinguish between "person", "natural person" and "sovereign person". The definition of "person" in section 248 of the Act includes a "flesh and blood living man" such as the Appellant. As stated by Gauthier J. in M.N.R. v Stanchfield, 2009 FC 99 at paragraph 17:

...The whole notion of their being a second capacity distinct from the one of a natural person or human being is a pure fiction, one which is not sanctioned by law. One can describe nothing in any terms one wishes; it still remains nothing.

[9] The Appellant is a "person" who was resident in British Columbia, Canada in 1999, 2000, and 2001 and the income he received in those years is taxable.

[10] It is worth mentioning that the Appellant has argued that he is not liable for income taxes; and yet, he seeks the benefits of being a person resident in Canada. In his income tax returns he applied for the GST credit. Also, the 2000 T4 corporate summary showed that he had the maximum pensionable earnings for Canada Pension Plan purposes. At the criminal proceedings, the Appellant explained this by stating that "the taxpayer is entitled to any benefits which he is entitled to" and the "taxpayer" wanted to maximize his Canada Pension.
[11] The Minister has the burden to show that gross negligence penalties were properly assessed. According to the Federal Court in Venne v. The Queen, 84 DTC 6247, gross negligence involves a high degree of negligence tantamount to intentional acting or indifference as to whether the law is complied with or not.

[12] The evidence has shown that prior to 1999 the Appellant reported his income and paid taxes on it. He stated that in 1999 he found out that there must be a contract between the legal person and the government in order for him to be liable for taxes. He wrote to the Canada Revenue Agency ("CRA") and was told that he had to report all of his income. In spite of this, the Appellant reported nil income in his income tax returns for 1999, 2000 and 2001. The Appellant was also advised by his former accountant, R. W. Burr, C.A., that he had to report the amount of $444,000 which he withdrew in 2000 from his corporation, Chandler Holdings Ltd. In a letter dated December 18, 2001 to the Appellant, Mr. Burr wrote:

I am concerned that $444,000 of wages were shown in the company records, paid to you in the prior year, that you have not reported on a personal tax return nor prepared T4 slips for (both of which I would argue are necessary).

You should be aware that you have a risk of having the wage deduction disallowed in the company because you have failed to report it personally.

In view of your opinion that you do not agree with the current assessment of personal income taxes, I am enclosing a photocopy of a recent release concerning a tax court case that went against a taxpayer with similar views. You might find this of interest and you should consider it carefully in your current stand.

[13] The Appellant's failure to report his income was intentional and I am satisfied that the Respondent has met the onus in this appeal and the subsection 163(2) penalties were properly assessed.

[14] The late filing penalty was also properly imposed and the Appellant did not speak to the issue.

[15] The appeal is dismissed with costs.

Signed at Ottawa, Canada, this 20th day of October 2011.

"V.A. Miller"
V.A. Miller J.

[Burnaby49]

Actually, after re-reading the 2006 evasion decision, I may be wrong on the sovereign issue.
I thought the court referred to a strawman argument put up by the taxpayer but I can't find one in the decision. His position at trial was more akin to your Section 7701(a)(1) argument;

"The term ‘person’ shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.”

Mr. Turnnir, in his defense, used the same position, that "includes" was a restrictive rather than expansive term;

[21] Mr. Turnnir claims that the funds he received which he did not report on his tax returns for the 1999, 2000 and 2001 tax years were not subject to tax. He says this is so because the funds were in the nature of “compensation paid to him as a natural person under a contract for hire.”
[22] The issue of the applicability of the Income Tax Act to natural persons has been dealt with definitively by the British Columbia Court of Appeal in R. v. Lindsay, 2006 BCCA 150 (CanLII), 2006 BCCA 150. Madam Justice Newbury stated at paragraph [3]:
As far as not being “a” person, Mr. Lindsay relies on the definition of “person” at s. 248 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), as amended, which states:

“person”, or any word or expression descriptive of a person, includes any corporation, and any entity exempt, because of subsection 149(1), from tax under Part I on all or part of the entity’s taxable income and the heirs, executors, liquidators of a succession, administrators or other legal representatives of such a person, according to the law of that part of Canada to which the context extends;

Notwithstanding the word “includes”, Mr. Lindsay takes the position that only artificial persons such as corporations come within the definition, so that he is not subject to the requirement to file a return under the Income Tax Act. This position ignores the fact that the ordinary meaning of “person” is a natural person (including, I would have thought, a “free will, full liability flesh and blood living man”) and that the purpose of the statutory definition is to extend the meaning to include other specified legal entities as well. Mr. Lindsay’s position that he is not a “person” for purposes of the Income Tax Act is simply not tenable.

