His jet and a party are in the tax authorities

His jet and a party are in the tax authorities’ crosshairs

A Quebec billionaire is being sued by Revenu Quebec for nearly $2 million for withholding from his taxes the use of a private jet and a lavish party organized at his Westmount residence.

Little known to the general public, Sylvan Adams made a name for himself last year when he co-owned the team that enabled Hugo Houle to win a stage in the Tour de France.

In particular, the Québec tax authorities have accused him of deducting personal expenses related to the use of a private jet as business expenses.

A jet financed thanks to a $40 million interest-free loan from the businessman to a company.

An image of a Dassault Falcon 900EX jet similar to the one used by Adams.

Photo Adobe Stock

An image of a Dassault Falcon 900EX jet similar to the one used by Adams.

Revenu Québec advises that certain trips are not deductible as a business expense because they were instead used for personal reasons, for trips, or for their cycling activities.

Big party

The latter disputes the tax assessments. The case recently ended up in court. According to the case, Revenu Québec is talking about expenses for a big party organized at the Adams residence in 2013 that were wrongly deducted.

Among other things, there is an invoice for $43,916 for catering costs for an event for 200 people that took place on May 25, 2013. During this event, tents were set up in the courtyard of his Summit Circle residence in Westmount.

Some of these tents were even set up on top of the swimming pool.

The white tents are described as being set up on an antique brown floor over the pool using beams and scaffolding. The bill was $6,000 for three days.

This isn’t the first time Sylvan Adams has clashed with the tax officer. After a legal battle that lasted until 2019, his companies had to pay more than $100 million.

In addition, Sylvan Adams reportedly failed to report significant grants from his companies in 2012 and 2013 totaling $743,000.

Misrepresentation

Plaintiff “by negligence or willful omission made a misrepresentation of facts,” Revenue Quebec estimates.

In his application, the entrepreneur claims that he participated in thefts “in the course of a commercial activity”, which the tax authorities determined were for private purposes. He also believes contributions were late.

Mr Adams’ attorney has requested stays of two cases, arguing that Revenue Canada’s “mirror” ratings are also at issue. In late 2022, Judge Stéphane Davignon of the Quebec Court granted that request until November 2023.

WHO IS SYLVAN ADAMS?

  • Former President of Quebec giant Développements Iberville
  • Iberville developed the Galeries de la Capitale in Quebec and the Carrefour de l’Estrie in Sherbrooke
  • Adams now resides in Tel-Aviv, Israel, and is from Quebec
  • Named a billionaire in Forbes in 2021
  • Co-owner of Israel-Premier Tech, the team with which Hugo Houle won a Tour de France stage last summer

A $100 million tax bill

Groupe Iberville, owned by Sylvan Adams until 2015, got into a heated argument with Revenu Québec. He was eventually forced to pay a tax bill in excess of $100 million.

The dispute dates back to the sale of shopping centers such as the Galeries de la Capitale, the Carrefour de l’Estrie, the Grande-Place des Bois-Francs and land on Dix/30 in the 2000s.

Iberville had implemented a tax strategy called Q-YES to avoid paying Quebec taxes on capital gains totaling $728 million.

This strategy exploited a loophole in the law. Because federal and Quebec corporations could report different year-end dates, Iberville corporations actually only had to pay taxes in Ottawa.

In 2016, Judge Daniel Bourgeois of the Quebec Court of Revenu Québec fully agreed.

“In the court’s view, there is no doubt that there was abusive tax avoidance,” the judge said in his decision.

Maximum savings

It was KPMG’s Serge Bilodeau who developed the tax strategy.

“The purpose of the mandate given to KPMG and its legal advisors was that all of these transactions be completed with the greatest possible savings,” he explains.

The Court of Appeals rejected an appeal filed by Iberville, and the Supreme Court declined to hear the case in 2019.

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