Clearwater man taxed on marijuana profits

A Clearwater resident has failed to overturn a decision by Canada Revenue Agency

By Cam Fortems

Kamloops This Week

A Clearwater resident has failed to overturn a decision by Canada Revenue Agency to tax him on profits from a marijuana grow-op it determined he operated between 2003 and 2005.

Robert Hole appealed a decision by the Minister of National Revenue to the Tax Court of Canada.

A written decision by Justice David Graham determined Hole did not declare several hundred thousand dollars in revenue from a marijuana grow, as well as income from a logging business.

Hole’s problems started in 2005, when RCMP raided his Clearwater property.

Mounties found 90 mature plants and 144 clones in a machine shop and 172 mature plants in the forest.

Clones are cultivated to start a second crop.

The federal ministry tendered evidence showing abnormally high BC Hydro bills during 2003 to 2005.

An auditor determined revenues from growing marijuana at $120,000 in each of the first two years and $80,000 in the final year, when he was raided by RCMP.

Hole reported only $13,500 worth of income in the first year, none in 2004 and $5,500 the next year.

“Banking documents also demonstrate that Mr. Hole and his wife were spending far more money in 2003 to 2005 than their reported incomes could support,” Graham wrote.

Hole testified at the hearing in Kamloops that he did not make any income from his grow-op and did cultivate at all in 2003 and 2004.

He also said his cultivation was for personal use to treat pain in his foot.

“Mr. Hole’s explanation that he was growing marijuana for personal use was also not believable,” Graham wrote in the ruling.

“The amount of marijuana that would have yielded from the plants he was growing far outstripped his personal needs. [RCMP expert] Sgt. McMillan opined that even based on a high rate of personal usage, Mr. Hole would have yielded decades worth of marijuana from his operation.”

Active components of marijuana break down after a year or so, even in optimal conditions, the judge added.

The CRA reassessed Hole’s income for both marijuana growing and logging, finding he did not declare income and failed to pay GST.

He was assessed gross penalties.

Those penalties were not detailed in the judgment. Citing privacy issues, Canada Revenue Agency declined to detail those penalties.