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Docket: 2002-4739(IT)I
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BETWEEN:
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ROY VAN OENE,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Appeal heard on April 9, 2003 and judgment rendered
orally on April 16, 2003 at
Vancouver, British Columbia
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Before: The Honourable Judge L.M. Little
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Appearances:
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For the Appellant:
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The Appellant himself
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Counsel for the Respondent:
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Johanna Russell
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____________________________________________________________________
JUDGMENT
The
appeal from the assessment made under the Income Tax Act
for the 2000 taxation year is dismissed, without costs, in
accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 25th day of April
2003.
J.T.C.C.
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Citation: 2003TCC257
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Date: 20030425
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Docket: 2002-4739(IT)I
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BETWEEN:
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ROY VAN OENE,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Little, J.
The
issue in this appeal is whether the Minister of National Revenue
was correct in levying a penalty of $2,920.80 under subsection
163(1) of the Income Tax Act (the
"Act").
The
facts may be summarized as follows:
[1] The Appellant is an Industrial
Mechanic. The Appellant was employed by various companies to
service and repair industrial equipment located in pulp mills and
other business locations.
[2] The Appellant is a member of the
Millwrights, Machine Erectors & Maintenance Union Local 2736
(the "Union") and was assigned by the Union to various
jobs.
[3] In the 1998 taxation year the
Appellant was employed by a number of companies including
Interior Power and Chemical Services Ltd. ("Interior").
When the Appellant filed his income tax return for the 1998
taxation year he did not include the amount of $14,627.00 that
was paid to him by Interior. The Minister of National Revenue
(the "Minister") reassessed the Appellant's 1998
taxation year to include the amount of $14,627.00 that was paid
to him by Interior. The Minister did not levy a penalty.
[4] In the 1999 taxation year the
Appellant was employed by a number of companies including
Specialty Pipe & Mechanical Services Ltd.
("Specialty"). When the Appellant filed his income tax
return for the 1999 taxation year he did not report the amount of
$914.00 paid to him by Specialty. The Minister reassessed the
Appellant's 1999 taxation year to include the amount of
$914.00 that was paid to him by Specialty. The Minister did not
levy a penalty.
[5] In the 2000 taxation year the
Appellant was employed by the following companies:
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Name
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Payment Received
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(1) Whelen Mechanical Installation (1981) Ltd.
("Whelen")
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$29,208.00
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(2) UMA Constructors Ltd.
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7,768.83
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(3) Komtech Services Inc.
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482.24
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(4) American Eco Service
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4,267.77
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(5) Interior Power and Chemical
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3,695.00
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(6) Van Installations Ltd.
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4,927.00
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(7) Mitchell Installations Ltd.
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577.00
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(8) PIC Industrial Equipment
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$12,043.00
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Total 2000 Employment
Income
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$62,948.84
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[6] The Appellant testified that he
mislaid the T-4 slip issued by Whelen and therefore did not
provide H & R Block with a copy of the T-4 slip covering the
amount of $29,208.00 when H & R Block prepared his 2000
income tax return.
[7] By Notice of Reassessment dated
the 11th day of March 2002 the Minister reassessed the
Appellant's 2000 taxation year to include the unreported
income received from Whelen plus a penalty of $2,920.80 imposed
under subsection 163(1) of the Act.
[8] Subsection 163(1) of the
Act reads as follows:
163. (1) Every person who
(a) fails to
report an amount required to be included in computing the
person's income in a return filed under section 150 for a
taxation year, and
(b) had
failed to report an amount required to be so included in any
return filed under section 150 for any of the three preceding
taxation years
is liable to a penalty equal to 10% of the amount described in
paragraph (a), except where the person is liable to a
penalty under subsection (2) in respect of that amount.
[9] The Appellant said that he had a
serious heart attack in August 2001 and for some time prior to
the heart attack he was frequently confused and tired. The
Appellant also said that he was away from his home in Surrey
approximately 60% of the time in the 2000 year. The Appellant
suggested that his health and his frequent absences from his home
caused him to overlook the invoice from Whelen.
[10] During cross-examination the Appellant
indicated that he had signed his 2000 income tax return in the
office of H & R Block but he said that he did not read the
tax return.
[11] In reviewing the above facts it will be
noted that the Appellant failed to include the amount of
$29,208.67 in his income for 2000. This amount was approximately
46% of the Appellant's income for the year. The Appellant
also testified that he did not read his income tax return for
2000 at the office of H & R Block to ensure that
the return contained all of the income received by him in the
year.
[12] Before reaching my conclusion I have
reviewed a number of court decisions. In Maltais v. The
Queen, 91 DTC 1385, Judge Bowman (as he then was) said at
page 1387:
... The Appellant struck me as an honest and honourable young
man and I find as a fact that it was not his intention to evade
the payment of income tax. If it had been, more serious penalties
under subsection 163(2) might have been considered. Mr. Ghan on
behalf of the Respondent contended that subsection 163(1) in the
form which is applied to 1989 did not require that there be a
wilful intention to evade tax. In support of this position he
pointed to the wording of the former 163(1) which referred to
"Every person who wilfully attempts to evade the payment of
tax payable by him" and to the wording of subsection 163(2)
which uses the expression "knowingly or under circumstances
amounting to gross negligence". These provisions require a
mens rea of intent or of recklessness. I agree with the
Respondent on this point. In my opinion, the omission giving rise
to a penalty under subsection 163(1) as it applied to the
1989 taxation year is one of strict liability. Otherwise,
subsection 163(2) would be superfluous. It follows that where the
Minister of National Revenue is called upon under subsection
163(3) to justify the imposition of a penalty under subsection
163(1) he meets that onus by establishing that the taxpayer had
failed to report an amount of income in one year and that he or
she had failed to report an amount in a return for any of the
three preceding taxation years. It is not necessary for me to
decide in this appeal whether the amounts which the taxpayer
fails to report in two or more taxation years need be similar in
nature.
[13] In Slywka v. The Queen, [1996] 2
C.T.C. 2595 Deputy Judge Watson said at paragraph 10:
Considering all the circumstances of this case including the
testimony and documentary evidence, I am satisfied that the
Appellant did not exercise due diligence in both the 1991 and
1993 taxation years and that he failed to report the income
reflected in the T4's issued by his employer and received by
him. The penalty of $267.60 for the 1993 taxation year
was properly assessed by the Minister.
[14] I do not believe it could be said that
the Appellant exercised "due diligence" by signing his
2000 income tax return without reading it.
[15] In this situation the Appellant failed
to report income of $14,627.00 in 1998, $914.00 in 1999 and
$29,208.00 in 2000.
[16] I have some sympathy for the Appellant
because he was obviously suffering from health problems. He said
that he found it difficult to keep track of documents due to his
health problems and frequent trips away from his home. However,
in my view, the words in subsection 163(1) of the Act
are clear and I believe that the Appellant is caught by those
words. I also wish to add that I do not have the power to amend
the words of the Income Tax Act.
[17] The appeal is dismissed, without
costs.
Signed at Vancouver, British Columbia, this 25th day of April
2003.
J.T.C.C.
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