From: AlanBaggett@volcanomail.com   
      
   EXCLUSIVE: CRA sued for $32-million over 'threats, intimidation' : CRA SOTW   
      
   Jameson Berkow, Western Bureau Chief, BNN   
      
   When one of Canada's largest homebuilders received a $219-million tax bill,   
   Cardel sent the Canada Revenue Agency a bill of its own.   
      
   They are suing their tax collectors for $32-million plus interest and legal   
   fees. According to a Jan 27th statement of claim filed with the Court of   
   Queen's Bench of Alberta, Calgary-based Cardel Construction and two of its   
   five shareholders Ryan Ockey (   
   the CEO) and his brother Damon "suffered mental anguish and stress" as a   
   result of multiple CRA audits that "threatened to impose unreasonable and   
   punitive levels of... income tax, both corporate and personal, for the sole   
   purpose of intimidating" a    
   settlement on Ottawa's preferred terms.   
      
   Audits of Cardel's books and the personal finances of Ryan and Damon Ockey   
   have been ongoing since 2010 and their claim says the $219-million tax bill   
   equates to a rate of roughly 150% on the actual corporate and personal income   
   earned during the period    
   in question, or about $146-million. Their law firm, Bennett Jones LLP, claims   
   to have repeatedly sought a legal justification from CRA for such a dramatic   
   figure "but no credible legal basis has been provided" and that roughly   
   $36-million is the most    
   Cardel should have to pay in any potential back taxes.   
      
   As a result, the lawyers claim CRA's treatment of Cardel and the Ockey family   
   that owns it represents cruel and unusual punishment, which violates the   
   Ockey's constitutional rights under Section 12 of Canada's Charter of Rights   
   and Freedoms.   
      
   "Threatening to impose [a $219-million tax bill] that was known to be without   
   any credible basis in law is cruel, or at a minimum, unusual treatment," the   
   statement of claim says.   
      
   The CRA's actions have also damaged Cardel's business, the claim alleges.   
   Cardel builds thousands of new homes every year in Calgary, Ottawa and Tampa,   
   Florida and has been owned by the Ockey family for more than four decades.   
      
   "Cardel has been unable to fully invest in properties and other business   
   ventures due to the large tax liability... and the manner in which the audit   
   process has been conducted."   
      
   To right these alleged wrongs, Cardel and the Ockeys are seeking $30-million   
   in damages, plus another $1-million in punitive damages and a further   
   $1-million for the Charter violation for a total of $32-million before legal   
   fees and interest. In addition    
   to the CRA, Canada's Minister of National Revenue and Alberta's Finance   
   Minister are also listed as defendants.   
      
   The conflict stems from a 2006 reorganization of the Cardel Group that was   
   intended to help the company with succession planning, since the first   
   generation of leadership was in the process of transitioning power to the   
   second. Ryan and Damon Ockley used    
   their RRSPs to invest in a private mutual fund trust, which then invested in   
   the newly formed Cardel Homes Limited Partnership.   
      
   Ottawa ended publicly traded income trusts in 2006, but private trusts were   
   not affected. In 2011, however, the rules changed again, this time barring   
   RRSPs from being unitholders in private mutual fund trusts. There were of   
   course transitional rules put    
   in place, which the Ockleys lawyers claim their clients have complied with in   
   full. Yet the audits were already in full swing, with the Cardel group   
   targeted in late 2010 and by March 2012 Ryan and Damon had both received   
   letters warning the CRA was also    
   looking to "reassess them for additional income tax." By October of 2014, the   
   CRA was officially looking to "reassess their RRSP trusts for penalty taxes   
   and income taxes."   
      
   "In the proposed reassessments, CRA was effectively objecting to the private   
   mutual fund trust structure that saw monies paid into Ryan and Damon Ockley's   
   RRSPs," the statement of claim says, "the overall effect... would be to impose   
   tax amounting to    
   over 150% of the actual income earned."   
      
   The Canada Revenue Agency and a spokesperson for Minister of National Revenue   
   Kerry-Lynne Findlay did not immediately respond to a request for comment from   
   BNN.   
      
      
   UPDATE 12:35 PM ET: A spokesperson for the Canada Revenue Agency responded to   
   BNN to say "CRA does not comment and is actually not permitted to comment on   
   specific cases due to the confidentiality provision of the Income Tax Act."   
      
      
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