After denying all expenses claimed by the taxpayer in respect of an alleged business of selling herbal products in chains (on the basis that they did not qualify as a business) and partially disallowing expenses claimed in respect of a fishing business, Margeson T.C.J. went on to find (at paras. 290-291) that no gross negligence penalty was payable:
"This is a penal section. It has extreme consequences for the taxpayer and should only be resorted to on evidence which makes it clear that the taxpayer has knowingly, or under circumstances amounting to gross negligence, made an omission or false statement in his returns of income which resulted in him reporting less tax than he would otherwise have had to pay. The actions of the Appellant in this case do amount to carelessness, lack of proper knowledge with respect to recordkeeping matters and to some extent, his own mistake and belief that he would not have owed any income tax in some of the years in question. However, these factors do not amount to gross negligence as alleged by the Minister. The burden in that respect is on the Minister ... ."
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