Canada Revenue Agency went after Irvin Leroux because he incorrectly reported income tax and GST owed for three years, the tax collector says in a response filed with the courts to the local businessman's most recent statement of claim.
The matter was ultimately settled out of court for an amount less than that reached in an initial reassessment, the CRA said, and denies Leroux' allegations of misfeasance and negligence.
A final income tax reassessment showed that for 1994, rather than a $76,000 net business loss, Leroux appeal was resolved by a consent to include $147,448 in net income for a difference of $220,000.
The outcome completely eliminated a $76,000 loss and resulted in $68,000 of taxes owing, in addition to penalties and interest, the CRA said in the response.
For 1995, losses Leroux previously claimed were substantially reduced to $76,000 from $190,000, a $114,000 difference. This reduced the losses Leroux could carry back to offset past income or carry forward to offset future income and thus affected his liability for past or future taxes.
The CRA also denies destroying or losing any of Leroux's records, saying they were in poor condition at the time of the audit and further claims Leroux granted the auditors explicit permission to take the records from his home, and that any personal records auditors retained were in relation to expenses inappropriately claimed as business expenses.
None of the allegations have yet been proven in court.