A Yukon woman who filed for bankruptcy in 2015 will still have to repay $235,000 in unpaid taxes, a judge ruled.
In a decision released last month, Yukon Supreme Court Judge Leigh Gower ruled Yen Ngoc Tran, also known as Kathy Tran, had the ability to repay part of the money she owes to the Canadian Revenue Agency.
Between 2007 and 2009, Tran hid over $2 million in revenue from the CRA.
The agency uncovered the scheme when it audited Tran between 2011 and 2013. The audit, Gower wrote, “detected large amounts of funds and considerable assets” moving through Tran’s accounts, despite her reported income of less than $35,000 in each of the three years she was audited.
Gower listed eight real estate and business transactions Tran completed between 2007 and 2014.
That includes the sale of her 75 per cent stake in the Bonanza Inn for over $770,000, the purchase of a residence in downtown Whitehorse for $271,000, the sale of a gas bar and restaurant she fully owned for an undisclosed amount, and the 2012 sale for $521,000 of the Kluane Park Inn in Haines Junction.
While Tran owed $368,000 in unpaid taxes, and an extra $808,000 in interest and penalties, the CRA asked the court she only be required to repay 20 per cent of the total amount.
Gower agreed, writing that, as the CRA’s lawyer pointed out, it is a ratio commonly used in British Columbia for tax-driven bankruptcies.”
Citing previous court decisions, Gower emphasized that being granted a bankruptcy was not a right.
Rather it is a privilege for an “honest debtor” who’s been unlucky and deserves a new start.
“The bankruptcy courts should not be converted into a sort of clearing house for the liquidation of debts irrespective of the circumstances under which they were created,” Gower wrote, quoting from a B.C. decision.
It’s an aggravating factor when the debts are all tax-related, he noted, quoting from a 2015 decision by Yukon Supreme Court Chief Justice Ron Veale.
At that point, the courts have to punish tax evasion, he wrote.
“Deterrence is a significant consideration in a tax-driven bankruptcy,” Veale wrote.
Gower ordered Tran to repay the debt at a rate of $200 per month, which could take at least 10 years unless she makes additional payments.
Looking at her personal situation, Gower found no evidence Tran was suffering from health conditions as she told the court.
She also has been “deliberately under-employed” in the past few years, Gower said, noting her most recent monthly wage to be around $800.
When she first filed for bankruptcy in July 2015, Tran reported an employment income of $1,500 per month. A month later her income dropped to $827, without any explanation provided to the court.
At age 52, she still has “several productive working years ahead of her,” Gower said. “She has experience in business and real estate and I find that her financial prospects for the future are good.”
Tran testified she had a gambling addiction, but took no steps to address it, Gower said.
The full discharge for her bankruptcy will require her to prove she attended counselling, he ruled.
Contact Pierre Chauvin at email@example.com
CLARIFICATION: This story has been updated to reflect that the Canada Revenue Agency’s lawyer requested Tran be ordered to repay 20 per cent of her outstanding debt.