2015-1 068(IT)G

TAXCOURTOFCANADA

BETWEEN:

RICHARD COOPER,
Appellant,
and

HER MAJESTY THE QUEEN,
Respondent.

REPLY

In reply to the Appellant's Notice of Appeal with respect to the 2002, 2003, 2004, 2005,
2006, 2007, 2008, 2009 and 2010 taxation years, the Deputy Attorney General of Canada
says:

Overview
A.

The Appellant, his father Peter Cooper and his brother Marshall Cooper purported
to gift their wealth, exceeding CAD$25,000,000, for investing in an offshore
company in the Isle of Man created for this purpose. Under this structure, the
Appellant's father paid fees to various parties to run the offshore company and
matters related to it at his, the Appellant's and the Appellant's brother's behest,
and to pay out the company's earnings and funds to them as and when requested.

 - 2B.

For over eight years, the Appellant, his father and his brother, all Canadian
residents, earned income from their foreign investments exceeding CAD$4
million, which they did not report. Instead, the Appellant reported taxable income
disproportionate to the lifestyle he enjoyed.

C.

The offshore company structure used by the Appellant, his father and his brother
is a sham. The parties to the structure wilfully presented its transactions as being
different from what they knew them to be. All parties knew that the Appellant,
his father and his brother controlled the offshore company and intended to
reacquire the funds introduced to accounts held in its name. The offshore
company structure was an attempt to generate tax-free income for the Appellant,
his father and his brother and to avoid foreign reporting obligations.

I

STATEMENT OF FACTS
Notice of Appeal
D.

Unless expressly admitted, he denies the facts alleged in the Notice of Appeal.

E.

With respect to the facts alleged under the heading "Address of the Appellant" in
the Notice of Appeal:
1.

F.

He admits the facts stated in paragraph 1.

With respect to the facts alleged under the heading "Assessments under appeal" in
the Notice of Appeal:
1.

With respect to paragraphs 2, 3 and 4, he states that the Minister of
National Revenue (the "Minister") assessed the Appellant as set out
herein.

2.

He admits the facts stated in paragraphs 5 and 6.

 - 3G.

With respect to the facts alleged under the heading ."The Appellant" in the Notice
of Appeal:
1.

With respect to paragraph 7, he admits only that the Appellant's father
Peter Marshall Cooper ("PMC"), PMC's spouse and their three children
(including the Appellant) resided in South Africa until the early 1990s, he
denies the remaining facts alleged in that paragraph, and he states that
PMC and his sons Richard Cooper (the Appellant) and Marshall Cooper
("AMJC") (collectively, the "Coopers") were all involved with and aware
of the planning and decision-making process regarding Ogral Company
and they attended various meetings in that respect.

2.

With respect to paragraphs 8 and 9, he admits only that PMC caused to be
created a corporate and trust structure and that PMC remained a
beneficiary of the structure, he states that the Appellant was born on April
28, 1962, and he states that it was in the mid-1990s that PMC caused the
disposition of his multiple businesses.

3.

He admits the facts stated in paragraphs 10 and 11.

4.

With respect to paragraphs 12, 13 and 14, he admits only that PMC caused
to be created Ogral Trust, that PMC was a beneficiary of Ogral Trust, that
PMC dealt with Ernst & Young and that he emigrated to Canada so as to
be exempt from Canadian tax on a trust structure, and he states that PMC
was a resident of Canada as of July 26, 1996, AMJC was a resident of
Canada as ofNovember 1997 and the Appellant was a resident of Canada
as of June 1998.

5.

With respect to paragraph 15, he admits that section 94 of the Income Tax
Act went through changes, and he has no knowledge of, and puts in issue,

the remaining facts alleged in that paragraph.

 -4'

.
6.

With respect to paragraphs 16 and 17, he denies that the Trustees sought
advice, he admits that there is a written opinion by KPMG, and he states
that it was PMC who sought advice, and PMC sought that advice from his
Victoria based chartered accountant Derrold Norgaard ofKPMG as he
knew that the Canadian five year immigration trust "tax holiday" period
was nearing expiration.

7.

With respect to paragraphs 18 and 19, he admits only that Ogral Company
was incorporated in the Isle ofMan on December 19, 2001, he clarifies
that the corpus of The CFT Trust was transferred to AMJC Family Trust
and RJC Family Trust and then to respective sub trusts and ultimately to
Ogral Company sometime before December 31, 2002, and he states that
'

the transferred assets (corpus) always remained in the hands of the
Coopers.
H.

With respect to the facts alleged in paragraphs 20 through 31 under the heading
"Ogral Company" in the Notice of Appeal:
1.

He admits the facts alleged in subparagraph 20(a).

2.

With respect to subparagraphs 20(b), (c), (d) and (e), he admits that Ogral
Company had two classes of voting shares, and the shareholders of record
were Lochside Limited and Korderry Limited, respectively. He states that
Lochside Limited and Korderry Limited were provided as shareholders of
record by a corporate service provider in the Isle of Man, and their
business was investment holding company and nominee services,
respectively. He expressly denies that Lochside Limited or Korderry
Limited had any actual entitlement to Ogral Company but for £50, they
were not allowed to sell their shares, they were not able to participate in
Ogral Company's earnings, they were not allowed any dividends at Ogral
Company's liquidation beyond £50, and they held the shares as nominees
for the Coopers.

 - 53.

With respect to subparagraph 20(f) and paragraphs 26 and 27, he admits
only that there are constating documents of Ogral Company that define
"Eligible Persons". He states that the constating documents ensured that
the property (money) of Ogral Company remained with the Coopers and
ensured the Coopers' access to that money at any time. He expressly
denies that the directors of record gave due consideration in accordance
with their fiduciary obligations to the Coopers' requests for money, and he
states that the Coopers were never refused any request for payment from
Ogral Company and could not be refused, and further that the directors of
record had to obey the Coopers or the Coopers would cause Ogral
Company to be wound up and the money returned to them.

4.

With respect to subparagraphs 20(g), (h) and (i), he admits only that Ogral
Company had a non-shareholder member including those named in
subparagraph (g) and the directors of record named in subparagraph (h).
He expressly denies that the directors of record and the non-shareholder
member had any authority or influence over any matters respecting Ogral
Company, and he states that that control lay with the Coopers, the
directors of record were agents and nominees of the Coopers and the
Coopers controlled the non-shareholder member.

5.

He denies the facts alleged in paragraphs 21, 22,23 and 24, and he states
that the Coopers were the de facto and true shareholders·and the de facto
and true directors of Ogral Company, the shareholders of record and
directors of record were agents or nominees ofthe Coopers, and the
Coopers controlled Ogral Company and its property by controlling the
· non-shareholder member.

6.

He denies the facts alleged in paragraph 25.

 -67.

.

With respect to paragraphs 28, 29 and 30, he denies that Ogral Company
on the authority of its directors retained the parties listed in those
paragraphs, he states that the Coopers caused those parties to be retained,
he admits that those parties were paid for their services, he denies that
Simcocks Trust Limited managed investments of Ogral Company and he
states that Simcocks Trust Limited only prepared the financial statements
ofOgral Company and filed its tax returns in the Isle ofMan, he states that
the Coopers had long been clients ofUBS AG, and he states that Simcocks
Trust Limited was the sole shareholder of Lochside Limited and Lochside
Limited is one of the shareholders of record of Ogral Company.

8.

