Ms. Bessette is a member of the Order of Dentists and carries on business under a name since 1992, Dental Centre Nathalie Bessette. In 2002 she met Pierre Senez, accountant, being in search of a more favorable corporate structure.
M. Senez creates two (2) companies, Les Nathalie Bessette Services inc. whose shares are held by Bright Eyes Management inc., whose own shares are 100% owned by Ms. Bessette. All revenue for services rendered to patients are deposited in a bank account Dental Centre Nathalie Bessette.
Through a contract, management fees are paid from the Dental company to the Management company. The management company did not have any employees or resources that would have enable it to deliver the services in the contract.
AS a result, the court found that the deduction in the dental business for the management fees was not allowable as it was not an expense incurred to earn business income.
The link to the court case is below.