Ari Ben-Menashe sought reconsideration of a jeopardy order granted by the Federal Court on March 8, 2022, which authorized the Minister to collect an income tax debt of over $7.6 million for various tax years.
The Minister's request for the order was made under subsection 225.2(2) of the Income Tax Act, related to collection actions.
Legal Issues:
Jeopardy Order: Whether the jeopardy order against Ben-Menashe should be set aside.
Full and Frank Disclosure: Evaluation of the Minister's compliance with the requirement for full and frank disclosure in the application for the jeopardy order.
Relevance of Deposits and Withdrawals: The consideration of deposits and withdrawals in Ben-Menashe’s spouse’s bank accounts and whether these were properly disclosed.
Judgment:
Judge: Mr. Justice Diner
Decision: Motion for reconsideration allowed; jeopardy order set aside.
Reasoning:
The Court found the Minister did not fulfill the duty to make full and frank disclosure, omitting relevant information in the application.
Significant disbursements from Ben-Menashe’s spouse’s bank accounts and his alleged unorthodox tax behavior and business expenses were central to the case.
The Court disagreed with the Minister’s characterization of these disbursements as an attempt to place assets out of reach.
Costs: Ben-Menashe awarded costs of $17,179.60.
Conclusion:
The Federal Court set aside the jeopardy order due to insufficient disclosure by the Minister in the ex parte application, emphasizing the necessity of presenting all relevant facts in such applications. The decision underscores the importance of transparency and thoroughness in legal proceedings involving tax collection.