With respect to paragraph 31, he admits that Ogral Company traded
marketable securities, making frequent transactions including extensive
buying and selling and he states that Ogral Company's portfolio included
a continuous mix ofliquidity, bonds, equities and alternative investments
in different currencies, he admits that Ogral Company earned interest and
dividend income, he denies that the securities were held for the purposes
of earning passive income, he denies that the securities were not actively
traded, he admits that Ogral Company incurred some expenses not in
excess of those allowed by the Minister, and he states that the accounts
held in the name of Ogral Company earned income as detailed in the
attached Schedule "B".

I.

With respect to the facts alleged under the heading "IV. Appellant's tax filing
and the Minister's reassessments" in the Notice of Appeal:
1.

With respect to paragraphs 32, 33 and 34, he admits that the filing, initial
assessment and reassessment dates are as detailed and that the Minister
reassessed the Appellant for foreign reporting penalties for failing to file
the required foreign reporting forms T1135 as and when required under
subsections 162(7), 162(10) and 162(10.1) ofthelncome Tax Act, R.S.C.

 -71985, c. 1 (5th Supp.), as amended (the "Act"), unreported income, and
gross negligence penalties under section 163(2).
2.

With respect to paragraphs 35, 36, 37 and 38, he states that the Minister's
position and assumptions are set out herein. The Respondent denies any
allegations made in those paragraphs that are inconsistent with this
pleading and he puts PMC to the strict proof of any allegations that are not
addressed herein.

J.

He denies all remaining facts alleged in the Notice of Appeal.

K.

In filing his tax returns for the years in issue, the Appellant reported total income

and taxable income, paying total income tax of$3,162, as follows:

Taxation Total income Taxable income Federal and
year
Provincial tax
payable
2002

$25,092

$13,701

$1,305

2003*

Nil

Nil

Nil

2004

Nil

Nil

Nil

2005

$10,533

$10,020

$129

2006

$48,836

$48,301

$1,596

2007

$22,910

$22,910

$132

2008

$22,787

$22,411

Nil

2009

$37,560

$37,560

Nil

2010

$2,568

$2,568

Nil

* The Appellant did not file a tax return for 2003.

 -8L.

For each of the years in issue, the Appellant failed to report income, and he failed
to file foreign reporting forms T1135 as and when required in respect of foreign
property (i.e., funds in foreign bank accounts held in the name of Ogral Company
Limited, an Isle of Man company, for the Coopers, and shares in Ogral Company
Limited held by registered shareholders for the Coopers), and having foreign
property exceeding a cost of$100,000 each year, with reference to section 233.3
ofthe Income Tax Act, R.S.C. 1985, c. 1 (5th Supp), as amended (the "Act").
Assessments

M.

The Minister initially assessed the Appellant's 2002, 2004, 2005, 2006, 2007,
2008, 2009 and 2010 taxation years as filed.

N.

The Minister reassessed the Appellant and accordingly issued notices on the
following dates (the "Reassessments"):
1)

on June 12, 2012, the Minister reassessed the Appellant for foreign
reporting penalties for failing to file _the required foreign reporting forms
T1135 as and when required for the 2002 through 2010 taxation years;

2)

on June 21, 2012, the Minister reassessed the Appellant for umeported
income/loss for the 2002 and 2005 through 2010 taxation years, and on
August 12, 2012 reassessed the Appellant for umeported income (loss) for
the 2004 taxation year, as detailed in the attached Schedule "D".

 - 9-

The Reassessments assessed the following (all currency amounts are in Canadian
dollars unless otherwise noted):
Unreported income and loss and gross negligence penalty

Taxation Year

2002

Unreported interest and
Gross negligence
other investment income (line penalty (ss. 163(2))
121); or carrying charges
(line 221)
($269,372)
$100

2003

($563,494)*

Nil

2004

$410,493

Nil

2005

$548,019

$76,500

2006

($270,562)

$100

2007

$355,902

$48,608

2008

($128,034)

$100

2009

($63,702)

$122

2010

$301,778

$38,292

Total

$321,028

$163,822

* The Appellal'lt did not file a tax return for 2003 .

 - 10Foreign reporting penalties
Taxation
Year

2002
2003
2004
2005
2006
2007
2008
2009
2010
Total
foreign
reporting
penalties

Unreported
offshore
bank
accounts
$3,277,704
$2,616,752
$2,768,726
$3,102,419
$2,493,157
$2,513,699
$3,430,587
$2,692,588
$2,481,172

ss.162(7)
penalty

$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$2,500
$22,500

ss. 162(10)
penalty

$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$7,000
$1,000
$74,500

ss.
162(10.1)
penalty

Total

$151,885
$118,838
$126,436
$143,121
$112,658
$113,685
$159,529

$163,885
$130,838
$138,436
$155,121
$124,658
$125,685
$171,529
$9,500
$3,500
$926,152 $1,023,152

The Minister reassessed the Appellant on the income earned in the name of Ogra1
Company Limited ("Ogral"). The bank and investment accounts held in Ogral's
name, and also Ogral' s directors of record, and shareholders of record were put in
place to deceive the Minister, and each, individually or collectively, constitute a
sham. The Appellant, PMC and AMJC were the beneficial and true owners of
those bank and investment accounts as Ogral was holding same as agent or
nominee for them. Furthermore, the Appellant, PMC and AMJC were de facto
shareholders of Ogral, and also were de facto directors of Ogral.
The Minister reassessed the Appellant beyond the normal reassessment period
pursuant to subsection 152(4) of the Act for unreported income for the 2004, 2005
I

and 2007 taxation years, and for foreign reporting penalties for the 2002 through
2007 taxation years.
0.

The Appellant duly served on the Minister notices of objection to the above
reassessments.

 - 11 -

P.

On December 9, 2014, the Minister confirmed the above reassessments, and
accordingly issued a notification on that date.

Q.

In determining the Appellant's tax liabilities for the 2002, 2003, 2004, 2005,

2006, 2007, 2008, 2009 and 2010 taxation years, the Minister made the following
assumptions of fact:
The Appellant and his family
1)

at all material times, PMC was resident in Canada;

2)

PMC's spouse is Irene Elizabeth Cooper (also known as Ginger) ("Irene");

3)

PMC's sons are Richard John Cooper (the Appellant) and Arthur Marshall
James Cooper (also known as Marshall or Marsh) (defined earlier as
"AMJC");

4)

AMJC purchased residential property on October 23, 1997 at 5577
Alderley Road, Victoria, British Columbia ("BC");
a)

5)

AMJC became a resident of Canada in November 1997;

the Appellant purchased residential property at 5213 Polson Terrace,
Victoria, BC on March 26, 1998;
a)

6)

PMC's daughter is Shelley Youngleson ("Youngleson");
a)

7)

the Appellant became a resident of Canada in June 1998;

Youngleson is a resident of the United States ("USA");

until the mid-1980s, PMC, Irene, AMJC and the Appellant were residents
of South Africa where they had several business operations and property
holdings;

 - 128)

in the mid-1980s PMC, Irene, AMJC and the Appellant sold all

oft~.eir

assets, and took steps to have a portion of the ownership of the South

·

African companies held by purported trusts, namely the Largo Trust in
Liechtenstein, and The MC Trust in South Africa;
9)

PMC and Irene moved to the USA in 1993;

10)

in 1995, PMC left the USA so as to not become an American resident
subject to USA tax on earnings within any trust structure;

11)

in the spring of 1995, PMC resided at 10365 Resthaven Drive, Sidney,
BC;

12)

PMC immigrated to Canada on July 26, 1996, taking steps including the
following;
a)

PMC opened a Canadian bank account at the Royal Bank of
Canada on June 3, 1996 in Sidney, BC;

b)

