Court found contradictory employer records created 'insurmountable credibility problem'
A family-owned restaurant's sloppy employment record-keeping left a former worker unable to prove his income when the Canada Revenue Agency came calling, according to a Federal Court decision that highlights the real-world consequences of inadequate payroll documentation.
Justice William Pentney dismissed George Hart's judicial review application on February 17, 2026, upholding the CRA's finding that Hart failed to establish he earned at least $5,000 in employment income to qualify for the Canada Recovery Benefit. The case centered not on whether Hart actually worked at the White Hart Pub and Grill — owned by his parents — but on whether the employer's contradictory and incomplete records could verify his earnings.
The court found that multiple T4 statements showing different amounts, Records of Employment that contradicted employer letters, and a complete absence of paystubs or timesheets created an insurmountable credibility problem for the worker's claim.
Multiple contradictory employer documents
Hart submitted two different T4 statements for 2020 showing earnings of $7,567.12 and $7,500, while his initial tax assessment reported T4 earnings of $12,760. For 2019, his claimed earnings ranged from $21,880 to $55,730 across multiple tax reassessments, with T4 statements eventually settling on $26,850.
The employer documentation problems extended beyond inconsistent dollar amounts. The Officer reviewing Hart's eligibility noted a fundamental T4 compliance issue: "An additional discrepancy of note regarding the T4's is that the 'Payer' listed on the T4's processed by the Canada Revenue Agency for 2019 and 2020 is simply listed as Lee Hart. There is no indication on the T4's that White Hart Pub and Grill, or any other business name, or any other business number was the 'Payer' on the T4's for 2019 and 2020."
A Record of Employment completed by Louise and/or Lee Hart in November 2023 showed insurable earnings of $16,450 that didn't match the T4 totals for 2019 and 2020. The Officer noted: "This information is contradicted by the information outlined on the ROE completed by Louise and/or Lee Hart on November 16, 2023, indicating the TP was employed from January 3, 2019, to March 14, 2020, his final pay period date was March 15, 2020, the TP was remunerated semi-monthly in 2019 and in 2020, and the total insurable earnings indicated on the ROE do not match the sum of the T4's for the 2019 tax year and the 2020 tax year."
No supporting payroll records
Beyond the contradictory employer statements, the case revealed a complete absence of basic payroll documentation. The CRA Officer's notes recorded: "The TP does not have any pay stubs, pay slips, was not paid by direct deposit, does not have any bank records, copy of work schedule or time cards to confirm his earnings in 2019 or in 2020."
Hart told the Officer he was paid in cash and by cheque and had deposited some money into his personal bank account, but provided no banking statements or other records to confirm this. He later claimed his bank accounts were frozen, preventing him from obtaining records, and argued the CRA should have used its legal powers to access the information.
The Officer questioned Hart about the discrepancies, but his explanations failed to resolve the concerns. Hart said he didn't know how the errors occurred and suggested perhaps he had added CERB or CRB amounts to his T4 earnings when completing his tax return, stating that income tax returns and mathematics were not his strong points.
Employer documents under scrutiny
Based on the documentation failures, the Officer concluded: "This Review Agent is not accepting that the TP earned $26,850 in employment income in 2019 working as a Bar Manager at White Hart Pub and Grill, (which is a family owned business) due to the discrepancies in the TP's initial income tax return and subsequent requests for adjustments (reassessments)."
Justice Pentney upheld the decision, noting the worker bore responsibility for proving his claim. The court stated that "it was his responsibility to obtain the documents he needed to establish his entitlement to the benefit; there is no onus on the CRA to take any measures to validate his income or seek to obtain third party records."
The court also confirmed that tax assessments alone don't prove income was actually earned or came from eligible sources.
