Citation: 2005TCC313
Date: 20050614
Docket: 2001‑83(IT)G
BETWEEN:
GRATIEN TURNER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL
ENGLISH TRANSLATION]
REASONS FOR
JUDGMENT
Bédard J.
[1] The point for determination in these appeals, which
were instituted under the general procedure, is whether the penalty assessed
against the Appellant was warranted:
(i) for
the 1991, 1992, 1993 and 1994 taxation years, in respect of the claim for a tax
credit for a wholly dependent person;
(ii) for
the 1991, 1992, 1993, 1994, 1996 and 1997 taxation years, in respect of the
claim for the transfer of a Disability Tax Credit and, for the 1998 taxation
year, in respect of a Disability Tax Credit.
It is
not in dispute that the Appellant was not entitled to claim a tax credit for a
wholly dependent person in computing his federal tax for the years concerned.
It is also not in issue that the Appellant was not entitled to claim a transfer
of the tax credit for the 1991, 1992, 1993, 1994, 1996 and 1997 taxation years
for severe and prolonged mental or physical impairment or, for 1998, a tax
credit for severe and prolonged mental or physical impairment.
[2] The facts on which the Minister of National Revenue
(the "Minister") relied in making the assessments for the years
concerned are as follows:
[TRANSLATION]
a. the case originated from an internal investigation of certain
employees of the Jonquière Tax Centre who had set up a scheme to enable certain
persons to receive fraudulent tax refunds in consideration of a commission
based on a percentage of the said refunds;
b. on or about April 22, 1996, the Appellant received a total
tax refund of approximately $6,964.42 for the 1991, 1992, 1993 and 1994
taxation years pursuant to reassessments dated April 22, 1996;
c. the Notice of Assessment dated April 22, 1996, for the
1991, 1992, 1993 and 1994 taxation years granted the Appellant equivalent‑to‑spouse
credits and transferred Disability Tax Credits;
d. on or about April 21, 1997, the Appellant received a tax
refund of $809.76 for the 1996 taxation year, as a result of the assessment
dated April 21, 1997;
e. the Notice of Assessment dated April 21, 1997, for the
1996 taxation year, granted the Appellant a transferred Disability Tax Credit;
f. on or about May 22, 1998, the Appellant received a tax
refund of $600.13, for the 1997 taxation year, as a result of the assessment
dated May 22, 1998;
g. the Notice of Assessment dated May 22, 1998, for the 1997
taxation year, granted the Appellant transferred Disability Tax Credits;
h. on or about May 3, 1999, the Appellant received a tax
refund of $508.71, for the 1998 taxation year, as a result of the assessment dated
May 3, 1999;
i. the Notice of Assessment dated May 3, 1999, for the 1998
taxation year, granted the Appellant a Disability Tax Credit;
j. the Appellant informed the Minister's investigators by solemn
declaration that he did not have a spouse and was not the father of a child
during the taxation years in issue and, furthermore, that he was not blind and
did not know Gilles Tremblay, an optometrist from Ville de la Baie;
k. the Appellant alleged to the Minister's investigators by solemn
declaration that the returns of income for the taxation years in issue were
completed by his daughter's spouse, Mario Boucher;
l. in the Minister's view, the Appellant colluded, aided and
abetted in this case;
m. in support of the reassessments dated June 30, 2000, for
the 1991, 1992, 1993, 1994 and 1996 taxation years, the Appellant made a
misrepresentation that is attributable to neglect, carelessness or wilful
default or committed fraud in supplying information under the Income Tax Act;
n. the equivalent‑to‑spouse credits and the
transferred Disability Tax Credits claimed for the 1991, 1992, 1993 and 1994
taxation years, the transferred Disability Tax Credit claimed for the 1996 and
1997 taxation years and, lastly, the Disability Tax Credit claimed for 1998
lead the Minister to believe that the Appellant knowingly, or under
circumstances amounting to gross negligence, participated in, assented to or
acquiesced in the making of, a false statement or omission in the returns of
income filed for the 1991, 1992, 1993, 1994, 1996, 1997 and 1998 taxation
years, as a result of which the tax that he would have been required to pay,
based on the information provided in the returns of income filed for those
years, was less than the amount of tax payable for those years.
[3] Roland Pelletier, a special investigations
officer at the Canada Customs and Revenue Agency (the "Agency"),
testified that, in May 1998, an employee of the Agency realized that the
department had made tax refunds to taxpayers without there being any supporting
documentation in their files. Mr. Pelletier explained that, together with
other persons, he had conducted an investigation into that matter. That
investigation led to the laying of charges against two Agency employees, one of
whom was Mario Boucher, the Appellant's son‑in‑law. According
to Mr. Pelletier, the investigation revealed that some 45 taxpayers
had been contacted by two of those employees or by other persons and that the
latter had received 50 percent to 66⅔ percent of the tax
refunds received by the taxpayers. Mario Boucher was implicated in a
number of cases, including the instant case. It was in this context that
Mr. Pelletier met the Appellant and the latter made solemn declarations to him, as indicated in the
Reply to the Notice of Appeal. Mr. Pelletier also testified that the
Appellant had always denied paying Mr. Boucher a commission or any other
form of remuneration. However, he added that he was convinced that the
Appellant had paid Mr. Boucher a commission, in view of the fact that the
Appellant had withdrawn from his bank account a cash amount corresponding to
approximately 60 percent of the tax refunds obtained in this case.