PMC obtained aBC driver's license on July 16, 1996;

c)

on July 17, 1996, PMC purchased residential property at 301-2545
Oakville Avenue, Sidney, BC with a possession date of July 26,
1996;and

d)

on September 23, 1996, PMC applied for Permanent Residency
through Citizenship and Immigration Canada;

13)

by 1996, PMC and Irene had completed the sale of their South African
holdings;

14)

PMC has been a resident of Canada since July 26, 1996;

 - 1315)

in filing his tax returns for the years in issue, the Appellant reported total
income and taxable income, paying total income tax of$3,162, as follows:
Taxation Total income Taxable income
year

2002

16)

Federal and
Provincial tax
payable

$25,092

$13,701

$1,305

2003*

Nil

Nil

Nil

2004

Nil

Nil

Nil

2005

$10,533

$10,020

$129

2006

$48,836

$48,301

$1,596

2007

$22,910

$22,910

$132

2008

$22,787

$22,411

Nil

2009

$37,560

$37,560

Nil

2010

$2,568

$2,568

Nil

since the Appellant first began filing Canadian tax returns in 1999, he has
been refunded provincial and federal credits and supplements totalling
$759, claiming the full $9,000 home renovation tax credit for 2009;

17)

since the Appellant, PMC

an~

AMJC first began filing Canadian tax

returns, they have claimed credits and supplements, and Irene claimed
credits and suppleme?ts for the years in which PMC did not do so;
18)

the Appellant did not disclose in his tax returns that he held foreign
property;

 - 1419)

for all of the years in issue the Appellant failed to report the income he
earned from accounts held by Ogral Company Limited;

20)

PMC's estimated value of his residential property at 3380 Beach Drive,
Victoria, BC as of September 2005 is $4,000,000;

21)

for 2007 and 2008, PMC paid property taxes of$9,887 and $10,344,
respectively, in respect of3380 Beach Drive;

22)

the Appellant's lifestyle w~s not supported by the income he reported for
the years in issue;

The offshore trust structure
23)

in the mid-1990s, PMC and Irene, along with their accountants, took steps
to establish an offshore trust structure to protect their wealth and to avoid
income tax and foreign reporting obligations;

24)

PMC and Irene caused to be created Ogral Trust, Liechtenstein ("Ogral
Trust") for themselves and The CFT Trust, Jersey (also known as The
Capital First Trust or The Cooper Family Trust), for their children the
Appellant, AMJC andYoungleson;

25)

Ogral Trust was settled on November 19, 1996 by PMC;
a)

the assets purportedly settled in Ogral Trust were always held by
PMC; and

b)
26)

PMC was the beneficiary of Ogral Trust;

The CFT Trust was settled on November 19, 1996;
a)

the assets purportedly settled in The CFT Trust were for the benefit
of, among others, the Appellant and AMJC;

 - 15 27)

PMC sought advice from his Victoria, BC based accountant, Derrold
Norgaard ("Norgaard") of the accounting firm KPMG LLP of Canada
("KPMG") to replace the offshore trust structure because he knew the
Canadian five year immigration trust "tax holiday" period would expire on
January 1, 2001;

28)

at all material times, Norgaard was the Coopers' authorised representative
and tax preparer;

The Ogral offshore company structure
29)

Barrie Philp ("Philp"), with the assistance of Mark Meredith, both of
KPMG, developed the idea of an offshore company structure;

30)

KPMG promoted an offshore company structure internally as being for
Canadians having high net worth and maturing immigration trusts;

31)

on October 15, 2000, Norgaard and Philp introduced an offshore company
structure, using the name Ogral Company, to PMC, AMJC and the
Appellant (previously defined as the "Coopers"), Youngleson, and
Youngleson's spouse Nick;

32)

PMC knew that as of January 1, 2001 the immigration trust tax exemption
period would have ended (as PMC had been a resident of Canada for 60
months in that year), and the income of the trusts would then have been
taxable for the 2001 and 2002 taxation years;

33)

the Coopers caused KPMG to be engaged to put in place an offshore
company structure to replace Ogral Trust and The CFT Trust, with the
goal of continued protection of their wealth, and the avoidance of income
tax and foreign reporting obligations;

34)

in October 2001, the Coopers caused KPMG to be engaged to restructure
the holdings of Ogral Trust, The CFT Trust and related family trusts;

 - 16Ogral Company Limited
35)

the Coopers caused to be created Ogral Company Limited, an Isle of Man
company (formerly defined as "Ogral"), to replace the offshore trust
structure;

36)

Ogral was incorporated in the Isle ofMan on December 19, 2001 at the
request ofNorgaard, via the Coopers;

37)

Ogral is a guarantee company set up to have non-shareholder and
shareholder members, referred to as a hybrid company;

38)

PMC was the directing mind ofOgral;

39)

the offshore company structure in the present case is sometimes referred to
as the Ogral Company structure or the offshore company structure (the
"Ogral OCS"), as detailed in the attached Schedule "A";

40)

the Ogral OCS arrangement included creating an offshore company in the
Isle of Man which was either exempt from tax there or subject to tax at the
rate of zero percent there, then having Ogral Trust and The CFT Trust
donate their corpus to the offshore company, and then winding up the
trusts, as follows:
a)

the Coopers planned to transfer the corpus ofPMC's expired
immigrant trust namely Ogral Trust, to Ogral, to avoid income tax
and foreign reporting obligations and to keep beneficial interest
withPMC;

b)

the Coopers planned to transfer the corpus of the immigrant trust
of the Appellant and AMJC, namely The CFT Trust, to Ogral to
avoid income tax and foreign reporting requirements and to keep
beneficial interest with the Appellant and AMJC; and

 - 17c)

the Coopers planned to retain the control and the benefit of the
corpus of the trusts (money) transferred to Ogral (the "Money")
and the resulting investment income;

41)

42)

the Ogral OCS is comprised of:
a)

Memorandum and Articles of Association for Ogral;

b)

Shareholders ofRecord;

c)

Non-shareholder Member;

d)

Directors of Record;

e)

Letter of Wishes;

f)

Members Agreement;

g)

Option Agreements;

h)

Directors' Reports and Unaudited Financial Statements;

i)

the General Ledger; and

j)

UBS AG and Kleinwort Benson Portfolios;

the documents relating to the Ogral OCS purport to represent that the
Coopers did not have control of Ogral and purport to represent that the
Coopers did not have control over the Accounts and the Money;

43)

KPMG generated client fees from Ogral OCS for 2002 through 2008
based on the Coopers' annual tax savings, receiving fees and
disbursements of approximately $300,000;

 - 18The Money

44)

at all material times, the Coopers intended to reacquire and control the
Money and the investments held in the name of Ogral;

45)

the Money totalled $26,278,067;

46)

the Ogral OCS formed a contractual arrangement that established the
rights of the Coopers over Ogral and the property it held (i.e., the Money);

47)

the Coopers falsely held out that they had donated or gifted the Money and
had neither the control nor the benefit of that Money;

48)

the Money was transferred to Ogral as follows, and as noted in Schedule
"A":

a)

on January 1, 2002, the Appellant and AMJC provided $7,001,751
(i.e., $3,500,876 each) to Ogral;
i)

the amount came from the AMJC and RJC II Family Trusts,
via The AMJC Family Trust and RJC Family Trust and Skink, via The CFT Trust (the "AMJC Funds", the "RJC
Funds" and the "Skink Funds");

b)

on January 1, 2003, PMC providyd $19,276,315 to Ogral;
i)

49)

the amount came from Ogral Trust (the "Jackal Funds");

the Money was deposited into investment and bank accounts at UBS AG,
a bank in Zurich, Switzerland as shown on the attached Schedules "A" and
"E";

