In 2003, Revenu Québec undertook a tax audit of the Relais de Saint-Jean, a restaurant in Saint-Jean-sur-Richelieu just south of Montreal, and incorrectly concluded in 2004 that the restaurant had not declared $ 1 million. dollars in sales. By the end of 2004, this amount had been reduced to $ 500,000.
Revenu Québec carries out corporate tax audits on behalf of the Canada Revenue Agency in Quebec.
Owner Gary Chinois and his wife Isabelle Desbiens denied failing to report the $ 500,000 in income, but said they were told to start paying off the debt in installments of $ 6,000 per month. Failure to make the payments, they were told, would lead to the seizure of their assets and bank accounts.
Chinese said he hired accountants and lawyers to fight the results of the audit. He said he borrowed against his home, business and investment properties in an attempt to stay open while making payments and funding the legal battle.
This battle was won in 2012 when a Quebec tax court ruled that the method used to determine a failure to report income was flawed. The CRA and Revenu Québec were ordered to reimburse all the money the Chinese had paid.
At this point, Chinese said, he owed $ 350,000 to accountants and lawyers. He sued both the CRA and Revenu Québec in 2012 for compensation for his costs and for pain and suffering.
That same year, Chinese said, he had to shut down his business because he could no longer afford to run it. He rented half the space to another company, opening a small bar in the remaining space.
The lawsuit was not heard in the Superior Court of Quebec until 2017. Mr. Chinois said the court ruled against him, telling him he should have filed his lawsuit within three years of learning that they had not declared income in 2004.
This decision was appealed to the Quebec Court of Appeal in 2019, which overturned the lower court’s decision.
Appeal to the Supreme Court
This decision did not, however, award any compensation or costs. Chinese said he now hopes the Supreme Court of Canada will hear his compensation case, which he said would set a precedent for making the CRA and RQ liable for errors that cause financial harm to individuals or businesses.
“In a way, I’m glad I managed to get this decision in the Court of Appeal to prevent a nightmare like this from happening to someone else. But at the same time, I feel like I’ve been cheated, ”Chinese CBC News said.
“There is nothing worse than being accused of anything, especially something that has destroyed my business, destroyed family relationships, and destroyed me financially. ”
Chinese and his wife were partners in the business with his brother; the stress of the long financial struggle, he said, has ruined that relationship.
He told CBC he believes he owes at least $ 800,000 in legal and accounting fees when his case is heard in Canada’s highest court. Chinese said he is seeking $ 5 million in damages for the stress and aggravation the 16-year-old fight has caused him and his family.
In her affidavit in support of Chinese Supreme Court claim, CFIB’s Pohlmann said her organization wanted to see the case heard because Canada’s tax agencies should be held accountable for their mistakes.
“The advice of the Supreme Court of Canada on this issue may have the effect of reversing the current culture of confrontation found in parts of Canada’s tax administration systems and bringing a more collaborative approach to their relations. with taxpayers by allowing them to carry out their tax mission while respecting the realities of independent businesses, ”Pohlmann said in the dossier.
The CRA said it was unable to answer questions from the CBC at the time this story was published.