Pleas for a break from crippling tax assessments from a Calgary inventor who created shipping technology to be tested in B.C. ports are being passed from office to office in Ottawa.
David Elderfield claims he’s almost penniless, his family is fractured and his business and reputation have been destroyed due to tax demands he and his accountant call groundless.
“I have lost everything on an unsubstantiated whim of some faceless decision maker thousands of kilometers away,” Elderfield said in an April 9 letter to Prime Minister Justin Trudeau. “They won’t even charge me with criminal tax evasion so that I can defend myself in front of a valid court.”
And, as Elderfield fought back, Canada Revenue Agency (CRA) ran a debt clock now standing at about $500,000. And that’s long after he used after-tax savings to develop the system for tracking people and goods through Canadian and international ports.
The government – the CRA, the Prime Minister’s Office (PMO), the minister of national revenue’s office and the Tax Ombudsman’s Office – won’t talk about Elderfield’s plight citing Income Tax Act privacy provisions. Each pushes the issue somewhere else.
So now, Elderfield’s accountant Ken Jones said, rather than having his technology being on every shipping container going to or from China, Elderfield faces bankruptcy.
Documents confirmed through a Glacier Media investigation show Elderfield’s company, Wayfare Identifiers Inc., had been certified to work with both the Canadian and U.S. militaries.
Elderfield’s technology was designed to track cargo containers secured with biometrics, as well as communicate locations and security conditions at each intermodal container movement point. Made of aluminum, the security systems are installed on containers and operate on a radio frequency.
While the development work was done in Calgary, the practical application was to be tested first in B.C.’s northwest.
Elderfield struck a deal with Alcan in Kitimat for a supply of enough aluminum to make 20,000 units for containers in a two-year pilot project. Former Alcan director of operation Paul Henning confirmed that deal.
In a potential deal with Tampa-based CP Ships to put those units on containers, the technology would have, following a successful pilot project, been deemed accepted for qualification under the U.S. Department of Homeland Security and Customs and Border Patrol standards for secure, inbound container cargoes, CP Ships said in September 2005.
Elderfield was considering using land near the Terrace airport for retrofitting old shipping containers, The Terrace Standard newspaper reported in September 2005. That announcement came as Prince Rupert’s port was working to open a container terminal, a facility now one of the busiest on North America’s West Coast.
Elderfield’s technology was lauded as a step forward in the post-9/11 world when continental security was dramatically spotlighted. He was working with high-profile military and political people and developed partnerships with internationally known firms.
“This technology was validated by Equifax, CP Ships, CSAV and ALCAN, and had garnered a fully binding contract for $6 million for a 50% share when CRA attacked,” Elderfield said.
He estimates he spent about $2.8 million from his savings, investments, his home value, in-kind work from himself and others and loans from family on the project.
Jones said the CRA arbitrarily assessed Elderfield for taxes in 2005 and 2006, basing the assessment on an anticipated $120,000 income Elderfield’s now ex-wife put on a 2005 rental application – after the bank foreclosed on his house.
“They extrapolated that income back to 2003 and 2004 and they used it for 2005 and 2006 and they used it to create that [big] tax bill,” Jones said.
That income didn’t happen, though, Jones said. But, the CRA listed it as anticipated debt on its files and ran with it.
“It’s a bit of a ‘so you’re going to screw with us, we’ll see who’s got the power,’” Jones said.
Jones said the CRA wouldn’t accept that Elderfield had no income. He said there are no T4s issued to his client and no cheques the CRA can point to as proof of income.
“The assessments were based on supposition and innuendo – not fact,” Jones said in a Feb. 6, 2018 letter to the CRA. “The taxpayer earned zero income in those years and was living off of savings and the value of his primary residences. That residence was forced into foreclosure by CIBC, which was completed in December 2005 when the house sold for a large sum in excess of any debts my client held. The CRA had a representative at those court proceedings.”
Elderfield said that representative requested $35,000 to bring his account into good standing. He said the payment was processed by Bennett Jones law firm before the end of 2005 but did not appear on his online CRA account.
Elderfield said he set up all the papers needed for an audit of his financials in late summer 2007. But, he said, a CRA auditor walked into Calgary’s Wayfare Identifiers Inc. and said, “I’m not doing this,” and walked out.
Elderfield identified that agency auditor as Chris Blundell.
Blundel is seen repeatedly on CRA documentation as noting he will have audits done, but nothing much happened, Elderfield said.