 - 1950)

the value of the UBS AG investment and bank accounts at the outset of
PMC's, AMJC's and the Appellant's respective provision of the Jackal
Funds, the AJMC Funds, the RJC Funds and the Skink Funds to Ogral, is
attributed as follows: PMC% (i.e., 75%); AMJC Ys (i.e., 12.5%); and the
Appellant Ys (i.e., 12.5%), as detailed on Schedule "D";

The banks and account managers
51)

the Money remained in investment and bank accounts at UBS AG;

52)

the Money was briefly transferred to accounts at Kleinwort Benson
(Channel Islands) Limited, a bank at the Guernsey Branch, Channel
Islands, and then back to accounts at UBS AG (collectively, the
"Accounts"), as detailed at Schedule "E"·'

53)

PMC had been a client ofUBS AG since at least 1980;

54)

AMJC and the Appellant had been clients ofUBS AG for many years;

55)

Ogral was the named holder of the Accounts;

56)

UBS AG and Kleinwort Benson knew the Coopers as the true and actual
owners of the funds in the Accounts;

57)

none of the Coopers held accounts in their own names at Kleinwort
Benson;

58)

PMC and AMJC personally contacted Kleinwort Benson numerous times;

59)

PMC personally contacted Kleinwort Benson numerous times respecting
Ogral accounts;

60)

AMJC and the Appellant decided and took steps to have their share of the
Money in Ogral, still at UBS AG, managed by Barnes Ellis, an investment
advisor with Baker Ellis Asset Management LLC, of Portland, Oregon;

 -20a)

prior to coming to Canada, AMJC and the Appellant had lived in
Portland, Oregon;

b)

Baker Ellis knew AMJC and the Appellant as the true owners of
the funds .in the Accounts that Baker Ellis managed; and

c)

AMJC personally contacted Baker Ellis numerous times;

The Shareholders ofRecord

61)

a corporate service provider (law firm) provided shareholders for Ogral at
the time it was formed, as follows, and as shown in Schedule "A":
a)

sole shareholder of the Class A shares (the "Class A Shareholder"):
Lochside Limited, an Isle of Man company, incorporated July 8,
1997, originally controlled by Singer & Friedlander Trust
Company (Isle of Man) Limited (until June 2005);
i)

the principal trade or business ofLochside Limited is an
investment holding company; and

ii)

as of June 2005, the shareholder of record of Lochside
Limited is Simcocks Trust Limited, an Isle of Man
company;

b)

sole shareholder of the Class B shares: Korderry Limited, an Isle
of Man company, incorporated February 24, 1999, controlled by
Paul Dougherty oflaw firm Dougherty & Associates, Isle of Man
(the "Class B Shareholder")
i)

the principal trade or business ofKorderry Limited is
nominee services;

(the Class A Shareholder and the Class B Shareholder, collectively, the
"Shareholders of Record")

 - 21 62)

Lochside Limited and Korderry Limited also acted as shareholders for
other KPMG offshore company structures;

63)

Paul Dougherty was paid for his services as a nominee director of Ogral
and for the services of Korderry Limited as a nominee shareholder of
Ogral;

64)

the Shareholders ofRecord:
a)

had no interest in Ogral beyond £50 (i.e., 50 pounds sterling);

b)

were not allowed to sell their shares;

c)

were not able to participate in Ogral's earnings;

d)

were not allowed any dividends at Ogral's liquidation beyond £50;
and

e)

held the shares as nominees for the Coopers;

65)

the Shareholders of Record were agents and nominees of the Coopers;

66)

the Coopers were the de facto and true shareholders of Ogral;

The non-shareholder member

67)

in December 2001, KPMG arranged for Belmont Trust Limited, a British
Virgin Islands company, to purchase a shelf company, namely Portrush
Limited ("Portrush"), for $1,850:
a)

Portrush was incorporated on January 8, 2001;

b)

Portrush had no power to carry on business in the British Virgin
Islands;

c)

Portrush' s principal trade or business was to be the nonshareholder member of an Isle of Man company;

 -22d)

Norgaard asked Del Elgersma of Beacon Law Centre in Sydney,
BC ("Elgersma") to act as the director for Portrush;

e)

Elgersma acted as the director for Portrush;

f)

from December 21, 2001 to December 9, 2002, Portrush's sole
shareholder was Y oungleson;

g)

from December 9, 2002 through all years at issue, Elgersma was
Portrush's sole shareholder; and

h)
68)

Elgersma held three shares of Portrush;

the Ogral OCS required that Ogral's non-shareholder member be a trusted
non-Canadian resident;

69)

under the Ogral OCS, Portrush was selected to be Ogral's non-shareholder
member;

70)

the non-shareholder member's (i.e., Portrush's) director nominee (the
"NSM") was initially Youngleson;

71)

Youngleson resigned as the NSM effective December 9, 2002;

72)

Youngleson opted out of the Ogral OCS because of USA tax concerns;

73)

Elgersma is a trusted lawyer of the Coopers;

74)

Beacon Law Centre maintained a trust account for the Coopers in the
client name of Ogral and Portrush;

75)

on December 9, 2002, Elgersma was appointed as the NSM after
Youngleson's resignation, as shown on Schedule "A";

76)

Elgersma agreed to act as the NSM on condition of receiving fees for his
NSM and director services, and on condition that PMC or Irene would
personally indemnify him;

 -2377)

Elgersma requested payment from PMC for his director services for Ogral;

78)

PMC indemnified Elgersma as the NSM of Ogral and as the nominee
director of Ogral;

79)

the NSM purportedly had veto decisions including being able to wind-up
and liquidate Ogral;

80)

no shareholder could sell or transfer shares without the consent of the
NSM;

81)

Elgersma considered PMC as having the authority and control ofOgral;

82)

the Coopers had influence over the NSM and controlled the NSM;

83)

the Coopers had influence over Ogral through the NSM and controlled
Ogral through the NSM;

The appointed directors

84)

as shown on Schedule "A", the appointed directors ofrecord ofOgral (the
"Directors ofRecord") were Anne Couper-Woods, Paul Dougherty and
Elgersma;
a)

Anne-Couper Woods has acted as director of 12 Simcocks Trust
Limited companies including Lochside Limited and director of 34
private companies including Ogral, and since 2007 was former
director of 119 other companies including companies involved in
other KPMG offshore company structures;

85)

no payment from Ogral was ever made to the Coopers when or as
determined by the Directors of Record;

86)

the Coopers received payments from Ogral only when they requested
payments;

 -2487)

the Coopers were never refused any request for payment from Ogral and
could not be refused;

88)

the Coopers accessed the Money in Ogral as and when they pleased;

89)

the Directors of Record were agents and nominees for the Coopers;

90)

the Coopers were the de facto and true directors of Ogral;

91)

the central management and control ofOgral was in Canada with the
Coopers;

The Isle ofMan

92)

declarations were made yearly to the Isle of Man Tax Authority that no
resident of the Isle of Man had any interest in Ogral;

93)

Ogral paid no income tax under the Isle of Man's old or new tax regimes;
a)

under the old tax regime, for years ending on or prior to April 5,
2006, a company qualified for tax exemption if it derived all of its
income from outside of the Isle ofMan and no resident in the Isle
of Man was beneficially interested in the company; and

b)

under the new "zero-1 0 regime", effective April 6, 2006, all
companies were required to file tax returns but those having
members that could not benefit from any distribution made by the
corporate taxpayer at any time would pay tax at the rate of 0%;

94)

for all ofthe years in issue under the old tax regime, KPMG provided
Ogral' s applications for tax exemption to the Isle of Man;

