Realtor and Home Developer “knowingly” failed to report his substantial profits by using principle residence exemption was assessed gross negligence

A licensed real estate agent, who had been reporting income of about $20K a year, realized gains from the construction and sale (in 2006, 2008 and 2010) of three homes in Vancouver (together with a small gain from the sale of a vacant lot) totalling over $2.2 M. He professed to have constructed each home as a principal residence, but did not substantiate that he or his family occupied the homes.

Before going on to find (at para. 203) that the taxpayer “knowingly made false statements or omissions in his 2006, 2008 and 2010 tax returns,” Visser J stated (at para. 201):

Mr. Wall’s false statements or omissions were blatant and readily determinable … . Mr. Wall is a knowledgeable and experienced real estate developer who knew that tax is payable on business income from real estate developments. In my view, he acquired each of the Three Homes with the intention of reselling them at a profit. However, he attempted to conceal his development business by attempting to create a façade of inhabiting the properties and claiming the principal residence deduction. In my view, the circumstances surrounding the acquisition, redevelopment and sale of each of the Three Homes can only be interpreted as a business activity. In addition, Mr. Wall’s excuse for failing to report the profits from the sale of the Vacant Lot is simply not credible.