As a personal note on where Mr. Turnir's tax position got him, the court, in his sentencing decision, stated;

[4] Mr. Turnnir is 55 years old. He lives alone in a motor home in the Chilliwack area. He is employed by Pollard Equipment as a heavy-duty mechanic and as a supervisor. He was born in Alberta and he comes from a large family, as I understand it, 11 siblings. He is separated from his wife of 13 years. I am told the separation occurred when he was arrested and charged with the offences that are before the Court. He pays support to his wife.

[grixit]

Wait i'm confused. Is the "he" that pays the support the taxpayer, the agent, the representative, the counsel, or the etherial body of the named entity. And this wife they speak of, which one is she married to?

[Burnaby49]

I assumed that she dumped all of them except to retain a tentative connection to whichever one the Family Law court nailed for support. I'm not masochistic enough to look that one up and see how the court sifted through the contenders to pick the winner.

Since his position seems to be that all the players resided inside the one physical body maybe the Natural Person / Taxpayer / Agent / Representative / Whomever squabble from time to time about who was really to blame for the fiasco. Must be crowded in there.

[notorial dissent]

What I find really amusing is that the not terribly inventive, nor apparently bright crowd up north have also taken to using the UCC commerce arguments so popular with the sovrun crowd down here, never minding the fact that that set of laws ONLY exists in that format in the US, in their (endlessly losing) legal battles with the Crown. I think a lot of this you can probably blame on Roger Elvick, but I don’t know about much of the rest of it. It is really entertaining when they try and use cites to the IRC to argue against a RC issue, and I am sure it must add to the general confusion.

[wserra]

Glad to see that we here in the U.S. haven't cornered the market on stupidity.

Welcome to Quatloos, Burnaby.

[notorial dissent]

No, but we do seem to be exporting it, as this nonsense seems to be showing up in Canada, Australia, and England every now and again.

I still find it amusing when I see the same failing UCC arguments used in court cases in Canada and Australia that have been literally cut and pasted from sovrun screeds we see all the time here, and they lose in court and wonder why. I don't know of anyone trying to use IRC cites in Australian tax cases, yet, but I have seen them in Canadian ones a number of times. And somehow, it doesn't seem to work any better for them there than it does here.

Which goes to show that a bad idea can be universal, sloppy, lazy thinking knows no borders or boundaries.

[Burnaby49]

Sadly I have to admit to a paucity of imagination up here. I spent my career (now retired) in tax and pretty much every tax protester argument I saw was regurgitated straight-up from your sovereign nutcases. The Canadian wannabes don't even bother to try and convert the arguments to local laws and legal standards. Turnnir is as good an example as any. He seemed, on his testimony, to have no clue about Canadian tax laws or even what "includes" means in standard English. He just kept repeating what he'd heard in some seminar given by a total stranger. He apparently saw no downside because, if caught, he thought he could claim an honest belief that he was right. I believe you have this as the Cheek defense. Court didn't buy it and nailed him on wilful blindness since he made no attempt to actually check it out. it didn't help that his long-time accountant testified that he told Turnnir he was wrong and got fired for his troubles.

[LPC]

The judge noted in his decision that although the defendant claimed he was not a taxpayer he was careful to actually fill in some forms and records to keep his government benfits covered. While reporting no income for tax purposes he reported earnings of $38,000 for Canada Pension Plan purposes to ensure he got the equivalent of your Social Security.

Classic. He may be nuts, but he's not crazy.

Someday, we'll have to do a tally on the number of nuts who protest the tax system while collecting Social Security, government pensions, or other payments or benefits from the government.

[notorial dissent]

Does Canada even have a willful stupidity statute? I didn't think it did, I have certainly never seen it referenced. But then again, the Canadian and British systems have never been particularly tolerant of that sort of thing as I recall.

[Demosthenes]

http://www.vancouversun.com/opinion/Chi ... story.html

Excerpts:

For years, a Chilliwack couple, Russell Porisky and Elaine Gould, have run a school called Paradigm Education Group, which teaches people how to avoid paying income taxes.

At his seminars, Porisky teaches students that with proper interpretation of the law, and proper arrangement of their business affairs, they can receive income as a "natural person" rather than a taxpayer, and thereby avoid income taxes.