 -2595)

for all of the years in issue under the old and new tax regimes, Elgersma
provided directors' reports and statements asserting that Ogral was either
exempt from Isle of Man income tax for the year, or that no provisions
were made for Isle of Man tax because Ogral specifically excluded
distributions from being made to any person resident there;

The Money was for the benefit of the Coopers

96)

Ogral held the Money as nominee for the benefit of the Coopers;

97)

the Coopers each agreed that the Money introduced in Ogral was made in
consideration of conditions including the following:
a)

the Money and its earnings were held for the benefit of each of
them;

b)

each of the Coopers could access the Money and its earnings at any
time; and

c)
98)

the Money and its earnings were to be reacquired by the Coopers;

distributions of money from Ogral out of income or investment earnings
could only be made to "eligible persons":
a)

an "eligible person" could not be a person resident in the Isle of
Man for income tax purposes; and

b)

the Coopers requested, knew and accepted that they were the
"eligible persons";

99)

the Money was to be returned to the Coopers at their direction;

100)

requests for payments from the Accounts always resulted from the
Coopers' requests ofthe Directors of Record, as follows:
a)

the Coopers made written request for payment;

 -26b)

the Directors ofRecord resolved to authorise the request;

c)

instructions were given to UBS AG or Kleinwort Benson; and

d)

the bank then paid the Coopers directly to their Canadian or
offshore bank accounts, or to Beacon Law Centre which then paid
the Coopers to their Canadian bank account;

101)

if a request for money by the Coopers was refused (which never occurred),
the Coopers, through their control of the NSM, could have Ogral woundup, liquidated, and the Money returned to them;

102)

from 2003 to 2010 the Coopers requested and received distributions from
the Accounts held in the name ofOgral totalling $5,843,693 as follows:
2003

$1,175,843

2004

$ 968,418

2005

$ 432,308

2006

$ 860,459

2007

$ 419,765

2008

$1,140,637

2009

$ 245,588

2010

$ 600.675
$5,843,693

103)

the Directors of Record, KPMG and the Coopers knew that the Coopers
were the true owners of the Money held by Ogral;

Control and further assurances of the Coopers' control over Ogral

104)

beyond the assurances provided by KPMG in the Ogral OCS plan, PMC
arranged for further assurances of control over Ogral and the Money,
including implementing the following:

 -27a)

UBS AG was required to give PMC 30 days notice respecting all
payments and transfers from the Accounts exceeding US$20,000;
and

b)

AMJC and the NSM, and the Appellant and the NSM, entered into
contracts on December 22,2002 whereby AMJC and the Appellant
could remove and replace the NSM at any time, and the Coopers
could liquidate Ogral and have the Money returned to them at any
time;

105)

PMC, AMJC and the Appellant were each highly involved in the creation
of Ogral and the prior offshore trust structures, and communicated
regularly with the various parties involved in the Ogral OCS, including the
Directors of Record, the Shareholders ofRecord and NSM, KPMG and
UBSAG;

106)

PMC regularly monitored the performance of the Accounts and questioned
the fees charged by the banks and Accounts managers, corporate service
providers and tax advisors;

The Ogral OCS is a sham
107)

the Coopers' motivation in participating in the Ogral OCS was not to gift
money but was to participate in a plan, the net result of which was to earn
income on a tax-free basis;

108)

the Coopers' involvement in the Ogral OCS was made with the intention
and the expectation that they would retain control of Ogral and the Money,
earn income in Ogral, retain and reacquire the initial investment and
acquire the earned income, and have access to the funds without having to
pay tax;

109)

the parties to the OCS presented the transactions as being different from
what they knew them to be;

 -28110)

the Coopers, KPMG, the Shareholders ofRecord, the NSM, the Directors
of Record, UBS AG and Kleinwort Benson each knew that, at all material
times:
a)

the Coopers were the actual owners of the Accounts and the
Money purportedly held by Ogral;

b)

the Coopers were the beneficial owners of the Accounts;

c)

the Coopers intended to, and did, control the Money; and

d)

the Coopers reacquired some of the Money (i.e., $5,843,693) frorp.
Ogral;

111)

the Coopers, KPMG, the NSM and the Directors ofRecord also each
knew that:
a)

the Coopers had not gifted the Money to Ogral;

b)

the Coopers intended to, and did, control Ogral;

c)

the Coopers were the de facto and true shareholders and directors
ofOgral;

d)

the Coopers could cause Ogral to be liquidated at any time; and

e)

the Coopers intended to reacquire the Money introduced into Ogral
as well as any resulting earnings from that Money;

112)

KPMG and the Coopers knew that the Coopers' overall objective was to
avoid paying income tax on income they earned in respect of the Money;

113)

UBS AG and Kleinwort Benson knew that the Coopers were the actual
owners of the Accounts held by Ogral;

 -29114)

the series of the transactions involving Ogral from the date of its
incorporation were to give the appearance that the Coopers were not the
beneficiaries of the Money;

115)

Ogral was created at the direction and control of the Coopers to deceive
the Canadian tax authorities by creating the appearance that gifts of the
Money were made to Ogral and that the Coopers had given up control of
that Money;

116)

the Ogral OCS is a sham and was intended to deceive the Minister so that
PMC, AMJC and the Appellant could receive taxable funds on a tax-free
basis;

117)

the steps taken and,the documents created in setting up the Ogral OCS
were all in furtherance of the sham;

118)

the real purpose of the Ogral OCS was to earn income that could be
acquired by the Coopers without tax and foreign reporting consequences;

Unreported income
119)

at all material times, the Accounts accumulated income through earnings
on the investments held therein;

120)

Ogral held itself out as an investment company;

121)

the Coopers selected people to manage the investments made in Ogral' s
name;

122)

Ogral's portfolio included a continuous mix of liquidity, bonds, equities
and alternative investments in different currencies;

123)

frequent transactions were made in the Accounts, including the extensive
buying and selling of securities;

124)

the securities were held for short periods oftime;

 -30125)

the ordinary business of each of the Coopers is comprised substantially of
security transactions;

126)

expenses were incurred for, among others, investment counsel respecting
the earning of investment income in the Accounts as shown on the
attached Schedule "C";

127)

expenses in excess of those allowed by the Minister were not incurred or
were not incurred for the purpose of gaining or producing income in
respect of the Accounts;

128)

disallowed expenses include amounts not incurred for the purpose of
gaining or producing income, including payments made to KPMG and to
corporate service providers, Simcocks Trust Limited and Beacon Law
Centre (Elgersma) to assist the Appellant in the sham by providing
nominee shareholder and director services, as detailed in Schedule "C";

129)

the Accounts earned interest and other investment income as detailed in
Schedule "B";

130)

income earned on the Accounts is on income-account;

131)

none of the income _earned on the Accounts has been reported;

 - 31 132)

for the 2002 through 2010 taxation years, the Appellant did not report
income he earned on the Accounts as follows, totalling $321,028, and as
detailed in Schedule "D": or carrying charges (line 221)
Taxation Year

Unreported interest
and other investment
income (line 121)

2002
2003
2004
2005
2006
2007
2008
2009
2010

Carrying charges
(line 221)

($269,372)
($563,494)
$410,493
$548,019
($270,562)
$355,902
($128,034)
($63,702)
$301,778

Failure to file foreign reporting information returns
133)

for each year in issue, the Appellant failed to file foreign reporting forms
{Tll35s) in respect of his foreign property held in foreign bank accounts
exceeding $100,000;

134)

the Appellant intentionally did not report property (i.e., his allocation of
the Money and resulting investment earnings) in the Accounts having a
total cost for each year in issue, as follows, and detailed in Schedule "E":

Taxation year

2002
2003
2004
2005
2006
2007
2008
2009
2010

Unreported offshore
bank accounts

$3,277,704
$2,616,752
$2,768,726
$3,102,419
$2,493,157
$2,513,699
$3,430,587
$2,692,588
$2,481,172

 -32-

135)

although the investments in the Accounts did not result in positive
earnings for 2003, 2006, 2008 and 2009, the Appellant intentionally did
not report the Accounts amounts for those years;

136)

the Appellant knew ofhis reporting obligations in respect of the Tl135
information returns for the years in issue and failed to file these returns;
and

137)

the Appellant was grossly negligent in failing to file T1135 information
returns for the years in issue.

