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MacKay, ex-director must pay sales tax
Promoter, co-principal of defunct business owe $42,300, court says
By BRUCE ERSKINE Business Reporter
Sat, Jul 30 - 4:55 AM
Controversial concert promoter Harold MacKay may have fought city hall, but he hasn’t avoided the taxman.
MacKay and Richard (Ed) Power, former directors of Keltic Brewing Co. Ltd., have lost their appeal of a $42,300 sales tax assessment by the Canada Revenue Agency for a Truro brewing and restaurant business that closed in 2007.
The 2009 assessment included $34,584.84 in unpaid tax, $6,676.81 in interest and a $1,094.19 penalty.
A Tax Court of Canada judgment dated Wednesday concluded that MacKay, who received $400,000 in secret funding from Halifax Regional Municipality last year to stage concerts, and Power failed in their due diligence regarding the payment of sales taxes from Keltic between September and December 2006.
Justice Steven D’Arcy didn’t accept MacKay’s testimony that he wasn’t aware of tax remittance difficulties and relied on managers to make them.
"I find that Mr. MacKay has not established, on a balance of probabilities, that he exercised the required degree of care, diligence and skill to prevent the failure to remit," D’Arcy wrote in dismissing the appeal.
D’Arcy said he didn’t believe Power was "completely forthcoming" with respect to his involvement with the corporation or his knowledge of its financial position.
"It is clear from his testimony and Mr. MacKay’s that Mr. Power was aware that the corporation was suffering financial difficulties at the end of 2005," he said.
"Once Mr. Power became aware of the financial problems of the corporation, he should have taken some positive steps to assure himself that the corporation was remitting the HST."
Keltic operated a restaurant on land leased from the Millbrook First Nation Economic Development Corp. Ltd. and the Millbrook band.
Millbrook and Dexter Construction Co. were Keltic’s other major shareholders.
D’Arcy said he shared the appellants’ concerns that the revenue agency didn’t assess Keltic directors Sean O’Connor, a chartered accountant with Dexter Construction, and Lloyd Johnson, an economic development officer with Millbrook First Nation.
O’Connor and Johnson resigned as Keltic directors in November 2006.
"I can only assume that CRA has information in its possession that was not before the court," D’Arcy said.
MacKay and Power argued they shouldn’t have been accountable for the unpaid tax because they had developed in 2007 a recovery plan for the business under which its general manager agreed to pay any unremitted HST.
