Divorce judge notes 'substantial unfairness to Canadian people' in couple's (lack of) taxes

Pssst: Taxman, are you listening?

B.C. Supreme Court Justice Loryl Russell doesn't exactly frame it that way, but at the end of a divorce file plagued by a lack of disclosure, the judge felt compelled to draw attention to facts that might be of interest to the Canada Revenue Agency.

The divorcing couple: landscapers Yuk Mui Wong and Guo Can Li.

As Russell points out, they ran their business on "very simple lines": no deductions for GST or income tax; no employee deductions "and the parties kept the cash they received and did not deposit it in the bank."

"Neither Ms. Wong nor Mr. Li has properly paid income tax over the last many years," Russell wrote.

"It is not my role to attempt to calculate the income tax the parties ought to have paid, but I will point out the substantial unfairness to the Canadian people who meet their income tax and GST obligations from those who do not.

"Mr. Li and Ms. Wong seem to have no hesitation in, for example, using roads or Court services without the least sense of a responsibility to contribute to the costs of those services."

Lack of co-operation

The judge's observations followed a 13-page reckoning of their finances that saw Li refuse to co-operate with an expert retained to value their business. Russell said there was no evidence Wong supplied him any of her records either.

That left the judge the difficult task of trying to calculate spousal support.

Wong and Li married in 2005 and separated 10 years later.

Her two children from a previous marriage own two thirds of the couple's matrimonial home. Li is listed as the owner of the other third.

The difficulties in assessing their finances came in part from Li's lack of participation.

The 45-year-old was ordered to pay his 55-year-old ex-wife and business partner $500 a month spousal support last August. But he has paid her nothing to date.

He dismissed his counsel last fall and did not attend any part of the trial.

As a result, Russell said her findings are based solely on Wong's evidence and Li's testimony for discovery.

'On the straight and narrow'

Wong claimed Li had the landscaping business before they met, but only worked when he wanted to: about two days a week.

"She put Mr. Li on the straight and narrow," Russell wrote. 

"She would push Mr. Li out of bed in the morning and together they would work 12-14 hours a day, seven days a week, during the season. She would do weeding and fertilizing and cleaning up after the mowing with a leaf blower on her back. They hired help as their work increased."

The business expanded from about 28 clients to around 1,000.

In her testimony, Wong claimed the business earned up to $200,000 a year.

According to the judgment, the net amount received from the business for the three years from 2012 to 2014 totalled nearly $380,000.

But Wong's declared income for those years was zero "because she said she did not receive wages for her work."

"That she would have been entitled to wages seems obvious since she was responsible for organizing the ongoing business and for billing and collecting receipts," Russell noted.

Li declared about $21,000 income for each of the two years the court was able to see.

'That debt will be joint'

The judge said Wong also had rental income of about $21,600 but there was no evidence of where the property was located, and the amount didn't show up on her taxes.

Records for the landscaping business appear to have been equally patchy.

"No deductions were taken and remitted to Revenue Canada from wages of the seven to eight workers employed at the height of the business," Russell said.

"Ms. Wong remarked that she would not have been able to find workers if she made deductions from their pay."

According to the decision, the business has died off without Wong's hand at the helm.

Russell concluded that Li is now intentionally underemployed. While she awarded him about $177,500 from the division of real estate assets, the judge also calculated a debt of $180,000 for spousal support.

The judge also anticipated the need to split one potential future liability.

"If by some possibility, the Canada Revenue Agency decides to pursue these parties for income tax and GST owing, that debt will be joint," she wrote.