Date: 20090812
Docket: T-1470-08
Citation: 2009 FC 825
Ottawa,
Ontario, August 12, 2009
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
KELLY
UGRO
Applicant
and
THE MINISTER OF
NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This
is an application for judicial review of a decision made by the Minister of
National Revenue (Minister) in a letter dated June 23, 2008 (Decision) which
denied the Applicant’s request for a waiver of penalties and interest for her
2002 to 2005 taxation years.
BACKGROUND
[2]
The
Applicant’s husband, Andrew Urgo, began a home-based business offering
professional services in graphic design billed at an hourly rate. Other
services included the purchasing and reselling of finished goods related to
graphic design. From 1995 to 2001, the Applicant’s husband operated the
business as a sole proprietorship. Then, from 2002 to 2004, he operated the
business in partnership with the Applicant.
[3]
The
Applicant’s husband hired Mr. Clyde Morrison, a chartered accountant, to
prepare financial statements for income tax purposes and advise the husband on
setting up accounts. The Applicant and her husband allege that Mr. Morrison did
not adequately represent the business’s financial statements for 1995, 1996 and
1997. In the spring of 1998, the Applicant’s husband ceased to do business with
Mr. Morrison because he “never addressed [the Applicant’s husband’s] repeated
attempts to make him show [the Applicant’s husband] the true profitability of
[the Applicant’s husband’s business].”
[4]
Beginning
in 1998, the Applicant’s husband used financial statements prepared by another
chartered accountant, Mr. Chris Cowland. The Applicant also alleges that Mr.
Cowland did not prepare the business’s financial statements accurately. The
Applicant’s husband did not use Mr. Cowland’s services as of the 2001-2002
taxation year.
[5]
During
2001-2002, the Applicant’s husband allegedly began to acquire a basic
understanding of accounting fundamentals as they pertained to the computation
of income. The Applicant and her husband allege that he used Canada Revenue
Agency’s (CRA) informational guides and other textbook accounting fundamental
resources.
[6]
The
Applicant’s 2002 to 2005 income tax returns were not filed on time. On July 20,
2006, the Minister assessed the Applicant’s 2002 to 2004 taxation years under
subsection 152(7) of the Act and levied late filing penalties in those years as
a result of the Applicant’s continued failure to file her 2002 to 2004 returns.
[7]
The
Applicant’s 2002, 2003, and 2004 tax returns were filed late on January 3, 2007
and her 2005 tax return was filed late on December 7, 2006.
[8]
In
March 2007, the Applicant’s tax returns for the 2002 to 2004 taxation years
were accepted by the Minister and were assessed as filed. In June 2007, the
Applicant’s 2005 tax return was accepted by the Minister and assessed as filed.
The Applicant’s 2002 to 2005 tax returns were not audited prior to being
assessed as filed.
First Level
Fairness Request
[9]
By
a letter dated November 20, 2006 and received by the Minister by facsimile on
July 10, 2007, the Applicant requested under the fairness provisions for the
CRA the cancellation or waiver of the penalties and interest for her 2002,
2003, 2004 and 2005 taxation years.
[10]
The
Applicant was advised by letter on July 13, 2007 that the Minister had reviewed
the Applicant’s fairness request and denied it.
Second Level
Fairness Request
[11]
By
letter dated July 18, 2007, and received by the Minister on July 20, 2007, the Applicant
made a second level fairness request.
[12]
On
April 21, 2008, the Applicant’s 2002 to 2005 taxation years were reassessed
pursuant to an audit conducted by the Minister. A Taxpayer Relief Coordinator
reviewed the Applicant’s fairness request and all of the information available
and prepared a report with a recommendation to deny the Applicant’s request.
The Manager of the Revenue Collections division of the Vancouver Island Tax
Services Office concurred with the recommendation to deny the Applicant’s request.
[13]
By
letter dated June 23, 2008, the Applicant was advised of the Minister’s
Decision to deny her request.