Before all of this happened, Jones told the CRA Southern Alberta Tax Services Office in February 2018, Elderfield’s track record for tax filing was exemplary.
“The taxpayer lost all his money plus the ability to finance the [research and development] he was developing for the shipping industry,” Jones told the CRA.
Pleas for help ignored
Elderfield, who was working to develop technology in cooperation with companies such as B.C.’s Alcan, as well as with various levels of government, said his pleas for help to the CRA, the federal Office of the Taxpayers’ Ombudsman and the Prime Minister have gone unanswered.
Pleas for help to the PMO have been referred to Minister of National Revenue Diane Lebouthillier’s office.
Leboutillier’s press secretary Emilie Gagnon said Elderfield’s communications have been forwarded to the CRA.
Elderfield isn’t holding out much hope from that after similar previous commitments.
Desperate for answers, Elderfield reached out to Sen. Percy Downe, who filed a package with the ombudsman’s office.
“I have not received an acknowledgement from the ombudsman’s office,” Downe said.
Elderfield has written repeatedly to Trudeau and received no substantive response.
Glacier Media reached out to the CRA and the ombudsman’s office.
“We cannot comment on this specific case due to the confidentiality provisions of the Income Tax Act,” spokesperson Dany Morin said. “We are committed to making sure that all taxpayers are provided services that are fair, helpful and easy to use. It is not the Canada Revenue Agency’s intention to cause anyone financial hardship.”
The ombudsman’s office pointed to general answers about its work on its website.
“We are unable to share any information relating to individual complaints, which are confidential,” office manager of communications and public affairs Christianne Scholfield said.
“They won’t help,” Jones said.
Meanwhile, Elderfield has tried through the Tax Court of Canada to get some relief, or extension of appeals for 2005 and 2006.
“We were twice told we could not apply for an extension hearing without referencing the CRA’s rationale for their assessment,” Elderfield said. “We never received that rationale until February, 2017… though it should have been supplied, at latest, when requested by our then-lawyer in 2010.”
In spite of this, the court’s Chief Justice, Eugene Rossiter, last October ruled Elderfield is out of luck.
Even there, Elderfield mentioned the rental agreement.
“That agreement contained a single reference to back wages that were due to me for the period of July 1, 2005, until the finalization of an investment contact with Toronto-based Rhonda Corporations (a maximum period of 10 months),” Elderfield said in court documents. “Rhonda Corporation walked away from the contract and I received no payment.”
Jones said Elderfield, who he described as something of a ‘mad scientist,’ does have some culpability in the situation.; he said Elderfield should have filed tax returns with zeros in every year just to keep the CRA paper pushers happy.
Under the business banner of WayFare Identifiers, Elderfield and his family lent the business $1.3 million because it was technology that was needed for Canada’s border security, he said.
“Both sides of the border gave the development work high marks,” Elderfield said. “We had top military officers as advisers.”
On his board were Joseph T. Gorman, a past member of the U.S. President’s Export Council and Council on Foreign Relations; Gen. Larry Welch, a past U.S. air force chief of staff and commander-in-chief, strategic air command; Admiral Al Baciocco of the U.S. nuclear attack sub program; and James Ellis, whose last assignment among many was commanding general of the U.S. Third Army.
In April 2002, Canadian Minister of Foreign Affairs Bill Graham wrote to Immigration Minister Denis Coderre noting Elderfield’s work was “designed
to facilitate the secure movement of people and goods at border crossings. I agree that, in light of the events of September 11, it is now time for development of such innovative ideas.”
Three months later, Elderfield signed a Militarily Critical Technical Data Agreement with the Canada Border Services Agency (CBSA) for the involvement of Wayfare’s personal ID verification system with the agency. Agency president Alain Jolicouer and deputy chief of staff for operations and plans Linda Longo signed the document. CBSA confirmed the document’s authenticity.
The CBSA has since passed such documentation to the Public Procurement Service of Canada, which says such documents are for certification of companies so they are able to work on government contracts that are militarily important.
Such documents assist companies working with the United States and Canada.
The U.S. Department of Homeland Security has not responded to multiple queries about Elderfield’s work.
The project was seen as one the B.C. government could tout to the world, as evidenced in Elderfield’s presence on a November 2002 trade trip to California with former Premier Gordon Campbell.
“It was a tremendous advantage to have representatives such as you, who bring innovation and skill from the private sector, to impress upon our American friends exactly what this province has to offer the high tech industry,” Campbell wrote to Elderfield.