A Canada Revenue audit of a fund used to support Canada’s top-ranked women’s tennis player gave Tax Court a glimpse into money and sport.
Michel Bouchard, father of tennis pro Eugénie Bouchard, has been ordered to pay $81,143 in disallowed tax claims generated through an “in and out scheme”, according to a federal judge.
Blacklock’s could not contact Bouchard through Eugénie’s agent. The former Wimbledon junior single’s champion turned pro last year and is now ranked 62nd worldwide. “All of this is very expensive,” Tax Court Judge Rommel Masse wrote in upholding a federal audit against Bouchard.
Court heard testimony that in 2003 Bouchard, a former Wood Gundy employee, created Tennis Mania Ltd. Partnership. Investors in Tennis Mania were to subsidize Eugénie expenses for training, tournaments and equipment as an amateur on the promise of 10% annual return once she turned pro.
Bouchard’s daughter, then 9, was not a party to the agreement, and Tennis Mania did not have any other clients. “I’m not going to find investors for everyone else’s kids,” Bouchard testified.
Under the Income Tax Act section 18.1, no business deductions are permitted for “personal or living expenses of the taxpayer.” However, documents showed Bouchard in one instance deposited a $25,000 cheque into the partnership bank account, then immediately took $25,000 from the fund as reimbursement for Eugénie’s expenses and claimed the transaction as a business loss.
Reported losses by Tennis Mania totaled $25,047 in the 2005 tax year, then $20,085 in 2006 and $36,011 the year after that – all disallowed after auditors examined the partnership’s books in 2009. “It was only operated in such a way as to create tax deductions,” wrote Judge Masse; “This resulted in significant tax savings for the appellant and thus made it easier for him to finance Eugénie’s burgeoning career.”
Masse continued, “He was not looking at the partnership as a source of profit but was instead looking for a means to finance Eugénie’s development as a tennis player, while at the same time creating a tax advantage in the form of a tax loss for himself.”
Court documents showed Eugénie earned enough to meet her expenses by 2009, but to date had not paid any profits to Tennis Mania investors. Commercial sponsorships of the tennis pro, including a $75,000 contract with Adidas Group, were paid to Eugénie personally, court heard.
By Tom Korski