DECISION UNDER REVIEW
[14]
The
Minister denied the Applicant’s second level fairness request on the basis of
the following:
1)
The
Applicant had failed to demonstrate that, due to factors beyond her control,
she was prevented from filing her 2002 to 2005 tax returns and from remitting
the amounts owing by the statutory deadlines;
2)
The
Applicant had failed to provide details of why the business partnership continued
to file its GST returns annually for 2002 to 2005 but she did not file her 2002
to 2005 tax returns in a timely manner;
3)
The
Applicant had had adequate time to acquire another accountant’s services, or to
prepare her 2002 to 2005 tax returns herself, and to file these returns on time.
She and her husband had determined in or about March 2002 that the previous
accountant had allegedly incorrectly prepared the 1995 to 2000 financial
statements and tax returns. This occurred before the Applicant became a partner
in the business and before the Applicant’s 2002 and subsequent years tax
returns were due;
4)
Dissatisfaction
with a previous accountant, or incorrect financial statements prepared by the
Applicant’s accountant, were not extraordinary circumstances beyond the
Applicant’s control that prevented her from filing her 2002 to 2005 tax returns
and remitting the amount owing by the statutory deadlines; and
5)
A
taxpayer’s choice of which accountant to consult (if any), how they keep their
accounting records, the timeliness with which they file their returns and pay
the amounts owing are all factors within the taxpayer’s control.
ISSUES
[15]
The
Applicant submits the following issue on this application:
1)
Both
the first and second level fairness officers failed to act in accordance to their
duties under procedural fairness to address all the reasons that the Applicant
submitted in the request.
STATUTORY PROVISIONS
[16]
The
following provisions of the Act are applicable to these proceedings:
|
12.1) There shall be included
in computing the income of a taxpayer for a taxation year as income from a
business or property such of the following amounts as are applicable
Services,
etc., to be rendered
(a) any amount received by the taxpayer in the year in
the course of a business
(i) that is on
account of services not rendered or goods not delivered before the end of the
year or that, for any other reason, may be regarded as not having been earned
in the year or a previous year, or
(ii) under an
arrangement or understanding that it is repayable in whole or in part on the
return or resale to the taxpayer of articles in or by means of which goods
were delivered to a customer;
Amounts receivable
(b) any amount receivable by the taxpayer in respect of property
sold or services rendered in the course of a business in the year,
notwithstanding that the amount or any part thereof is not due until a
subsequent year, unless the method adopted by the taxpayer for computing
income from the business and accepted for the purpose of this Part does not
require the taxpayer to include any amount receivable in computing the
taxpayer’s income for a taxation year unless it has been received in the
year, and for the purposes of this paragraph, an amount shall be deemed to
have become receivable in respect of services rendered in the course of a
business on the day that is the earlier of
(i) the day on which the account in respect of the services was
rendered, and
(ii) the day on which the account in respect of those services would have
been rendered had there been no undue delay in rendering the account in
respect of the services;
152(4) The Minister may at any time make an assessment,
reassessment or additional assessment of tax for a taxation year, interest or
penalties, if any, payable under this Part by a taxpayer or notify in writing
any person by whom a return of income for a taxation year has been filed that
no tax is payable for the year, except that an assessment, reassessment or
additional assessment may be made after the taxpayer’s normal reassessment
period in respect of the year only if
(a) the taxpayer or person filing the return
(i) has made any misrepresentation that is attributable to neglect,
carelessness or wilful default or has committed any fraud in filing the
return or in supplying any information under this Act, or
(ii) has filed with the Minister a waiver in prescribed form within the
normal reassessment period for the taxpayer in respect of the year; or
(b) the assessment, reassessment or additional assessment is made
before the day that is 3 years after the end of the normal reassessment
period for the taxpayer in respect of the year and
(i) is required pursuant to subsection 152(6) or would be so required if
the taxpayer had claimed an amount by filing the prescribed form referred to
in that subsection on or before the day referred to therein,
(ii) is made as a consequence of the assessment or reassessment pursuant
to this paragraph or subsection 152(6) of tax payable by another taxpayer,
(iii) is made as a consequence of a transaction involving the taxpayer
and a non-resident person with whom the taxpayer was not dealing at arm’s
length,
(iii.1) is made, if the taxpayer is non-resident and carries on a
business in Canada, as a consequence of
(A) an allocation by the taxpayer of revenues or expenses as amounts in
respect of the Canadian business (other than revenues and expenses that
relate solely to the Canadian business, that are recorded in the books of
account of the Canadian business, and the documentation in support of which
is kept in Canada), or
(B) a notional transaction between the taxpayer and its Canadian
business, where the transaction is recognized for the purposes of the
computation of an amount under this Act or an applicable tax treaty.