Porisky and Gould originally chose trial by jury. Jury selection was to commence on Nov. 1; however, they failed to show up, so a warrant was issued for their arrest. The next day, they were arrested and taken into custody. Bail was set at $20,000 each.

As mentioned, the federal government doesn't buy this argument, but many others have. Paradigm's pitch has proved popular and generated handsome revenues, as indicated by the charges.

The government alleges the couple failed to report taxable income totalling $1,111,564 for the fiveyear period ending December 2008, thereby evading $225,222 in income taxes.

[Kestrel]

Since his position seems to be that all the players resided inside the one physical body maybe the Natural Person / Taxpayer / Agent / Representative / Whomever squabble from time to time about who was really to blame for the fiasco. Must be crowded in there.

Interesting how often we've seen the symptoms of Dissociative identity disorder being exhibited in tax courts.

Now if the split-personality Natural Person / Taxpayer / Agent / Representative / Whomever actually claimed to be suffering from the psychiatric malady, he/she/it might have a somewhat understandable excuse.

[Burnaby49]

Thanks Demo. Talk about Coincidence! I mentioned Porisky yesterday and he pops up in an article in today's Vancouver Sun. I subscribe to it but haven't read today's edition yet, my wife grabbed it first.

I'd forgotten about Eva Sydel, a sucessful dentist who totally screwed herself by drinking the entire bucket of natural person kool-Aid topped off with a generous helping of Freemason and international Jewish conspiracies. She ended up in jail over it, a notable achievment in Canada where tax protesters/evaders generally get a fine and a solemn little speech from the bench how we all have to pay our fair share in a just society.

Her defense at her criminal trial was the same as Turnnir, it's not my fault, somebody told me I didn't have to pay tax. From her trial decision;

[19] At the start of the defence case, then, it became clear that on the defence case, the live issues that would be cross‑examined on which would be adduced and argued, would relate to “officially‑induced error” and to “intent.” Mr. Christie made it quite clear that his intention was to call a Mr. Persky, who was an individual who had put on a number of tax seminars and had produced written materials that went along with the seminars; that Dr. Sydel had attended a number of his live seminars; and also that Dr. Sydel had obtained videotapes of those live seminars and the written material from those seminars. In addition to that, Mr. Christie outlined that Dr. Sydel had met privately a number of times with Mr. Persky to discuss his views and opinions, about how somebody could structure their affairs so as not to pay taxes, or whether one simply need not pay taxes, depending upon how they viewed their status in Canada. There was a discussion about “natural persons,” “sole corporations,” or “corporation soles.”

[20] In any event, it was very clear that what Mr. Christie was proposing to do was, to lead evidence through Mr. Persky, and then through the tapes of the lectures that Persky had given and that Dr. Sydel had seen, to make out a defence of lack of intent, or at least to raise some reasonable doubt that the necessary intent was not there for Dr. Sydel to knowingly or wilfully break the law with respect to non‑filing or false filing or evasion of income tax. He said that one would have to listen to all of the same pieces of information that Dr. Sydel listened to, in order to fairly come to a conclusion whether she had raised a reasonable doubt or not as to her honest intent. His argument was, that in order to meet an argument that the Crown would raise that a mistake at law generally is not a defence, he would have to show that, based upon the information that she had, it was reasonable for her to have honestly believed, that she did not have to pay income tax and, accordingly, did not have the culpability or the mens rea to deliberately violate the Income Tax Act.

She of course lost badly but, then again, what can you expect when you get your tax advice from Sir Larry Loophole?

g. At the tax seminars most of the lecturers used aliases, as opposed to their real names. Dr. Sydel said that anyone was free to use whatever name they chose. She testified that the reason given by the lecturers for using aliases was to protect their privacy. She did not regard this as suspicious or unusual, even though one of the lecturers went by the alias, “Sir Larry Loophole”. How could an intelligent, well educated, worldly, 39 year old professional, not be suspicious?

h. At the beginning of each of the five lectures presented by Mr. Porisky, the following caution was given: “In no way should this be construed as either legal or financial advice. You should consult a competent expert”. Mr. Porisky frankly told the attendees at his lectures that “I am in the building trade. I am not a lawyer. I can’t give legal advice. I am not an accountant. I can’t give accounting or financial advice. I am just a guy banging nails”. He also said, ‘I strongly recommend you consult a competent expert on this subject matter”. Dr. Sydel chose to ignore Mr. Porisky’s advice, even though it was loud and clear. She decided not to seek out a professionally trained tax lawyer or tax accountant. She chose to remain wilfully blind.

