Conrad Black owes taxes on income and benefits, court says

Conrad Black owes the Canadian government taxes on $5.1 million of income and taxable benefits from 2002, according to a ruling by the Tax Court of Canada.

TORONTO — Conrad Black owes the Canadian government taxes on $5.1 million of income and taxable benefits from 2002, according to a ruling by the Tax Court of Canada.

Chief Justice Gerald Rip sided with the Canada Revenue Agency’s argument in a dispute over Black’s residency status because he owned homes in both Canada and the United Kingdom.

“As a resident of Canada, he is subject to tax on his worldwide income, including from employment in a third state unless the (Canada-United Kingdom Income Tax) Convention determines otherwise, which it does not,” Rip wrote in his Jan. 14 ruling.

“Therefore, I determine that the Minister of National Revenue may assess tax against the applicant on the basis that he was a resident of Canada for the purposes of the Income Tax Act.”

The case dealt with the interpretation of an international agreement that aims to avoid over-taxing between Canada and the U.K.

If Black was a resident of the United Kingdom in 2002 according to the convention, as his lawyers argued, that would have meant he didn’t have to submit his non-Canadian income from that year with his Canadian taxes.

The statement of facts filed with the court also said that Black paid Canadian taxes on $808,226 of domestic work when he was not a resident of the country, but the U.K. did not collect any tax on the disputed $5.1 million.

The ruling means the CRA can now take another look at Black’s taxes for that year and include the $5.1 million as part of his income.

That figure includes taxes on an additional $2.9 million in income earned for work done outside of Canada and $1.4 million for benefits from Black’s use of an airplane Hollinger International Inc. had access to.

It also includes tax on $90,000 worth of security for his Toronto home and $365,500 the agency claims Black recognized from the debts of Conrad Black Capital Corp.

An actual figure of what the final tax amount Black may have to pay as a result of the reassessment was not provided, as the ruling simply means the CRA is now free to recalculate.

Black renounced his Canadian citizenship in 2001 so that he could become a British Lord. He became a resident of the United Kingdom in 1992, and remained a resident throughout 2002, court papers said.

He has been living in Toronto since 2012, when he finished serving 37 months in the U.S. for convictions on fraud and obstruction of justice. An appeal court tossed out two other fraud convictions against him and two other Hollinger executives.

Black has been steadfast in declaring his innocence on all charges and in his belief that he was subjected to unfair prosecution in the United States.

Most recently, he asked the Ontario Securities Commission to stay or at least limit the scope of regulatory proceedings against him in Canada, because he says those cover many of the questions already dealt with by the court in Chicago and through a settlement reached with the U.S. Securities and Exchange Commission.

That agreement, announced in August, bars Black from acting as a director of a public company in the United States.

The OSC proceedings seek to deal with the fallout from a complicated system of non-compete payments involving Hollinger Inc. and Hollinger. Black’s motion will be heard on March 26.

Black did not immediately respond to a request for comment Tuesday, and the CRA does not comment on tax cases due to confidentiality laws.

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