(iv) is made as a consequence of a payment or reimbursement of any
income or profits tax to or by the government of a country other than Canada
or a government of a state, province or other political subdivision of any
such country,
(v) is made as a consequence of a reduction under subsection 66(12.73)
of an amount purported to be renounced under section 66, or
(vi) is made in order to give effect to the application of subsection
118.1(15) or 118.1(16).
…
163.2(8) For the purpose of applying this section (other than
subsections (4) and (5)),
(a) where a person makes or furnishes, participates in the making
of or causes another person to make or furnish two or more false statements,
the false statements are deemed to be one false statement if the statements
are made or furnished in the course of
(i) one or more planning activities that are in respect of a particular
arrangement, entity, plan, property or scheme, or
(ii) a valuation activity that is in respect of a particular property or
service; and
(b) for greater certainty, a particular arrangement, entity,
plan, property or scheme includes an arrangement, an entity, a plan, a
property or a scheme in respect of which
(i) an interest is required to have, or has, an identification number
issued under section 237.1 that is the same number as the number that applies
to each other interest in the property,
(ii) a selling instrument in respect of flow-through shares is required
to be filed with the Minister because of subsection 66(12.68), or
(iii) one of the main purposes for a person’s participation in the
arrangement, entity, plan or scheme, or a person’s acquisition of the
property, is to obtain a tax benefit.
|
12.1) Sont à inclure dans le
calcul du revenu tiré par un contribuable d’une entreprise ou d’un bien, au
cours d’une année d’imposition, celles des sommes suivantes qui sont
applicables :
Services
à rendre
a) les sommes
reçues au cours de l’année par le contribuable dans le cours des activités
d’une entreprise :
(i) soit qui sont au titre de services non rendus ou de
marchandises non livrées avant la fin de l’année ou qui, pour toute autre
raison, peuvent être considérées comme n’ayant pas été gagnées durant cette
année ou une année antérieure,
(ii) soit qui sont, en vertu d’un arrangement ou d’une entente,
remboursables en totalité ou en partie lors du retour ou de la revente au
contribuable d’articles dans lesquels ou au moyen desquels des marchandises
ont été livrées à un client;
Sommes
à recevoir
b) les sommes à
recevoir par le contribuable au titre de la vente de biens ou de la
fourniture de services au cours de l’année, dans le cours des activités d’une
entreprise, même si les sommes, en tout ou en partie, ne sont dues qu’au
cours d’une année postérieure, sauf dans le cas où la méthode adoptée par le
contribuable pour le calcul du revenu tiré de son entreprise et acceptée pour
l’application de la présente partie ne l’oblige pas à inclure dans le calcul
de son revenu pour une année d’imposition les sommes à recevoir qui n’ont pas
été effectivement reçues au cours de l’année; pour l’application du présent
alinéa, une somme est réputée à recevoir pour services rendus dans le cours
des activités de l’entreprise à compter du premier en date des jours suivants
:
(i) le jour où a été remis le compte à l’égard des services,
(ii) le jour où aurait été remis ce compte si la remise n’avait
pas subi un retard indu;
152(4) Le ministre peut établir une cotisation, une
nouvelle cotisation ou une cotisation supplémentaire concernant l’impôt pour
une année d’imposition, ainsi que les intérêts ou les pénalités, qui sont
payables par un contribuable en vertu de la présente partie ou donner avis
par écrit qu’aucun impôt n’est payable pour l’année à toute personne qui a
produit une déclaration de revenu pour une année d’imposition. Pareille
