Date: 20000302
Docket: T-1245-98
IN RE: the Income Tax Act
BETWEEN:
SAM GOLDMAKER
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
HENEGHAN J.
[1] The applicant, Mr. Goldmaker, has applied for judicial review of a decision of Mr. H.C. Beaulac, Director, Ottawa Tax Services Centre, Ottawa dated May 20, 1998 wherein Mr. Goldmaker"s request for waiver of interest on his income tax account was denied.
[2] By letter dated March 2, 1998 the applicant wrote Revenue Canada and requested a review of interest charges appearing on his income tax account showing a balance, as of January 22, 1998, in the amount of $12,831.84. The applicant said that this amount represented interest only on his income tax account and requested that it be reviewed under the fairness provisions of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 as amended, on the grounds that he was unable to pay the amount claimed.
[3] As a result of this letter, Mr. Goldmaker received a telephone call from Revenue Canada and discussed his financial situation. Subsequently, it was decided that Mr. Goldmaker would attend at the offices of Revenue Canada to pick up income and expenses and assets and liability statement forms to be completed by him. Mr. Goldmaker attended at the offices of Revenue Canada on March 20, 1998 and picked up the forms which he completed and returned on March 25, 1998.
[4] A "fairness fact sheet" was prepared on behalf of the Minister on March 25, 1998. This document contained a recommendation against the waiver of the interest assessed on Mr. Goldmaker"s income tax account. The document was approved, including acceptance of this recommendation, on March 26, 1998. By letter dated March 27, 1998, Mr. Goldmaker was advised that his request for a waiver of the interest pursuant to the leniency provisions of the "fairness" legislation was denied.
[5] Following a further telephone conversation between Mr. Goldmaker and a representative of Revenue Canada, Mr. Goldmaker wrote to Revenue Canada on April 14, 1998 requesting a further review of his tax situation.
[6] A meeting was held on April 23, 1998 between Mr. Goldmaker, J.P. Henley and Lynn McConnery of Revenue Canada and the situation was further discussed. The last paragraph of this memo provides:
| Client did not provide any addition information other than what was originally provided to substantiate his request for fairness on the basis of financial hardship. |
[7] A second "fairness fact sheet" was prepared by Revenue Canada. This fact sheet, completed on May 8, 1998 and approved on May 14, 1998 also recommended that the taxpayer"s request for fairness be denied. The reason given for this recommendation was that "financial hardship has not been demonstrated".
[8] This decision of the Minister was communicated to the applicant by letter dated May 20, 1998. On June 18, 1998 the applicant filed this application for judicial review.
[9] The issue in this application for judicial review is whether the Minister"s statutory delegate discharged his duty to act fairly in declining to exercise his discretion under section 220(3.1) of the Income Tax Act in favour of the applicant.
[10] Section 220(3.1) provides as follows:
| The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to (5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest.
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| Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable ou une société de personnes en application de la présente loi, ou l"annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation.
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[11] Section 220(3.1) of the Income Tax Act grants discretion to the Minister to cancel or waive all or a portion of any interest or penalties payable in relation to income tax assessed. This leniency provision applies to taxation years back to 1985. Guidelines concerning the cancellation and waiver of interest and penalties are published in Information Circular 92-2, dated March 18, 1992. Section 5 of those guidelines identifies some of the factors which will be taken into account by the Minister in deciding whether or not to exercise this discretion. The list is not exhaustive and paragraph 5 opens with these words:
| Penalties and interest may be waived or cancelled in whole or in part where they result in circumstances beyond a taxpayer"s or employer"s control. |
[12] Paragraph 9 identifies the information which is required to support an application for waiver of interest. Subparagraph (c) requires the taxpayer to show the following:
| (c) The facts and reasons why the interest or penalties levied, or to be levied, were primarily caused by factors beyond the taxpayer"s control. |
[1] The applicant sets out two grounds for his application:
| 1. The respondent erred in law in failing to exercise its discretion conferred upon it by the applicable legislation in rendering the decision in question. |
| 2. The respondent erred in law in breaching its duty of fairness to the applicant in and failed to provide the applicant with full disclosure of the case he was to meet. |
[2] In his oral submissions, the applicant argued further that the representatives of Revenue Canada did not want to look at the evidence and did not give him enough time to present all the evidence.
[3] Counsel for the Minister argued that the evidence on the record does not suggest that Revenue Canada failed to pay attention to the evidence submitted by the applicant in support of his "fairness" request. Counsel for the Minister pointed out that evidence relating to the history of events contributing to the financial difficulties of the applicant was irrelevant, on the basis that the applicant had asked for waiver of the interest on the grounds that he did not have any ability to pay this amount.