Gross negligence penalties
R.

In addition to the facts assumed by the Minister as enumerated in paragraph Q,

the Minister relied on the following additional facts in determining that the
Appellant was liable for penalties under subsection 163(2) of the Act for the 2002
and 225 through 2010 taxation years in issue on the unreported foreign income
(loss) amounts detailed at paragraph N above:
a.

PMC, AMJC and the Appellant (defined earlier as the. Coopers) had
influence over Ogral and controlled Ogral;

b.

to avoid detection by Canadian tax authorities and thus taxation under the
Act, the Coopers knowingly and purposefully caused Ogral to be founded,
and they utilized Ogral to avoid being identified as its beneficiaries;

c.

the Coopers are all knowledgeable and experienced business persons;

d.

the Coopers knew that they had caused Ogral to be formed for their
benefit, and that they should have reported the Accounts' funds and the
income earned in those Accounts;

 - 33-

e.

for the years in issue, the Appellant's reported income was not
commensurate with his lifestyle;

f

the Appellant knew that care had to be taken to correctly report income;

g.

the Appellant provided information to KPMG indicating that he did not
hold foreign property having a cost of more than $100,000 and was aware
of the consequences of failing to disclose;

h.

for all of the years in issue, Norgaard prepared the tax returns for each of
the Coopers;

1.

the Appellant certified his tax returns as correct and complete;

J.

the adjustments made to the Appellant's income for each of the years in
issue is material relative to the income that he reported in those years, as
detailed in paragraphs K and Q above;

k.

the Appellant made or participated in, assented to or acquiesced in the
making of, false statements or omissions in his 2002 through 2010 income
tax returns by failing to report the foreign income (loss) amounts; and

1.

the Appellant made those false statements or omissions knowingly or
under circumstances amounting to gross negligence.

Misrepresentation
S.

In addition to the facts assumed by the Minister as enumerated in paragraph Q and
the facts relied on in paragraph R, the Minister relied on the following additional
facts in determining that the Appellant made misrepresentations attributable to
neglect or carelessness in filing his income tax returns for the 2002 through 2007
taxation years:
a.

the Appellant made misrepresentations in his 2002 through 2007 income
tax returns by not reporting all of his income for those taxation years, and

 -34specifically, by not reporting the foreign income (loss) amounts totalling
$210,986 he received from Ogral in those years (the specific yearly
amounts are detailed in paragraph N);
b.

further, the Appellant made misrepresentations in his 2002 through 2007
income tax returns by certifying that he did not hold foreign property in
those years having a cost of more than $1 00,000; and

c.

the misrepresentations were attributable to the Appellant's neglect or
carelessness.

II

ISSUES TO BE DECIDED
T.

The issues are:
a.

whether the Ogral OCS was a sham;

b.

whether the Appellant was required to include in his income the foreign
income (loss) amounts totalling $321,028 for the years in issue;

c.

whether the Appellant is liable for penalties under subsections 162(7), (1 0)
and (10.1) ofthe Act for the 2002 through 2008 taxation years, and under
subsections 162(7) and (10) of the Act for the 2009

~d

2010 taxation

years in respect of the failure to file T1135 foreign reporting forms as and
when required under subsection 233.3(3) ofthe Act;
d.

whether the Appellant knowingly, or under circumstances amounting to
gross negligence, failed to report the foreign income (loss) amounts; and

 - 35e.

whether the Appellant made misrepresentations attributable to neglect,
carelessness or wilful default in his 2002 through 2007 income tax returns
by failing to report the foreign income amounts (for 2004, 2005 and 2007)
and by not reporting that he held foreign property in those years having a
cost of more than $100,000.

III

STATUTORY PROVISIONS RELIED ON
U.

He relies on sections 9, 20, 95, 160,233.3 and 250, subsections 18(1), 91(1),
104(1), 152(4), 152(8), 162(7), 162(10), 162(10.1), 163(2), 230(1) and 248(1),
and paragraphs 12(1)(k), 18(1)(a), 20(1)(bb) and 111(1)(a) of the Act.

IV

GROUNDS RELIED ON AND RELIEF SOUGHT
Umeported income
V.

He submits that the Ogral OCS and the series of the transactions comprising it are
a sham. Ogral was created at the direction and control ofPMC, AMJC and the
Appellant to facilitate the sham by creating the appearance that they had
pmportedly gifted the'Money to Ogral and purportedly given up control of that
Money. PMC's, AMJC's and the Appellant's motivation in participating in the
Ogral OCS was not to gift money but was to participate in a plan, the net result of
which was to earn income on a tax-free basis. The documents relating to the
Ogral OCS were a sham, in so far as they purport to represent that the Coopers
did not have control of Ogral and purport to represent that the Coopers did not
have control over the Accounts and the Money.

W.

He further submits that the parties to the Ogral OCS wilfully presented its
transactions as being different from what they knew-them to be. All parties knew
that PMC, AMJC and the Appellant controlled Ogral and intended to reacquire
the funds introduced to the Accounts held in Ogral's name. The Ogral OCS was
intended to deceive the Minister so that PMC, AMJC and the Appellant could
receive taxable funds on a tax-free basis and to avoid foreign reporting
requirements, while enriching all of the parties participating in the sham.

 - 36X.

As a resident of Canada, the Appellant was required to report his foreign income
(loss) amounts pursuant to section 9 of the Act. The Minister properly included in
the Appellant's income for the 2002 through 2010 taxation years the amounts
detailed in Schedule "D".

Y.

In the alternative, ifOgral is not holding the bank and investment accounts for

PMC, AMJC and the Appellant, which is not admitted but is specifically denied,
he submits that PMC, AMJC and the Appellant were at all material times the de
facto shareholders ofOgral. As such, the income earned in the Accounts

attributed to the Appellant as detailed in Schedule "D" is taxable to him as foreign
accrual property income; with reference to section 9, paragraph 12(1)(k),
subsection 91(1) and section 95 ofthe Act.
Foreign reporting form penalties

z.

The Appellant failed to file information returns, namely Tll35 forms, as and
when required by subsection 233.3(3) of the Act for each of the 2002 through
2010 taxation years. Consequently, the Appellant is liable for penalties for each
of those years under subsection 162(7) of the Act.
Gross negligence penalties

AA.

He submits that the Appellant, knowingly or under circumstances amounting to
gross negligence, failed to file T1135 information returns for the 2002 through
2010 taxation years as and when required by section 233.3 ofthe Act. As such,
the Appellant is liable for penalties under subsection 162(10) of the Act for each
of the 2002 through 2010 taxation years. Further, since the number of months
during which each of the information returns for the 2002 through 2008 taxation
years was required to be filed but was not filed exceeded 24 months, the
Appellant is also liable for penalties under subsection 162(1 0.1) of the Act for
each of those taxation years.

 - 37BB.