cotisation ne peut être établie après l’expiration de la période normale de
nouvelle cotisation applicable au contribuable pour l’année que dans les cas
suivants :
a) le contribuable ou la personne produisant la déclaration
:
(i) soit a fait une présentation erronée des faits, par
négligence, inattention ou omission volontaire, ou a commis quelque fraude en
produisant la déclaration ou en fournissant quelque renseignement sous le
régime de la présente loi,
(ii) soit a présenté au ministre une renonciation, selon
le formulaire prescrit, au cours de la période normale de nouvelle cotisation
applicable au contribuable pour l’année;
b) la cotisation est établie avant le jour qui suit de
trois ans la fin de la période normale de nouvelle cotisation applicable au
contribuable pour l’année et, selon le cas :
(i) est à établir en conformité au paragraphe (6) ou le
serait si le contribuable avait déduit un montant en présentant le formulaire
prescrit visé à ce paragraphe au plus tard le jour qui y est mentionné,
(ii) est établie par suite de l’établissement, en
application du présent paragraphe ou du paragraphe (6), d’une cotisation ou
d’une nouvelle cotisation concernant l’impôt payable par un autre
contribuable,
(iii) est établie par suite de la conclusion d’une
opération entre le contribuable et une personne non résidente avec laquelle
il avait un lien de dépendance,
(iii.1) si le contribuable est un non-résident exploitant
une entreprise au Canada, est établie par suite :
(A) soit d’une attribution, par le contribuable, de
recettes ou de dépenses au titre de montants relatifs à l’entreprise
canadienne (sauf des recettes et des dépenses se rapportant uniquement à
l’entreprise canadienne qui sont inscrits dans les documents comptables de
celle-ci et étayés de documents conservés au Canada),
(B) soit d’une opération théorique entre le contribuable
et son entreprise canadienne, qui est reconnue aux fins du calcul d’un
montant en vertu de la présente loi ou d’un traité fiscal applicable,
(iv) est établie par suite d’un paiement supplémentaire
ou d’un remboursement d’impôt sur le revenu ou sur les bénéfices effectué au
gouvernement d’un pays étranger, ou d’un état, d’une province ou autre subdivision
politique d’un tel pays, ou par ce gouvernement,
(v) est établie par suite d’une réduction, opérée en
application du paragraphe 66(12.73), d’un montant auquel il a été censément
renoncé en vertu de l’article 66,
(vi) est établie en vue de l’application des paragraphes
118.1(15) ou (16).
…
163.2(8) Les règles suivantes
s’appliquent dans le cadre du présent article, sauf les paragraphes (4) et
(5):
a) lorsqu’une
personne fait ou présente, ou fait faire ou présenter par une autre personne,
plusieurs faux énoncés, ou y participe, ceux-ci sont réputés être un seul
faux énoncé s’ils ont été faits ou présentés dans le cadre des activités
suivantes :
(i) une ou plusieurs activités de planification qui se rapportent
à une entité donnée ou à un arrangement, bien, mécanisme, plan ou régime
donné,
(ii) une activité d’évaluation qui se rapporte à un bien ou
service donné;
b) il est
entendu qu’une entité donnée ou un arrangement, bien, mécanisme, plan ou
régime donné comprend une entité, un arrangement, un bien, un mécanisme, un
plan ou un régime relativement auquel, selon le cas :
(i) un droit a ou doit avoir un numéro d’inscription attribué en
vertu de l’article 237.1 qui est le même numéro que celui qui s’applique à
chacun des autres droits dans le bien,
(ii) un avis d’émission visant des actions accréditives doit être
présenté au ministre par l’effet du paragraphe 66(12.68),
(iii) l’un des principaux objets de la participation d’une
personne à l’entité, à l’arrangement, au mécanisme, au plan ou au régime, ou
de l’acquisition du bien par une personne, est l’obtention d’un avantage
fiscal.
