Court rejects man's argument that Income Tax Act only applies to "artificial persons" who agree to be taxpayers

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      Michael Spencer Millar laid out an imaginative defence when the Canada Revenue Agency demanded that he pay income tax.

      The educator at Paradigm Education Group claimed that the Income Tax Act only applied to "artificial persons" who agree to be taxpayers.

      Millar went on to say that because he is a "natural person"—and not an artificial entity—he was not required to pay because he provided services to students who were also "natural persons".

      The North Vancouver resident also claimed that this also exempted the company from remitting the GST.

      In 2016 Millar was convicted on four counts, including evading the payment of income tax over several years and counselling others to commit fraud.

      "In general terms, the Crown's allegation of counselling fraud in Count 4 is that Mr. Millar counselled others to commit income tax evasion, which the Crown says is a particular type of fraud," trial judge Victoria Gray wrote. "It is not necessary that the Crown prove that anyone actually committed fraud or income tax evasion as a result of anything Mr. Millar may have done. To prove this charge, the Crown is required to prove only that Mr. Millar counselled others to commit income tax evasion."

      After the convictions were declared, Millar decided to appeal to B.C.'s highest court.

      In the meantime, he was ordered to spend two-and-a-half years in jail and pay a $24,000 fine.

      Today, Millar's arguments were dismissed by the B.C. Court of Appeal in a unanimous ruling by a three-judge panel.

      "For reasons I will express in summary form, I would not give effect to the appellant’s submissions that challenge the authority of the investigators or prosecutors, the jurisdiction of the court, or the validity of the charging documents," wrote Justice Gregory Fitch in the ruling. "I would also reject the appellant’s contention that the manner in which he purported to structure his affairs exempted him from the requirement to pay income tax or remit GST on the services he was providing."

      The central issue, according to Fitch, was whether the Crown had infringed on Millar's right to be tried within a reasonable time under section 11 of the charter of rights.

      The verdict came after the 30-month "presumptive ceiling" from when the case began. All but three of these months elapsed before the landmark 2016 Jordan decision in the Supreme Court of Canada, which laid out this Canadian legal principle.

      The trial judge, Gray, concluded that the delay was reasonable as a "transitional exceptional circumstance" and because of the complexity of the case.

      "While I would not endorse all aspects of the judge’s s. 11(b) analysis, I agree with her ultimate conclusion that the delay in this case did not infringe the appellant’s right to be tried within a reasonable time," Fitch concluded. "As a result, I would dismiss the appeal."

      Later in the decision, Fitch wrote: "In the case at bar, the Crown had virtually no time to adapt to Jordan and did everything that was reasonably within its power to expedite what then remained of the proceeding."

      The founder of Paradigm, Russell Porisky, was sentenced to five-and-a-half years in prison (less credit for time served) and fined $259,482 after being convicted in B.C. Supreme Court 2016.

      Prisky's common-law spouse, Elaine Gould, was given one day in jail and a fine of $38,241.

      "The CRA warns all Canadians to beware of individuals that try to convince you that Canadians do not have to pay tax on the income they earn," the tax agency said in a news release at the time. "These individuals, also known as tax protesters, not only fail to report their own earnings, but they also conspire, counsel, and promote these tax schemes. Canadian courts have consistently rejected arguments made in these tax protester schemes." 

      Fitch's ruling included descriptions of some unusual aspects of Millar's appearances before the trial judge.

      One of Millar's pretrial applications centred around whether he should be granted a private hearing with the public excluded.

      In this instance, he sought "exclusive equity for the hearing"—and argued the court's failure to do this would require an explanation why his private status and private capacity wasn't being granted.

      Another pretrial application was framed as "Original Jurisdiction: Private Person Residing Outside Canada Within a Non‑Military Occupied Private Estate Not Subject to the Jurisdiction of Canada – Notice of Conflict or Variance of Law".

      This application suggested that Millar was living outside of Canada on his private estate, even though the government considered him to be a resident of North Vancouver.

      "After addressing the memorandum, the judge made clear to the appellant that she would not address either of his applications," Fitch wrote. "The appellant continued to assert the right to have both applications heard on their merits."

      Millar then pointed out to the trial judge that he had never consented to the legal proceedings under the Income Tax Act.

      "As the appellant continued to make submissions in support of his applications, the judge asked the sheriff to 'kindly take custody of Mr. Millar'," Fitch wrote. "The appellant was briefly put in handcuffs."

      After Millar agreed to behave in court, the handcuffs were removed.