He submits that the Minister properly assessed penalties under subsection 163(2)
of the Act. The Appellant, knowingly or under circumstances amounting to gross
negligence, made or participated in, assented to or acquiesced in the making of
false statements or omissions in filing his 2002 and 2005 through 2010 income
tax returns by failing to report the foreign income (loss) amounts. As a result, the
tax that would have been payable assessed on the information provided in the
returns filed in respect of those years was less than the tax that would be payable
computed according to subparagraph 163(2)(a)(i) of the Act.

CC.

In the alternative, if the Appellant was not grossly negligent in failing to report
the foreign income amounts for his 2005 and 2007 .taxation years, in filing his
returns for those years, as well as for 2004, he made misrepresentations that are
attributable to neglect, carelessness or wilful default within the meaning of
paragraph 152(4) of the Act, and consequently, the Minister was entitled to
reassess unreported income for those years beyond the normal reassessment
period.

DD.

Further, in the alternative, if the Appellant was not grossly negligent. in failing to
file Tll35 information returns for the 2002 through 2007 taxation years as and
when required by section 233.3 of the Act to report his holdings of foreign
property in those years having a cost of more than $100,000, by not filing Tll35
information returns for those years he made misrepresentations that are
attributable to neglect, carelessness or wilful default within the meaning of
paragraph 152(4)(a) ofthe Act, and consequently, the Minister was entitled to
assess foreign reporting penalties for those years beyond the normal reassessment
period.

\

 -38EE.

He requests that the appeals be dismissed, with costs.

DATED at the City ofVancouver, the Province ofBritish Columbia, this 26th day of
June, 2015.

William F. Pentney, Q.C.
Deputy Attorney General of Canada
Solicitor for the Respondent

Per:

N~lf&~

cr

Nadine Taylor Pickering
Counsel for the Respondent

Department of Justice
900- 840 Howe Street
Vancouver, British Columbia
V6Z2S9
Telephone:
Facsimile:

TO:

AND TO:

The Registrar
Tax Court of Canada
· 200 Kent.Street
Ottawa, Ontario
K1AOM1

Mark Meredith
KPMGLaw
900 - 777 Dunsmuir Street
Vancouver, British Columbia
V7Y 1K3

(604) 775-6021
(604) 666-2214

 Richard Cooper v. HMTQ, TCC Appeal ~o.: 2015-1068(IT)G
Schedule "A": Orgal Offshore Company Structure 2002-2010

Paul Dougherty

Singer & Friedlander
Trust Company
(Isle of Man) Limited

"Lochs ide"
Lochside Limited
10M incorp. date
1997-07-08
I
.. ,................. ""·······
.............
50 class A shares

... .........................................

$26M "gifted" from
Ogral Trust & CFT Trust
to Ogral Company

Del Elgersma •
(
Canadian Lawyer Belmont Trust

gherty & Associates
n Isle of Man law firm

BC

"Korderry"

Limited BVI

"Portrush"

Korderry Limited
10M incoro. date 1

.....................•....................
~0

........... ·······••-'••••·················.a

Guarantee Member ~
...........................................

class B shares

··-·················-····················

Ogral Company
(Isle of Man incorp. date 2001-12-19)
30 days notice to PMC required for transfers > $20K
Non-Equity Members: Lochside, Korderry, Portrush
Equity Members: PMC, AMJC, RJC

:···································:································································y···················y·····················
·

I

UBS AG Portfolios
;.

•~

Jackal Furids:
PMC

I
· I
1

: Skink F~nds:
1 AMJC 1 RJC

...............................................................................................................................................
I

I.

"Gifts" to
Coopers as
requested

 Richard Cooper v. Her Ma
Tax Court of Canada Appeal r
SCHEDULE "B": Interest and Ot
Interest and Other Investment Income
Net investment income (loss) from Dec 21 2011 D Norgaard schedule
Audit Adjustments: (See Schedule "C")
Expenses not laid out to earn income, not
available under s.20(1)(bb):
Investment fees
Portrush expenses
Directors fees
Other professional fees
Statutory fees
Investment income
Total Audit Adjustments
Interest and Other Investment Income

2002-12-31
$

$

2003-12-31

2004-12-31

(745,169) $ (4,624,450) $

32,418

$

-

$

te Queen
5-1068(1T)G
1estment Income
2006-12-31

2005·

3,245,381

$

-

$

4,~

s

2007-12-31

(2,214,266) $

1,963
5,251
0
146

2,790,619

2009-12-31

2008-12-31
$

900
5,169
0
687

(1,069,569) $

2010-12-31

(562,753) $

2

Total

189,585

$

3,676,217

$

32,418
6,213
37,889
172,838
3,589

$

426,954

$

3,913,584

1,514
7,317
97,590
510

962
7,945
43,662
570

874
12,207
31,586
628

2,307,292

2001-12-31

174,007
$

$

$

-

$

(538,744) $ (4,624,450) $

3,245,381

$

206,425

$

-

$

4,~

$

$

6,756

$

45,295

(2,206,906) $

2,797,375

$

(1,024,274) $

7,360

$

53,139

$

106,931

(509,614) $

2,414,223

$

-

 Richard Cooper v. Her Majesty The Queen
Tax Court of Canada Appeal No. 2015-1068(1T)C
Schedule "C": Disallowed Expenses (Audit Adjustm
Audit Adjustments to Expenses
Expenses Claimed
Bank charges
1
2
Debit interest
Fees to corporate service
3 providers
Portrush expenses
4
Accounting fees
5
Directors' fees
6
Other professional feoo
7
Statutory fees
8
Miscellaneous expenses
9
Total Expenses Claimed
Audit Adjustments
Fees to corporate service
3 providers
4
Portrush expenses
Directors fees
6
Other professional fees
7
Statutory fees
8
Total Disallowed Expenses
Revised Expenses

1,2
3
4
5
6
7
8
9

2002

2003

2004

2005

$

32,418

$

128,417

$

92,177

$

24,060

1,048
$

32,418

$

128,417

$

92,177

$

25,108

$

32,418

$

116,497

$

38,559

$

23,558

$

$

$
$

32,418

-

$
$

116,497
11,920

$
$

38,559
53,618

$
$

1,048
24,606
502

z

2006

$

$
$

2,149
1,727
152,317
1,963
2,404
5,251
45,360
146
619
211,936

1,963
5,251
42,413
146
49,773
162,163

)

$

$

$

$
$

Bank and debit interest expenses for services respecting the administration or management of shares or secu
Fees paid to corporate service providers for nominee services were not incurred to earn income under ITA 1
Expenses for Portrush (the NSM and nominee ofthe Coopers) were not incurred to earn income under ITA •
Accounting fees for services respecting the administration or management of shares or securities allowed un
Fees for directors (nominees ofthe Coopers) were not incurred to earn income under ITA 18(1)(a).
Other professional fees paid to KPMG and nominees of the Coopers were not incurred to earn income under
Fees paid to the Isle of Man were not incurred to earn income under ITA 18(l)(a).
Miscellaneous expenses were not reviewed.

2009

2008

584
34
,675
900
,470
,169
,981
687
660
,160

900
,169
,839
687
,595
,565

$

$

$

$
$

8,576
124
288,969
874
2,258
12,207
31,586
628
1,109
346,331

874
12,207
31,586
628
45,295
301,036

$

$

$

$
$

297
4
304,17.8
962
10,986
7,945
43,662
570
244
368,848

962
7,945
43,662
570
53,139
315,709

2010

$

$

$

$
$

488
5
265,463
1,514
2,862
7,317
97,590
510
355
376,104

1,514
7,317
97,590
510
106,931
269,173

allowed under ITA 20(1 )(bb) regardless of name of account holder.
L) or for investment counsel under ITA 20(1 )(bb).
:a).
~A

20(1 )(bb) regardless of name of account holder.