|
STANDARD OF REVIEW
[17]
Generally
speaking, the standard review for fairness decisions is reasonableness: Lanno
v. Canada (Customs and Revenue Agency) 2005
FCA 153 and Vitellaro v. Canada (Customs and Revenue Agency) 2005 FCA 166 at paragraph 5.
[18]
In Dunsmuir v. New Brunswick 2008 SCC 9 (Dunsmuir), the Supreme
Court of Canada recognized that, although the reasonableness simpliciter and patent unreasonableness standards are
theoretically different, “the analytical problems that arise in trying to apply
the different standards undercut any conceptual usefulness created by the
inherently greater flexibility of having multiple standards of review”: Dunsmuir at paragraph 44. Consequently, the Supreme Court
of Canada held that the two reasonableness standards should be collapsed into a
single form of “reasonableness” review.
[19]
The
Supreme Court of Canada in Dunsmuir also held that
the standard of review analysis need not be conducted in every instance.
Instead, where the standard of review applicable to the particular question
before the court is well-settled by past jurisprudence, the reviewing court may
adopt that standard of review. Only where this search proves fruitless must the
reviewing court undertake a consideration of the four factors comprising the
standard of review analysis.
[20]
Thus,
in light of the Supreme Court of Canada's decision in Dunsmuir
and the previous jurisprudence of this Court, I find the standard of review
applicable to the issues, with the exception of procedural fairness, legal and
factual error, bad faith and bias issues, to be reasonableness. When reviewing
a decision on the standard of reasonableness, the analysis will be concerned
with “the existence of justification, transparency and intelligibility within
the decision-making process [and also with] whether the decision falls within a
range of possible, acceptable outcomes which are defensible in respect of the
facts and law”: Dunsmuir at paragraph 47. Put
another way, the Court should only intervene if the Decision was unreasonable
in the sense that it falls outside the “range of possible, acceptable outcomes
which are defensible in respect of the facts and law.”
[21]
The
Applicant also raises procedural fairness, legal and factual error, bias and
bad faith issues.
[22]
The
standard of review for procedural fairness issues is correctness: Suresh v.
Canada (Minister of Citizenship and Immigration) 2002 SCC 1. For legal
error and bias I have also applied a correctness standard. See Uluk v. Canada (Minister of
Citizenship and Immigration), [2009] F.C.J. No. 149 (F.C.); and Lai v.
Canada (Minister of Citizenship and Immigration), [2007] F.C.J. No. 476
(F.C.)
ARGUMENTS
The Applicant
[23]
The
Applicant relies upon the arguments and authorities put forward by her husband
in T-1158-08 as they relate to her application. Both applications were heard
and argued together.
The Respondent
The Minister
Considered All Relevant Factors
[24]
The
Respondent submits that the Minister considered all of the relevant factors and
addressed all of the reasons and submissions submitted by the Applicant in
respect of her second fairness request which is the Decision under review.
