Citation: 2011 FCA
CORAM: NOËL J.A.
741290 ONTARIO INC.
MAJESTY THE QUEEN
Heard at Toronto,
Ontario, on December 15,
at Ottawa, Ontario, on December 20, 2011.
REASONS FOR JUDGMENT BY: NOËL
IN BY: DAWSON J.A.
Citation: 2011 FCA 361
is an appeal from a decision of Bowie J. of the Tax Court of Canada (the Tax
Court judge) upholding the assessment of penalties issued pursuant to
subsection 227(9) of the Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.) (the Act) for failure by the appellant to remit source deductions
withheld from the salaries paid to its employees as and when required to do so.
issue in this appeal is whether the penalties assessed are subject to the due
diligence defence which was successfully advanced by the appellant’s directors
against assessments issued pursuant to subsection 227.1(3) of the Act.
the Tax Court judge, I am prepared to assume for present purposes that a defence
may be validly advanced against a failure to remit where the failure is caused
by events beyond the employer’s control. However, such a failure cannot
possibly be justified by a decision by the employer to appropriate for its own
use source deductions in order to keep the businesses afloat in difficult times
as was done here (reasons, paras. 21 and 22). In choosing to act as it did, the
appellant ignored the unconditional duty imposed on it by subsection 153(1) and
is, as such, liable to the assessed penalties.
duty being distinct and separate from that imposed on corporate directors
pursuant to section 227.1, no issue estoppel or abuse of process can result
from the fact that the directors in this case were found to have made
reasonable attempts to prevent the failure.
would dismiss the appeal with costs.
Eleanor R. Dawson J.A.”
Johanne Trudel J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
FROM A JUDGMENT OF THE HONOURABLE MR. JUSTICE BOWIE OF THE TAX COURT OF CANADA
DATED MARCH 3, 2011, DOCKET NO. 2007-3055(IT)G.
STYLE OF CAUSE: 741290
ONTARIO INC. and HER MAJESTY THE QUEEN
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: December 15, 2011
REASONS FOR JUDGMENT BY: Noël J.A.
CONCURRED IN BY: Dawson J.A.
DATED: December 20, 2011
Osborne G. Barnwell
OSBORNE G. BARNWELL
FOR THE APPELLANT
Myles J. Kirvan
Attorney General of Canada
FOR THE RESPONDENT