Date: 20001208
Docket: A-679-99
CORAM: LINDEN, J.A.,
ISAAC, J.A.,
SHARLOW, J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
- and -
HARVEY ROLL
Respondent
Heard at Vancouver, B.C. on Friday, the 8th of December 2000
JUDGMENT delivered from the Bench at Vancouver, B.C. on Friday, December 8, 2000
REASONS FOR JUDGMENT BY: SHARLOW J.A.
Date: 20001208
Docket: A-679-99
CORAM: LINDEN, J.A.,
ISAAC, J.A.,
SHARLOW, J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
- and -
HARVEY ROLL
Respondent
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Vancouver, British Columbia, on December 8, 2000)
SHARLOW, J.A.
The Crown appeals from a judgment of the Tax Court in which the respondent Mr. Harvey Roll was found liable for penalties imposed under the Income Tax Act for failing to withhold source deductions from salaries and wages paid to the employees of Sea Hornet Marine Industries (Canada) Inc., but was not found liable for the source deductions themselves. Mr. Roll cross-appeals the assessment of the penalties.
The Tax Court Judge determined that Mr. Roll was a person to whom subsection 153(1) applied, based on the three-fold test from Coopers & Lybrand Ltd. v. The Queen, [1981] 2 F.C. 169 (F.C.A.). However, it is our view that once the Tax Court Judge determined that Mr. Roll was a bare trustee of the employer's funds, that he acted only on the directions of the principals of Sea Hornet and could exercise no independent authority over the disposition of the funds, and that the decision to pay the net salaries of the employees was that of the principals of Sea Hornet alone, he should have concluded that Mr. Roll was not within the scope of subsection 153(1) of the Income Tax Act. For the same reasons, Mr. Roll was not within the scope of subsection 153(1.3) as in force prior to June 20, 1996 or subsection 227(5) as in force on and after that date.
Therefore, there is no basis in the particular circumstance of this case for finding Mr. Roll liable for the source deductions or any related penalties. We conclude that the Crown's appeal must fail and Mr. Roll's cross appeal must succeed. Costs will be borne by the Crown.
(Sgd.) "K. Sharlow"
J.A.
December 8, 2000
Vancouver, British Columbia
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