[25]
The
Respondent states that in denying the Applicant’s request for interest and
penalty relief for 2002 to 2005 the Minister properly determined that there
were no extraordinary circumstances beyond the Applicant’s control that
prevented her from filing her tax returns on the basis that:
1)
During
the 2002 to 2005 taxation year the Applicant continued to operate her business
as a partnership with Andrew, her husband, and the business continued to file
its GST returns annually. However, the Applicant failed to explain why she did
not file her tax returns in a timely manner in those years;
2)
The
Applicant had adequate time to acquire another accountant’s services or to
prepare her 2002 to 2005 tax returns herself and to file these returns and pay
any amounts owing on time. The Applicant and her husband determined in or about
March 2002, that the previous accountant had allegedly incorrectly prepared
their financial statements and tax returns. This occurred before the
Applicant’s 2002 and subsequent years tax returns were due;
3)
Dissatisfaction
with a previous accountant or incorrect financial statements prepared by the
Applicant’s accountant are not extraordinary circumstances beyond the
Applicant’s control that prevented her from filing her 2002 to 2005 tax returns
and remitting the amounts owing by the statutory deadlines;
4)
A
taxpayer’s choice of which accountant to consult (if any), how they keep their
accounting records, the timeliness with which they file their returns and pay
the amounts owing are all factors within the taxpayer’s control;
5)
The
Minister did consider the Applicant’s submission that she filed her 2002 to
2005 returns late because she was trying to correct the alleged fraudulent
errors made by her tax preparers. However, the Minister determined this was not
something that prevented the Applicant from filing her returns on time;
6)
CRA
did not provide the Applicant with advice about her personal income tax filings
and the April 21, 2008 reassessments of the Applicant’s 2002 to 2005 taxation
years did not constitute advice from the CRA;
7)
The
Minister did consider the Applicant’s submissions in her first level request
that she allegedly suffered from emotional and mental distress. However, the
Minister still determined that this did not prevent the Applicant from filing
her 2002 to 2005 tax returns on time;
8)
In
the Applicant’s second level request, which is the Decision under review, the
Applicant states only that she was currently experiencing emotional distress
but did not indicate that she had suffered emotional distress at the time she
was required to file her 2002 to 2005 tax returns; and
9)
Prior
to becoming a partner of the company, the Applicant was a T4 employee and had
never been assessed a late filing penalty.
[26]
The
Respondent states that, because she continued to operate her business in 2002
to 2005, it was reasonable for the Minister to conclude that the Applicant’s
alleged emotional distress did not prevent her from complying with the Act.
[27]
Where
a taxpayer has health problems but is still able to operate a business, it is
reasonable for the Minister to conclude that those health problems do not
prevent a taxpayer from dealing with their tax obligations: Young v. Canada,
[1997] F.C.J. No. 1680 (F.C.T.D.) at paragraphs 13, 19, 20
and 24-26.
[28]
The Respondent contends that it was
reasonable for the Minster to deny the Applicant’s request, even though she
allegedly suffered from emotional distress, because she allowed an
extraordinary period of time to elapse before rectifying her tax situation. The
Applicant’s 2002 to 2004 returns were due in June 2003, 2004 and 2005, but were
not filed until on or about January 3, 2007. The Applicant’s 2005 return was
due on June 15, 2006, but it was not filed until on or about December 6, 2006.
[29]
The Respondent notes that when a taxpayer
suffers from health problems, but allows an extraordinary period of time to
elapse before taking steps to rectify their tax situation, it is reasonable for
the Minister to deny the taxpayer’s fairness request: Sutherland v. Canada (Customs
and Revenue Agency) 2006 FC 154 (F.C.T.D.) at paragraph 21.
The Minister Observed
the Principles of Natural Justice and Procedural Fairness
[30]
The
Respondent submits that the Applicant’s record provides no evidence of a
failure by the Minister to observe the principles of natural justice,
procedural fairness or any other procedure. The Applicant’s record also, in the
Respondent’s view, provides no evidence of bad faith or evidence that the
Minister based his Decision on irrelevant facts or erred in law, or that the
Minister failed to follow the CRA’s procedural guidelines.The Respondent notes
that the Minister did not provide incorrect advice to the Applicant. CRA did
not provide the Applicant with advice about her personal income tax filings and
the April 21, 2008 reassessments of the Applicant’s 2002 to 2005 taxation years
did not constitute advice from CRA.
