Claim disallowed because tips not fully declared to CRA

Ms. Rock, a waitress in a pub, sued her former employer in BC Small Claims Court. She gave her version of conversations between her & her employer & her employer gave a different version of events.

At trial, Ms. R testified that she had earned more than $10,000 in tips in 2011, but that she had only disclosed 15% of these tips to CRA. Her lawyer argued that the judge should look past her lack of candour, partially because it is common in some industries that taxpayers do not report all of their income. This was not a winning argument.


Ms. Rock lost in court, partly because she falsely reported her income in her tax return.

The judge said this about Ms. R only disclosing 15% of her tips:

  • she knew what she did was wrong,
  • the tax system is an honour system and
  • Ms. R did not do what was expected of her.

The judge stated that he had to weigh whom to believe, Ms. R or her employer. He preferred the testimony of the pub owner. He reasoned that because Ms. R had previously showed that she is capable of dishonest behaviour, she may well do it again in court. The judge dismissed Ms. R’s claim and ordered her to pay part of the pub’s legal costs.

On one’s income tax return it state above where one signs:
“I certify the information given on this return and any documents attached is correct, complete, and fully discloses all my income.”

Considering this wording, judges of our courts are not at all impressed to discover that a party to a legal action filed a false tax return.

This case shows how important credibility is to an injury or any other claim and how one’s credibility can be harmed by one’s past behaviour.

ICBC certainly:

  • looks for evidence that a claimant cheated on his or her tax return (usually by an admission by the claimant) and,
  • if so, use this against a claimant in his or her injury claim.