A Victoria businessman and former financial planner owing more than $900,000 to Canada Revenue Agency will be discharged from bankruptcy if he pays close to 15 per cent of that amount, B.C. Supreme Court has decided.
Bruce Foerster will have to pay $136,000 to be discharged from bankruptcy, Master Carolyn Bouck of B.C. Supreme Court said in a decision released this week. Being discharged from bankruptcy means a person no longer has the legal obligation to pay debts that existed when bankruptcy was filed.
While Foerster can pay the money any time, the discharge will be suspended until May 16, 2015.
He had asked the court for either a suspension or conditional order of discharge from his bankruptcy, which went into effect May 16, 2013.
CRA said it is owed a total of $911,856 in income tax, interest and penalties. Of the total amount, $278,786 reflects tax debt, the court said. CRA had sought $200,000 in payment as a condition of discharge.
Foerster, 57, lives most of the year in Victoria. For about the past 10 years, he has been a businessman as owner and operator of Jungle Sea Ventures Ltd. resort in Belize. As of this year, he no longer holds controlling interest but is working on marketing, client development, public relations, reservation tracking and website monitoring for the resort, the court said.
Between 1984 and 1997, he worked as a financial planner. In that position, he promoted an investment scheme operating as a tax shelter, which the CRA decided did not generate legitimate tax deductions. Reassessment of returns to investors resulted in most of the tax debt still outstanding for Foerster, the decision said.
Foerster used the investment program to avoid paying significant income tax, Bouck said.
“The fact that CRA did not catch on to the scheme for several years does not excuse the fact that Mr. Foerster ought to have been paying his fair share of Canadian taxes in 1993 and 1994. Instead, Mr. Foerster re-directed that income to offshore accounts and the purchase of assets in Belize.”
A B.C. Securities Commission hearing decided in 1997 that Foerster had committed a number of breach of duties toward his clients. They were described as “egregious and damaging,” court said. Penalties included being barred from dealing with securities for 15 years.
Foerster states that the commission’s findings are not true, Bouck said.
He has also disputed his tax debt and “very little effort” has been made to repay it, she said. Court noted that he paid $27,778 between 2010 and 2013 toward the income tax debt.
Foerster’s shares in Jungle Sea resort are virtually worthless, she said. The resort’s debt is larger than its value.
In 2008, he mortgaged the Belize property to pay off some debt, including all loans owed to original investors, and to address financial obligations relating to his failed second marriage, including two children. The resort’s boats and vehicles were upgraded.
Foerster, who pays child support, is not living extravagantly, court said. A 1981 Ferrari 308 GTS and 2006 Mercedes Benz B200 are gone. His only assets of value are said to be worth $3,875.