[31]
The
IC 07-01 Guidelines advise taxpayers that they are entitled to a second
fairness review, but they do not provide that the taxpayer’s second level
review will be conducted by the tax services officer’s director.
[32]
The
Respondent concludes on this issue that the Applicant’s record provides no
evidence that would give an informed person a reasonable apprehension of bias.
See: Superior Filter Recycling Inc.
v. Canada 2006
FCA 248 at paragraph 4.
The Minister Did Not Consider
Himself Bound by His Own Guidelines and Policy
[33]
The
Respondent submits that the Minister did not fetter his discretion by
considering himself bound by his own guidelines and policy. The Minister
reviewed and considered all of the information and submissions available to
him, as well as applying the Guidelines in the exercise of his discretion. The
Minister did not treat the Guidelines as binding.
[34]
The
Respondent concludes that there is no evidence that the Minister made his
Decision in bad faith, ignored relevant facts or considered irrelevant facts.
The Minister acted fairly and reasonably and considered all of the submissions
made by the Applicant and all the relevant factors before him. The Minister did
not consider himself bound by the Guidelines. The Decision not to waive or
cancel penalties and interest was reasonable and was supported by lines of
analysis on each of the points raised by the Applicant.
[35]
The
Minister’s reasons, taken as a whole, withstand a probing examination and
support the Decision made. There are multiple lines of analysis within the
Minister’s reasons that could reasonably lead the Minister from the evidence
before him to the conclusion that he reached. Therefore, the court should not
interfere with the Minister’s Decision. The Respondent requests that the
application be dismissed with costs.
ANALYSIS
[36]
The
Applicant’s application for judicial review was heard in conjunction with her
husband’s application on T-1158-08 in Victoria on June 11, 2009. They both represented themselves
and there is significant overlap in the points they raise. I am satisfied that,
in conjunction with her husband, the Applicant has been able to present her
case before the Court with clarity and conviction.
[37]
I
have reviewed the Applicant’s arguments and evidence in detail and I believe
that each point she raises is appropriately answered by the Respondent.
Relevant Factors
[38]
After
reviewing the record, it appears to me that the Minister’s decision to deny the
Applicant interest and penalty relief was reasonable because the Applicant
failed to demonstrate that, due to factors beyond her control, she was
prevented from filing her 2002 to 2005 tax returns and from remitting the
amounts owing by the statutory deadlines.
[39]
The
record reveals that the Minister considered all relevant factors and addressed
all of the reasons and submissions submitted by the Applicant at the second
level.
[40]
I am
also in agreement with the Respondent that, in denying the Applicant’s request
for interest and penalty relief for 2002 to 2005, the Minister properly
determined that there were no extraordinary circumstances beyond the
Applicant’s control that prevented her from filing her tax returns on the basis
that:
a)
During
the 2002 to 2005 taxation years the Applicant continued to operate her business
as a partnership with her husband and the business continued to file its GST
returns annually; however, the Applicant failed to explain why she did not file
her tax returns in a timely manner in those years;
b)
The
Applicant had adequate time to acquire another accountant’s services, or to
prepare her 2002 to 2005 tax returns herself, and to file those returns and pay
any amounts owing on time because the Applicant and her husband determined in
or about March 2002, that the previous accountant had allegedly incorrectly
prepared their financial statements and tax returns. This occurred before the
Applicant’s 2002 and subsequent years tax returns were due;
c)
Dissatisfaction
with a previous accountant or incorrect financial statements prepared by the Applicant’s
accountant were not extraordinary circumstances beyond the Applicant’s control
that prevented her from filing her 2002 to 2005 tax returns and remitting the
amounts owing by the statutory deadlines;
d)
A
taxpayer’s choice of which accountant to consult (if any), how she keeps her
accounting records, the timeliness by which she files her returns and the
timeliness by which she pays the amounts owing are all factors within the
taxpayer’s control;
e)
The
Minister did consider the Applicant’s submission that she filed her 2002 to
2005 returns late because she was trying to correct the alleged fraudulent
errors made by her tax preparers; however, the Minister determined this was not
something that prevented the Applicant from filing her returns on time;
f)
CRA
did not provide the Applicant with advice about her personal income tax filings
and the April 21, 2008 reassessments of the Applicant’s 2002 to 2005 taxation
years did not constitute advice from the CRA;
g)
The
Minister did consider the Applicant’s submission in her first level request
that she allegedly suffered from emotional and mental distress; however, the
Minister still reasonably determined that this did not prevent the Applicant
from filing her 2002 to 2005 tax returns on time;
h)
In
the Applicant’s second level request, which is the Decision under review, the
Applicant stated only that she was currently experiencing emotional distress
but did not indicate that she had suffered emotional distress at the time she
was required to file her 2002 to 2005 tax returns; and
i)
Prior
to becoming a partner of the company, the Applicant was a T4 employee and had
never been assessed a late filing penalty.