i. Dr. Sydel knew that each and every lecturer was not a tax lawyer or tax accountant. Every lecturer was “up front” about their lack of accreditation. Nonetheless, they talked about the law, the statutes, the interpretation of the law and the statues, they discussed court cases and reported court judgments. Dr. Sydel accepted their views as “experts” who were imparting accurate information and opinions as to what the Canadian law was. She said that she could not recall if she questioned any of the lecturers during the seminars, she said that she did not research any court cases they referred to, she did not go “on line” or to the law library. She was told that there were decided and reported legal cases throughout Canada relating to the issues under discussion. To not have read any of these cases for herself, or even so much as to ask the lecturers for copies of the cases they said were directly on point, is evidence of her wilful blindness.

j. At the early lectures by Detax and Untax, Dr. Sydel was asked why, if the Lt. Governor of British Columbia, The Queen and the Bishop of Victoria, had all established themselves as “corporation soles” and thereby avoided the payment of taxes, why wouldn’t any other resident of Canada be able to do so, also? She accepted this rhetorical question and answer and placed an advertisement in the Westender newspaper, announcing that she now was a “corporate sole”. How could an intelligent, educated person not seriously question this rhetorical question? The answer is: she was being deliberately blind. Later on, after attending the Porisky lectures, she realized that this hypothesis had no legitimate basis. However, this realization still failed to motivate her to obtain some tax advice from traditional, accredited and qualified tax specialists. Instead, she continued only to attend more seminars given by Mr. Porisky, who you recall, had clearly cautioned her and the others to seek qualified tax advice, before relying or acting on what he was saying.

[.]

There's a book in here somewhere.

"The many faces of Chandler Turnnir: Having your Canadian tax cake and eating it, too."

Subtitle: "Who, exactly, are you speaking to?"

Never mind that the whole "Eve" multiple-personality thing has been totally discredited. That would just be an element of why Chandler and his many imaginary internal buddies are right and no argument can ever possibly defeat them.

[jkeeb]

I wonder if "no name" ever lurks any more.

[Arthur Rubin]

There's a book in here somewhere.

Don't tell Demo.

[Burnaby49]

As with Turrnir, Ms. Sydel's obsession with not paying tax had a catastrophic effect on her personal life. She was a successful dentist prior to her tax problems. The recent newspaper article refers to her as a "former" dentist although she is now only in her mid 40s. At her criminal trial it was noted that she was estranged from her father and sister because of her obsession with her tax opinions. So, apart from the criminal conviction, jail time, penalties, back taxes with interest, and probably huge legal fees, she torched her professional and personal life.

[Number Six]

It's kind of unusual to see these Canadian tax protestors from time to time, as when I spent some time in the Eastern Townships, I found most of the English people there were unusually pro-government and warned vociferously against violations of the various laws. Many of the Tories went up there after the Brits lost the war, and there are still some there keeping pro-government sensibilities strong and alive. I ran an essay on taxes by a Nova Scotia farmer a few years ago and he said they did not have the problem of tax protestors up there, it must have to do with how heavy-handed they are.

If these people would ever learn--do not do complex taxes except through a credentialed accountant. Don't think you can fight the legal system without a lawyer. People don't do their own dentistry or operations do they?

[Burnaby49]

It's kind of unusual to see these Canadian tax protestors from time to time, as when I spent some time in the Eastern Townships, I found most of the English people there were unusually pro-government and warned vociferously against violations of the various laws.

That's because you were on the wrong side of the country. Our tax protest movement is focused here in the west, largely in Alberta, our most libertarian province. As an example our Detax movment is centered there. It is run, at least until recently, by a guy called Eldon Warman. Website is;

http://www.detaxcanada.org/

You'll note it borrows very heavily from American sovereign/tax protester movement and a heavy dose of anti-crown anti-pope conspiracy theories. Warman ran in the 1988 federal elections as a candidate for the Calgary Southeast riding and managed to get 58 votes out of a total of 51,825 cast. He ran as a member of the Commonwealth Party, which supported the ideology of U.S. politician Lyndon LaRouche.

However our tax protesters are overall a pretty trivial issue compared to your mob. They mainly end up in provincial courts charged with refusing to file tax returns. Their complex technical arguments tend to be along the lines of;

"The charges are against JOHN N. SMITH, I'm jOHn n SmITh, so you've got the wrong guy". Works about as well up here as it does in the states.

[Burnaby49]

My apologies for the formatting of the prior post. I'm new to this and haven't figured out yet how to put quotes in boxes.