Appellant's Testimony
[4] In his testimony, the Appellant essentially tried to
lead me to believe that he did not really remember what had happened, that he
was ignorant of tax matters and, lastly, that he had been the innocent victim
of his son‑in‑law, Mario Boucher, whom he had trusted
completely and thought competent in view of the fact that he worked for the
Agency. The Appellant contended that Mario Boucher had told him he was
entitled to tax credits that he had failed to claim. The Appellant said that it
was in that context that he had signed his returns of income prepared by his
son‑in‑law, without however reviewing them.
[5] Thus he testified that he did not remember completing,
signing or filing the T2201 form
entitled "Disability Tax Credit Certificate". That form stated that
the Appellant had in fact been blind since 1980. Part B of the form had
been completed by Dr. Gilles Tremblay, an optometrist. The Appellant
admitted that his signature appeared on the form. However, he added that he did
not remember completing the form, which, in any case, he did not understand.
[6] The Appellant received a total tax refund of
approximately $6,964.42 as a result of the reassessments of April 22,
1996. On this point, the Appellant at first contended that Revenue Canada had
deposited the refund in question to his bank account and that the refund
therefore could not have been accompanied by notices of reassessment stating
the nature of the changes that had resulted in the tax refund. He added that he
had not really requested an explanation of the reason for the refund since
Mario Boucher, whom he trusted, had simply told him that he was entitled
to it. The Appellant's explanations on this point bear citing (pages 12‑14
of the transcript):
[TRANSLATION]
Q. That's
what you're telling me. O.K. At one point, you received an amount of money,
didn't you? I'm at tab 15. I'm showing you a cheque in the amount of
$6,964.42.
A. Yes.
Q. It
seems to be a cheque and you see there's a signature on the back. Is that your
signature?
A. Yes,
it's my signature.
Q. Good.
Do you remember receiving this cheque for $6,900, in April 1996?
A. I
have direct deposit and …
Q. No,
do you remember receiving this cheque, Mr. Turner?
A. Yes,
I remember.
Q. Good.
Was there a document accompanying this cheque?
A. No,
there was no document; it was a direct deposit.
Q. You
say it was a direct deposit?
A. It
goes directly into the bank. The amount went directly to the bank; I saw it in
my bank book.
Q. But
here, this is in fact your signature that we see here, at tab 15 of the
lower portion?
A. Yes,
it's my signature.
THE COURT:
And there was a direct deposit.
Éric Le Bel:
Q. You
say it was a direct deposit?
A. Well,
yes, I have direct deposit.
Q. O.K.
This isn't a cheque.
A. It's
a cheque that was deposited to my account.
Q. Who
deposited the cheque to your account?
A. Canadian
tax authorities.
Q. You
say it was Canadian tax authorities.
A. Well,
it was a direct deposit.
Q. O.K.
After that, that amount, did you know why you were given that amount, $6,900?
A. No,
I didn't know.
Q. You
didn't know. Did anyone explain to you the reason for that payment?
A. Mario Boucher
told me I was entitled to it.
Q. Good.
What did Mario Boucher tell you? How did he explain that to you?
A. He
told me I was entitled to it. The explanations… I can't give any.
Q. He
didn't give you any explanation?
A. No.
Q. Or
he gave you one and you don't want to tell us; I don't know. Do you remember
him giving you an explanation of the reason for that payment?
A. No.
Q. What
did Mario Boucher in fact tell you in explaining this cheque?
A. He
told me I was entitled to that amount.
Q. He
told you you were entitled to that amount, and that was all.
A. That
was all.
Q. O.K.
Then did you give Mr. Boucher any amounts of money?
A. No,
I never gave Mario a cent.
Q. Did
he ask you for any?
A. Never.
Q. He
or anyone else?
A. Never,
no one else either.
[7] And yet counsel for the Respondent got the Appellant
to admit in cross‑examination that he had in fact received a refund
cheque of $6,964.42 and that he had endorsed it and deposited it to his bank
account.
[8] The Appellant added that he had not paid a kickback to
his son‑in‑law or anyone else. It should be emphasized that the
evidence showed that, after this refund cheque was received, the Appellant made
two withdrawals from his bank account, one for $1,154.87 on April 25,
1996, and the other for $4,000 on April 26, 1996. The Appellant
explained that, with the $4,000 withdrawal, he had purchased a sound system for
his son and that he had used the other withdrawal for his personal expenses. I
note that the Appellant's assertion that he had purchased a sound system for
his son was supported neither by documentary evidence nor by independent or
credible testimony.