[4] While I am not prepared to go so far as to say that the background circumstances which may contribute to the inability of a taxpayer to pay interest is irrelevant, I agree with the position taken by counsel for the Minister, that the question before the Minister in this case was whether interest should be waived because the applicant could not pay.
[5] In Kaiser v. The Minister of National Revenue (1995), 95 D.T.C. 5187 (F.C.T.D.), Mr. Justice Rouleau of this Court commented on the purpose of section 220(3.1) at page 5188 as follows:
| The purpose of this legislative provision is to allow Revenue Canada, Taxation, to administer the tax system more fairly, by allowing for the application of common sense in dealing with taxpayers who, because of personal misfortune or circumstances beyond their control, are unable to meet deadlines or comply with rules under the tax system. The language used in the section bestows a wide discretion on the Minister to waive or cancel interest at any time. To assist in the exercise of that discretion, policy guidelines have been formulated and are set out Information Circular 92-2. |
[6] It is clear that section 220(3.1) of the Income Tax Act confers a discretion, not an obligation, on the Minister in respect of cancellation of interest charges. The question then becomes whether this discretion has been properly exercised by the Minister or, in this case, by his statutory delegate.
[7] Disagreement by a taxpayer with the Minister"s decision does not mean that the Minister"s decision will be reversed.
[8] The scope of judicial review in relation to a Ministerial decision, made in the exercise of discretion, is limited to reviewing whether the Minister has properly exercised his discretion, with regard for relevant considerations and without regard to extraneous factors. The standard of review of discretionary decisions in the context of section 220(3.1) of the Income Tax Act was addressed by Mr. Justice Rouleau in Kaiser v. Minister of National Revenue, supra, as follows:
| The jurisprudence has established the standard to be employed by the courts when called upon to review the exercise of a discretionary power such as the one in question here. In Re Maple Lodge Farms Ltd. and Government of Canada et al (1982), 137 D.L.R. (3d) 558 (S.C.C.), McIntyre, J. stated at p. 562: |
| In construing statutes such as those under consideration in this appeal, which provide for far-reaching and frequently complicated administrative schemes, the judicial approach should be to endeavour within the scope of the legislation to give effect to its provisions so that the administrative agencies created may function effectively, as the legislation intended. In my view, in dealing with legislation of this nature, the courts should, wherever possible, avoid a narrow, technical construction, and endeavour to make effective the legislative intent as applied to the administrative scheme involved. It is, as well, a clearly-established rule that courts should not interfere with the exercise of a discretion by a statutory authority merely because the court might have exercised the discretion in a different manner had it been charged with that responsibility. Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere. |
[9] I am unable to conclude, based on the facts presented, that the Minister improperly exercised his discretion in the present case. The applicant"s contention that he was not given an opportunity to present his case is not substantiated on the evidence. On the contrary, the record shows that the applicant was given full opportunity to present evidence concerning his present financial situation, including his income, expenses, assets and liabilities. The applicant was given the opportunity to make representations as to why the interest should be waived and he argued before both the Minister and this court that he did not have the money to pay the interest. As an explanation for his inability to pay, Mr. Goldmaker offered a history of some unfortunate professional difficulties and problems in collecting accounts receivable. This history is set out in the affidavit filed as part of the applicant"s record.
[10] It is clear from the two letters from Revenue Canada that the Minister, through his authorized employees, carefully considered all the evidence presented by the applicant. He concluded that, having regard to the information concerning income, expenses, assets and liabilities, the applicant was not unable to pay the interest outstanding.
[11] In the course of his submissions, the applicant submitted that he had understated his expenses. I note that upon a hearing in a judicial review proceeding, it is not open to an applicant to introduce unsworn evidence. In any event, the submissions of the applicant in this case do not change my view that the Minister had given consideration to relevant matters, that is, the information presented by the applicant upon his initial request to the Minister for waiver of the outstanding interest. In my opinion, there was sufficient information before the Minister to justify the conclusion which was reached.
[12] I refer again to the decision of Mr. Justice Rouleau in Kaiser v. Minister of National Revenue, supra, where he says:
| Absent bad faith on the part of the Minister, a breach of the principles of natural justice or consideration of extraneous or irrelevant factors, there is nothing to warrant the Court"s interference with the exercise of his discretion. |
[13] The same considerations apply in this case. There is nothing on the record to support an argument that there was a breach of natural justice by the Minister towards the applicant. There is nothing on the record to show that there was consideration of extraneous or irrelevant factors in this case.
[14] For the foregoing reasons, the application is dismissed.
"E. Heneghan"
J.F.C.C.
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