The trial of a Chilliwack woman who followed the “natural person” theory to avoid paying income tax, while counselling others to do the same, wrapped up in BC Supreme Court on Thursday.
Debbie Arlene Anderson followed renowned tax cheat Russell Porisky and his Paradigm Education Group, which taught that income tax is optional for individuals who declare themselves natural persons. This, so goes the theory, is opposed to the legal (artificial) person working for pay under a contract of service.
The argument behind Porisky’s scheme has been repeatedly rejected by the courts, which have said his teachings are nothing more than counselling illegal tax evasion.
Porisky himself was sentenced on July 29, 2016 to four years in jail and fined $260,000. His partner Elaine Gould was sentenced to one day in jail and was fined $38,242. The duo’s fraudulent counselling to more than 800 students resulted in an estimated $11 million in income tax evasion.
Anderson faced four counts in her trial, which wrapped up July 6 in BC Supreme Court in Chilliwack. Two under the Income Tax Act (ITA) were for making false T1 statements by not declaring taxable income of $113,276 for 2005 and 2006, and evading $22,689 in taxes by failing to report income for 2005, 2006 and 2007. She also failed to remit $12,337 in GST in contravention of the Excise Tax Act.
Anderson also faced one count of fraud over $5,000 under the criminal code.
The court heard there was a specific program created by the Canada Revenue Agency (CRA) to investigate Porisky and his followers called Project Fable.
During her closing submissions in court Thursday, Anderson, who defended herself, had various arguments beyond the “natural person” theory, including that the ITA is so complicated that no one individual can understand it.
But her main argument remained true to the natural person theory, specifically that income tax only applies to what she repeatedly called “office holders.”
“Income tax is a tax on the privilege of being a holder of an office in the federal jurisdiction only,” Anderson said, reading from 84 pages of closing submissions.
“I receive money as my private property not as public money.”
She argued that the CRA cannot force private persons into becoming office holders for whom it is mandatory to pay tax on income.
“The created, the government, cannot be greater than the creator, people,” Anderson concluded.
During Crown submissions it was explained that, quite simply, a person cannot simply decide whether money they are paid constitutes taxable income. People can legally structure their financial affairs in various ways to minimize taxes payable, but tax evasion is tax evasion.
Another Porisky follower, Michael Spencer Millar, who also represented himself, was sentenced Feb. 28 to two-and-a-half years in jail for following the debunked theory.
Justice Neill Brown is scheduled to render a decision in the Anderson case Nov. 3.