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Supreme Court rules Egg Board's fine tax deductible

Bittersweet victory for chicken farmer

Tags: Excerpts from the Windmill

PRINCE GEORGE, British Columbia - A determined Dutch-born chicken farmer and his family after an eleven-year legal battle all the way to the Supreme Court, have won their case against a costly tax-ruling by Revenue Canada. The government must return $125,000 in taxes to Veekens Poultry Farms and also pay the company the $100,000 it incurred in legal costs.

An aerial view of the Veeken farm which was started by the brothers Nick (+1969), Peter Sr. (+1993) and Lou. At one time, the farm included an egg grading station and distribution system.

The case hinged on Lou Veeken's decision to deduct as a business expense over-quota levies of $275,000 imposed on his company by the B.C. Egg Marketing Board. Veeken and his brother Peter who since has died, knew they risked such levies but calculated them into their business plan, and assumed they were a cost of doing business. When Revenue Canada disallowed these and other deductions, the fight was on.

Veeken won the first round before the Tax Court of Canada which ruled the deduction was legal under the Income Tax Act. The Federal Court of Appeal sided with Revenue Canada, prompting the Bergen, North Holland born entrepreneur to take his case to the Supreme Court of Canada, in April 1999.

The decision does not mean that suddenly everyone saddled with levies, penalties and fines can use them as deductions. In certain instances other operators may be able to defend themselves without the expense of costly court battles.

Accountants and lawyers say they still need more time to study the implications of the ruling, forcing Veeken to wait some more for his cheque. Retired from farming, the Veeken brothers meanwhile sold their shares to Peter Veeken Jr. who now also raises turkeys and operates his own meat plant near the northern B.C.