Conrad Black is nearing the end of his prolonged court battle with Canadian tax officials.
The Canada Revenue Agency has been after Mr. Black for more than 10 years over allegations he has failed to pay all taxes owed. At one point, the agency launched a criminal investigation into possible charges of tax evasion, but dropped the probe without taking any action.
The CRA also went to the federal court in 2010 in an attempt to force the former media magnate to disclose his personal investments, including any offshore holdings, bank accounts, brokerage activities and business dealings. That lawsuit was discontinued last year. The CRA has also compelled Mr. Black to pay millions of dollars in taxes, only to reverse itself, send the money back and launch another assessment.
Filings in the Tax Court of Canada show the CRA reassessed Mr. Black's taxes annually from 1992 to 2002. Mr. Black resided in Britain during that time, where he ran London's Daily Telegraph newspaper and later became a member of the House of Lords.
The only case remaining in court involves the reassessment for 2002. The CRA has alleged that Mr. Black was a Canadian resident for tax purposes and owes taxes on more than $5-million in income and benefits. That includes $2.8-million in income and $1.36-million in taxable benefits for the personal use of a private jet owned by Mr. Black's former newspaper company, Hollinger International Inc. Also included are $177,000 in benefits related to personal staff and security at Mr. Black's home in Toronto that was covered by another company controlled by Mr. Black.
Mr. Black argues that he paid taxes on $808,226 in income that year, which was all he owed. Although he resided in Britain, Mr. Black also argues that he paid taxes in the U.K. under what is known as a "non-domicile" rule. That allows U.K. residents to cite another country as their real domicile and then pay U.K. tax on their earnings in the rest of the world but only if they remit that money to Britain. Mr. Black has kept Canada as his domicile while living in the U.K. and paid taxes on that basis.
A hearing before the Tax Court will be held in May to determine whether Mr. Black was a Canadian resident for tax purposes. Even if the court sides with the CRA and determines that Mr. Black was a Canadian resident for tax purposes, it is not clear that he will owe taxes on the $5-million. That's because Mr. Black has disputed the CRA's calculations and another hearing will have to be held to determine the exact amount.
"Depending on how the motion is dealt with, it may do away with the need for the appeal or it will shorten the appeal," said Adrienne Woodyard, a Toronto lawyer representing Mr. Black.
The Canadian case isn't the only tax case facing Mr. Black. The U.S. Internal Revenue Service has also gone after him for millions of dollars in back taxes. That case is still before a U.S. Tax Court.