18(l)(a).

 Richard Cooper v. Her Majesty the Queen
Tax Court of Canada Appeal No.: 2015-1068(1T)G
SCHEDULE "D": Allocation oflncome
2002-12-31
Interest and Other Investment Income
See Schedule "B"
Allocation (II Line I21}:
Peter Marshall Cooper (PMC)
Richard John Cooper (RJC)
Arthur Marshall James Coo~er (AMJC)

s

(538,7-1-1)

2003-12-31

s

$

$ (3,380.964) $

$

(269.372)
(269.372)
$

(4,507.95J

(538,744)

(563.494)
{563.494)

s

2005-12-31

2004-12-31

(4,507,953) $

3,283,940

$

2,462,955 $
410,493
410,493
3,283,940

$

4,384,151

2006-12-31
$

(2.164,493) $

3,288,113 $ ( 1.623 ,370) $
(270.562)
548,0I9
(270.562)
548,019
4,384,151

s

(2,1 6-1.-193) $

2007-12-31

2008-12-31
$

(1.024,274) $

2,135,4IO $
355,902
355,902

(7 68,206) $
( 128.034)
( 128.034)

2,847 214

2,847,214

$

(1.024.274)

s

1,614) $

2,414,223

~.211)

i,702)
i,702)

I,810,667
301,778
301,778

1,614) $

2,414,223

Basis for Allocation:
Based on beneficial ownership of investments at 2003-12-31
UBS AG Portfolio 01 belongs to R.JC and AMJC @Dec 31 2003
UBS AG Portfolio 02 belongs to PMC @Dec 31 2003
Investments at Cost, Ogral Company Limited, Dec 31 2003

5,233,504
14,128,310
19,361,814
$5,233,504/ $19,361,814 =
or

Allocation, all years (*except for 2002-12-31)

27.0300%
1/4

= 1/8 (RJC) + 118 (AMJC) + 3/4 (PM C)

* -journal entries made in the books of Ogral Company Limited indicate AMJC & RJC transferred their portfolio to Ogral Company Limited on January I,
PMC transferred his portfolio to Ogral Company Limited on January I, 2003
Alternatively, had we based the income allocation on the FMV of contributions by each of the Coopers to Ogral Company, the result would be the same:
Based on·contributions to Ogral Company
UBS AG Portfolio 01 contributed by RJC and AMJC on Jan 1 2002
UBS AG Portfolio 02 contributed by PMC on Jan 1 2003
Total Contributions by RJC, AMJC & PMC (PP 206)

7,001,751
19,276,315
26,278,066
$7,001,7511 $26,278,066 =
or

Allocation, all years (*except for 2002-12-31)

26.6448%
1/4

= 1/8 (RJC) + 118 (AMJC) + 3/4 (PM C)

2010-12-31

~-31

•bile

$

 - r

Richard Cooper v. Her Majesty The Queen
Tax Court of Canada Appeal No. 2015-1068(IT)G
Schedule "E": Ogral Money/Specified Foreign Propel

1
2
3
4

The Ogral Money/S(!ecified Foreign Pro(!ertv ("SFP")
PMC
UBS AG portfolio 02 Jackal
KB portfolio 3
UBS AG portfolio 01 Jackal
UBS AG portfolio 04
Total GBP
PMC Specified Foreign Property CAD $

RJC&AMJC
5 UBS AG portfolio 01 Skink
6 KB portfolio 2
7 UBS AG portfolio 02 Skink
Total GBP
Allocation
RJC Specified Foreign Property CAD $
AMJC Specified Foreign Property CAD $
RJC & AMJC Ogral Money CAD $
Total Ogral Money/Specified Foreign Property CAD $

2003-12-31

2002-12-31
£

- £

5,556,917

£

£

$

£

- £ 5,556,917 £ 6,497,3
- $ 14,128,310 $ 15,002,1

2,779,865

£

2,287,071

£
~

£

£

2,779,865

£

2,287,071

£

2,322,5

$
$

$
$
$

2,616,752
2,616,752
5,233,504

$
$

$

3,277,704
3,277,704
6,555,409

2,768,7
2,768,7
5,537,4

$

6,555,409

$ 19,361,814

$

$ 20,539,6·

Explanation
Cost amounts from the Directors' Report and Unaudited Financial Statements of Ogral Company Limited.
Total SFP from British Pounds Sterling (GBP) translated to Canadian Dollar (CAD$) using nominal noon ex
Money and investments held by Ogral in the Jackal accounts is owned by PMC; the money and investments 1
UBS AG account names Jackal and Skink were account names within the Coopers' Ogral Trust structure (199
After a hiatus (PMC: 2004,2005; RJC, AMJC 2004-2007), the Coopers returned to UBS AG and used the same cl
Notes
1 UBS AG portfolio 02 Jackal (2003): Portfolio Number.###-####32-02 (Jackal), UBS AG, Zurich, Switzc
2 KB portfolio 3 (2004, 2005): ##3115, Kleinwort Benson (Channel Islands) Limited, Guernsey, Channel
3 UBS AG portfolio 01 Jackal (2006, 2007, 2008, 2009, 2010): Portfolio Number ###-####32-01 (Jackal), 1
4 UBS AG portfolio 04 (2009, 2010): Portfolio Number ###-####32-04, UBS AG, Zurich, Switzerland
5 UBS AG portfolio 01 Skink (2002, 2003): Portfolio Number ###-####32-01 (Skink}, UBS AG, Zurich, S
6 KB portfolio 2 (2004, 2005,2006, 2007): ###USB, Kleinwort Benson (Channel Islands) Limited, Guern
7 UBS AG portfolio 02 Skink (2008, 2009, 2010): UBS AG portfolio 02: Portfolio Number ###-####32-02

£

- £

7,789,947
15,558,853

7,308,609

8,645,547

7,308,609
$ 16,669,109

8,645,547
$ 16,956,578

£

~

-

- £
2,811,819

2,322,:
£

-

- £

2009-12-31

2008-12-31

2007-12-31

-

£

2010-12-31
-

£

-

7,789,947

6,497,3

£

2006-12-31

2005-12-31

2004-12-3

£

£

9,988,032
£

9,988,032
$ 17,885,151

- £

£

2,387,412 £

2,339,790

£

$
$

2,493,157
2,493,157
4,986,315

2,513,699
2,513,699
5,027,399

$
$

s

3,102,419
3,102,419
6,204,838

s

21,763,691

$

$ 21,655,424

9,475,923
503 ,601
£ 9,979,524
$ 15,495,291

- £

-

£

-

3,497,621
3,497,621 £

3,024,775
3,024,775

£

3,117,500
3,117,500

3,430,587
3,430,587
6,861,175

2,692,588
2,692,588
5,385,176

2,339,790

2,387,412

2,811,819

s
s

8,547,164
489,112
£ 9,036,276
$ 15,306,858

$
$
$

$ 21,983,977

$

$ 24,746,325

$
$
$

$ 20,692,033

$
$
$

2,481,172
2,481,172
4,962,343

$ 20,457,634

5e rates at Dec 31st from the Bank of Canada (www.bankofcanada.ca)
>y Ogral in the Skink accounts is owned by RJC & AMJC.
)02), the corpus of which was purportedly appointed to Ogral Company.
lUmbers and account names "Skink" and "Jackal" although portfolio numbers 01 and 02 were reversed.
d

ds
AG, Zurich, Switzerland
:rland
:hannel Islands
1k), UBS AG, Zurich, Switzerland