[41]
The
record also shows that Officer Jacks did review the first level fairness
decision materials and Officer Green’s conclusions. However, it is clear that
Officer Jacks undertook her own independent and detailed review to arrive at
her conclusion to deny the Applicant’s request.
[42]
In
my view, it was reasonable for the Minister to conclude that, even if the
Applicant had suffered from emotional distress, this did not prevent her from
complying with the Act because she continued to operate her Business in 2002 to
2005.
[43]
It
was not unreasonable for the Minister to deny the Applicant’s request, even if
she had suffered from emotional distress, because she allowed an extraordinary
period of time to elapse before rectifying her tax situation. The Applicant’s
2002 to 2004 returns were due in June 2003, 2004 and 2005 respectively, but she
did not file these returns until on or about January 3, 2007. The Applicant’s
2005 return was due on June 15, 2006 but she did not file it until on or about
December 6, 2006.
Natural Justice and
Procedural Fairness
[44]
I
can find nothing in the record to support the Applicant’s assertion that the Minister
failed to observe principles of natural justice, procedural fairness or any
other procedure.
[45]
Also,
I can find nothing in the record to show bad faith, or evidence that the
Minister based his Decision on irrelevant facts or erred in law.
[46]
In
my view, the Minister did not provide incorrect advice to the Applicant. CRA
did not provide the Applicant with advice about her personal income tax filings
and the April 21, 2008 reassessments of the Applicant’s 2002 to 2005 taxation
years did not constitute advice from the CRA.
[47]
Also,
I can find nothing in the record to show that the Minister failed to follow
CRA’s procedural guidelines.
[48]
The
IC 07-1 Guidelines advise the taxpayer that she is entitled to a second level fairness
review, but these Guidelines do not provide that the taxpayer’s second level
review will be conducted by the tax services office’s director.
[49]
I
can also find no evidence that would give an informed person a reasonable
apprehension of bias.
Fettering of Discretion
[50]
In
my view, the Minister did not fetter his discretion by considering himself
bound by his own guidelines and policy. The Minister reviewed and considered
all of the information and submissions available to him and applied the
Guidelines in the exercise of his discretion. The Minister did not treat the
Guidelines as binding.
Conclusions
[51]
In
the end, the Applicant simply disagrees with the Minister’s Decision and has
sought to frame that disagreement under a wide variety of legal concepts in an
attempt to convince the Court that the Decision should be set aside.
Disagreement with a decision does not make it unreasonable within the meaning
of Dunsmuir and it does not make it procedurally unfair or biased. The
Minister gave the Applicant a full opportunity to present her case but could
not agree to the waiver requests. Ample reasons were given to support and
justify the Decision.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES that
1.
The
application is dismissed;
2.
The
Respondent shall have costs of the application.
“James
Russell”
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