[9] Lastly, the Appellant's testimony in cross‑examination
by counsel for the Respondent concerning the non‑refund of provincial tax
is worthy of note (pages 32 and 33, paragraphs 135‑146, of the
transcript):
[TRANSLATION]
Q. If
I told you that you did not receive a cheque from the provincial government
similar to the one you received from the federal government for $6,900, would
you agree with me?
A. No,
I didn't receive one from the provincial government.
Q. O.K.
And then you didn't ask yourself any questions? Why did you receive one for
$7,000 from the federal government, but not from the provincial government?
A. Perhaps
because Mario worked for the federal government.
Q. And
your daughter as well?
A. My
daughter as well.
Q. O.K.
Yes, but, if you were entitled to a refund from the federal government, you didn't
say to yourself, I should be entitled to a refund from the provincial
government?
A. No.
Q. Why?
A. Well,
why… he wasn't working for the provincial government.
Q. Then,
you knew that, in view of the fact that he worked there, that entitled you to a
refund? I don't understand. You paid taxes all your life, when you worked.
A. Yes.
Q. How
many years did you work for Alcan?
A. I
worked at Alcan for 40 years.
Q. Good.
You paid taxes to the federal and provincial governments during all those
years?
A. Yes.
Q. You
always signed your tax returns?
A. Always.
Q. Good.
You'll agree with me that, in general, you report virtually the same things to
both levels of government, virtually? Do you agree with me?
A. I
imagine so.
Q. O.K.
When you received a cheque for $7,000, you didn't wonder: how is it I'm not
receiving one from the provincial government? As you said, it was because Mario
was working for the federal government?
A. Yes,
Mario was working for the federal government.
[10] First, I would emphasize the fact that a judge is not
required to believe a witness who is not contradicted. I refer on this point to
the decision of the Quebec Court of Appeal in Légaré v. The Shawinigan
Water and Power Co. Ltd., [1972] C.A. 372. In that case, the Court stated the following at pages 373 and
374:
[TRANSLATION]
[…] But the
courts are not required to believe witnesses, even if they are not contradicted
by other witnesses. Their stories may be implausible in the circumstances
revealed by the evidence or based on the rules of plain common sense […]
[11] I suggest that the Appellant should have claimed a
Disability Tax Credit on the ground that he was suffering from general amnesia
rather than blindness. In particular, the Appellant claimed that he did not remember,
or had virtually forgotten:
(i) when
he had met Mr. Boucher;
(ii) the
year in which Mr. Boucher had begun to complete his returns of income;
(iii) the
year in which Mr. Boucher had stopped completing his returns of income;
(iv) whether
Mr. Boucher or his daughter had drafted his notices of objection for him;
(v) the
person who had filed the T2201 form entitled "Disability Tax Credit
Certificate";
(vi) the
person who had drafted the solemn declaration that he signed in the presence of
Mr. Pelletier and Mr. Demers.
[12] The Appellant's explanation that he did not remember
completing, signing or filing the T2201 form, entitled, in capital letters,
"Disability Tax Credit Certificate" (although he admitted that his
signature appeared on that form) and that he did not understand what that form
meant seemed to me to be utterly implausible and not credible. The evidence
showed that the Appellant knew how to read and that he was thus not ignorant to
the point of not seeing and understanding that that form concerned a tax credit
for persons with disabilities.
[13] I found the Appellant's explanations of how he received
the tax refund cheque equally curious. I also found it utterly improbable that
the cheque would not have been accompanied by a notice of reassessment stating
the nature of the changes granting entitlement to such tax refunds.
[14] The Appellant did not admit that he had made a payment
to the transferor, but the evidence showed that he had immediately withdrawn
approximately 60 percent of the amount. He claimed that he had done so in
particular to purchase a sound system for his son. This was the usual way in
which the scheme proceeded. The statement that he did not pay an amount for the
service rendered by the author of the scheme is not plausible. The evidence of
the purchase of the system for his son was not supported by any documentation.
I conclude from a rational examination of the facts and circumstances, that is
the immediate withdrawal of approximately 60 percent of the tax refund and
the lack of any valid proof of the purchase of a sound system, that the
Appellant was not an exception to the scheme, which the Respondent proved,
under which two-thirds of the refund received was paid.
[15] In my view, this case is not even similar to those in Canada
(Attorney General) v. Villeneuve, 2004 D.T.C. 6077, 2004 FCA 20, and Canada
(Attorney General) v. Savard, 2004 D.T.C. 6383, 2004 FCA 150, in which
the Federal Court of Appeal confirmed the penalties assessed on other taxpayers
who had taken part in the same scheme as the Appellant in the instant case,
taxpayers who had shown wilful blindness.
[16] Instead, I simply find that the Appellant knowingly
made false statements on his returns of income and that he participated in,
assented to and acquiesced in those false statements.
[17] I am therefore satisfied that the Respondent showed on
a balance of probabilities that she was justified in assessing the Appellant a
penalty for each of the years in issue.
[18] The appeals are therefore dismissed, with costs.
Signed at Ottawa, Canada, this 14th
day of June 2005.
"Paul
Bédard"
Translation certified true
on this 7th day of February, 2006.
Garth McLeod,
Translator
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