Date: 20090526
Docket: T-700-08
Citation: 2009 FC 544
Ottawa, Ontario, May 26,
2009
PRESENT: THE CHIEF JUSTICE
BETWEEN:
ARMAND
SOLOMENESCU
Applicant
and
MINISTER
OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1] The applicant seeks
judicial review of the refusal by the Canada Revenue Agency (CRA or the Agency)
for the cancellation and waiver of his penalties and interest payments for the
tax years 2001, 2003 and 2004.
[2] For tax year 2001,
the applicant claimed a deduction for legal fees of $12,157. In September 2002,
the deduction was disallowed by the CRA because, in its view, the documentation
provided did not establish allowable legal costs. A reassessment was issued to
reflect the disallowance. There is no evidence before me that the applicant
exercised his statutory right to appeal this decision.
[3] The applicant refused
to accept the Agency’s position. As a result of the CRA reassessment, the
applicant’s statement of account reflected an outstanding balance of $ 5,416.50.
The applicant chose not to pay this amount when it was due. As a result,
interest payments grew as did the applicant’s outstanding balance.
[4] In August 2007, the
applicant filed his request for penalties and interest relief on the grounds
that the Agency’s actions caused undue delays in resolving the issue of the
deductibility of his legal fees and that its various notices and reassessments
from time to time caused confusion, hampering his ability to understand the
status of his account.
[5] Undue delay by the CRA
in resolving an objection is one of the grounds warranting the waiver of
penalty and interest payments: Information Circular, 07-1, Taxpayer Relief
Provisions, May 31, 2007 at paragraph 26(b).
[6] The applicant
believes that during a telephone conversation of March 1, 2006, a
representative of the Agency advised him “that about half of the amount claimed
by me in legal fees, shown as a deduction on my 2001 Tax Return, had been
accepted.” (paragraph 6 of the applicant’s affidavit)
[7] A careful review of
the record discloses no correspondence or other documents to support the
applicant’s belief.
[8] The applicant’s
letter of March 4, 2006 to the Agency representative with whom he spoke three
days earlier makes no mention of any change in the Agency’s position concerning
its refusal to acknowledge the deduction of legal fees.
[9] During the hearing in
this Court, the applicant argued that the Agency’s change of position is shown
by comparing CRA correspondence and his statement of account which is an
ongoing CRA summary of the applicant’s outstanding balance reflecting
adjustments made from time to time.
[10] For the applicant, the
income tax arrears as stated in a CRA letter of January 9, 2006 is
approximately 50% less than the balance owing in September 2002 according to
his statement of account. This difference, in the applicant’s view, reflects
the allowance of one-half of his deduction for legal fees.
[11] I do not agree with the
applicant’s submission. In fact, the amount indicated in the Agency’s statement
of income tax arrears of January 9, 2006 ($2,984.73) is within pennies
precisely the prorated difference over the 180 days between the amounts noted
on the statement of account for September 9, 2005 ($2,915.71) and March 7, 2006
($3,317.54).
[12] The comparison between
the Agency’s letter of January 9, 2006 and the statement of account does not
support the applicant’s position.
[13] In summary, the record
discloses no undue delay by the Agency to disallow the applicant’s deduction
for legal fees. The applicant chose to pursue the issue administratively in
communications with CRA representatives. The delay caused by this process
cannot be attributed to the CRA as undue. Nor has the applicant shown that the
CRA ever modified its disallowance of the deduction in issue.
[14] The process did result
in reassessments and adjustments for arrears in payments. These various notices
may have confused the applicant. Any such confusion can be attributed to his
refusal to accept the CRA position and pay his arrears. The Agency’s refusal to
provide relief to the applicant on account of his confusion is not an
unreasonable outcome: Dunsmuir v. New
Brunswick, 2008 SCC 9, at ¶¶ 45-47.
[15] In my view, the applicant’s
difficulties with the Agency are aptly described in the first review refusal of
the request for penalty and interest relief, dated October 23, 2007:
Your
inability to provide proof of the deduction for a particular taxation year
should not have prevented you from filing subsequent year tax returns when due.
As well, your repeated late filing, and allowing a balance to remain
outstanding for such a long period of time could not be considered as beyond
your reasonable care and control. While there has been numerous reassessments
on your returns, there is nothing to indicate CRA delays in initially
processing or reassessing your returns in a timely manner.
[16] On March 25, 2008, the
second review decision-maker also concluded that neither extenuating or
extraordinary circumstances nor suggested CRA delays warranted granting the
relief sought by the applicant.
[17] With all the sympathy
one might have for the applicant’s difficulties in understanding the various
communications he was receiving from the Agency, I cannot conclude that the
second review refusal for penalty and interest relief was unreasonable.
[18] For these reasons, this application for judicial review must be
dismissed.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES that:
1.
This
application for judicial review is dismissed.
2.
The
undersigned remains seized of the proceeding concerning the issue of costs, in
the event this issue cannot be resolved amicably.
“Allan
Lutfy”
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