Trips to Aruba and Bahamas don’t count as business expenses

Farmers Forum staff

ST. EUGENE — The Skotidakis goat-farming and dairy-processing family took an ongoing beef with Canada’s tax man to the Federal Court of Appeal but failed to persuade the three-judge panel on hundreds of thousands of dollars in claimed corporate travel expenses.

The June 17, 2024 ruling upheld a 2022 Tax Court of Canada decision that sided with the Canada Revenue Agency, which maintained that more than $860,000 in travel by four Skotidakis siblings in 2014 and 2015 did not qualify as a company business expense. Rather, the involved trips were personal and must be claimed as income by the involved travellers. The CRA also disallowed nearly $500,000 in expenses on the Skotidakis Goat Farm’s 2015 corporate income-tax filing, which was similarly upheld in the latest ruling. Almost $355,000 of that amount was travel-related, including meals.

The dispute arose after a CRA audit. The ensuing court battle has offered a fascinating glimpse into the operations of a company that started with 20 goats in 1975 but grew to 3,000 animals and $200 million in annual sales by 2022.

The contested trips took members of the Skotidakis clan to such places as Paris, the Caribbean island of Aruba, the Bahamas and Mont-Tremblant. This included:

• $211,621 in 2014 and $156,696 in 2015 for travel by company president John Skotidakis, his spouse Peggy and his mother Maria.

• $237,647 in 2014 and $181,737 in 2015 for travel by company treasurer and human resources director Antigoni Skotidakis, her spouse Kyriakos and mother Maria.

• $29,049 in 2014 and $18,549 in 2015 for travel by company vice-president Kostantinos Skotidakis.

• $6,967 in 2014 and $19,624 in 2015 for travel by company employee Kostantina Skotidakis.

After its audit, the CRA did allow the company to deduct travel expenses of about $200,000 for a milk show in Dubai and other trips to Chicago, New York, Vancouver, San Diego and Washington.

The appellants have argued that all of the expenses were valid as they were travelling to seek new business. Customers all over North America — including Mexico — buy Skotidakis dairy products. The business processes milk sourced locally and imported from the United States at its 150,000 square foot facility that employs 300 people in St. Eugene.

The company is known for its lines of Greek yogurt, cow- and goat-milk feta cheeses, ricotta and cream cheese, and tzatziki dip. But it also makes custom private label dairy products like shredded mozzarella and parmesan cheese.

In Canada, the Skotidakis brand can be found at mainline retailers like Metro and Costco. It’s also carried at three U.S. retail locations and eight in Europe. The operation is technically structured as a numbered Ontario company within a holding company, with shares owned by John (36 %), Antigoni (20 %), Kostantina (20 %) and Kostantinos (24 %) Skotidakis, according to court documents.