Construction mogul ends tax battle over exclusive Chester golf course

A wealthy Nova Scotia businessman is ending a year-long Tax Court battle related to an 18-hole golf course in Chester, N.S., that he claimed was used for business purposes, but which the federal government said was built for his "exclusive personal enjoyment."

Carl Potter, the owner of Municipal Group of Companies, which includes road-building giant Dexter Construction, had appealed a Canada Revenue Agency reassessment that found the course amounted to a "benefit" worth $4 million over three years and formed part of his income.

The appeal was dropped earlier this month, but court records offer revealing details of the case involving Mill Ridge Golf Course, which is run at a steep loss by one of Potter's companies and was designed by well-known Canadian golf course architect Graham Cooke.

The case revolved around a dispute about whether the golf course amounted to a giant company perk for Potter — described by the federal Department of Justice in court records as an "avid golfer" — and that it was a taxable benefit under the Income Tax Act.

It's not clear why Potter withdrew his appeal, which covers the tax years 2017, 2018 and 2019. He did not reply to phone messages, and his lawyer did not reply to requests for comment. The CRA declined to comment on the case, citing confidentiality provisions.

In the appeal, Potter's lawyer claimed Mill Ridge was a "business development tool" for Municipal Group, one that was made to "feel exclusive" for the bankers, developers and executives invited every year to tee off at the course.

The Department of Justice pushed back, claiming in court filings the course had only two members: Potter, who paid an annual membership of $25,000, and Municipal Group, which paid $250,000.

Potter had "exclusive and unfettered" access to the course, according to the government's reply to the appeal, and controlled who played there and how many tee times were allowed.

"Mill Ridge was constructed and used exclusively by the appellant for his personal use and personal recreation," the department said in court filings.

Potter began to build his business empire decades ago as a water, sewer and road-building contractor, acquiring in the 1970s Dexter Construction, which at the time was operating in New Brunswick.

Dexter has since become one of the largest heavy civil construction companies in Atlantic Canada, contracted to build highways, clear land for new subdivisions and excavate for new developments.

It is also one of three dozen companies that now come under the umbrella of Municipal Group, divisions that include waste collection and recycling, portable toilets and mining support.

Future real estate development

Mill Ridge was operated by a company controlled by a Municipal Group subsidiary, according to court records. The federal government said it arrived at the $4-million-benefit number using a formula that includes operating costs and the fair market value of the property.

The CRA relied on Section 6(1)(a) of the Income Tax Act, which requires that benefits received by a taxpayer "from an office or employment" be included in their annual income.

Potter's appeal said Municipal Group views land as a "long-term strategic asset," and claimed the golf course property will ultimately become a real estate development.

He also claimed his annual fee of $25,000 "fully compensated" for his use, denied Mill Ridge was a private course available to him at all times, and said the benefits calculated by the CRA were "inaccurate, arbitrary, grossly exaggerated."

Mill Ridge was built in 2005 and, according to the Department of Justice, a business development plan envisioned it evolving into a "world-class golfing destination."

The plan involved offering "exclusive" memberships, building vacation homes and a lodge for executive retreats, and included revenue targets, according to the department.

But none of that ever happened, according to court records. No plans or permit applications for future development have been filed with the town of Chester, the court records said.