Leroux – B.C. Supreme Court finds that CRA owes a duty of care to taxpayers not to inappropriately assess devastatingly large gross negligence penalties

CRA owes a duty of care to a taxpayer to ensure that it does not exercise its discretion unreasonably so as to have "foreseeably huge and devastating effects" on a taxpayer. Humphries J found that this standard of care had been breached when CRA assessed material gross negligence penalties against a taxpayer for failure to report proceeds of sale from clearing forested land as being on income account when, in fact, the question of how to characterize such proceeds was difficult and the taxpayer’s capital-account treatment ultimately was vindicated in a consent judgment.  However, the breach had not caused the taxpayer's loss of his home and business, which had more to do with other financial difficulties rather than interim collection actions of CRA.

Neal Armstrong. Summary of Leroux v. CRA, 2014 DTC 5068, 2014 BCSC 720 under General Concepts – Negligence and fiduciary duty.