Date: 20091002
Docket: T-968-08
Citation: 2009 FC 995
Ottawa, Ontario, October 2,
2009
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
DONNA
M. ADAMS
Applicant
and
CANADA
REVENUE AGENCY
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1]
This
judicial review of the Canada Revenue Agency’s (CRA) decision to deny
“fairness” relief from a late filing penalty turns on the reasonableness of the
decision and the fairness of the process.
[2]
The
standard of review on the merits of this type of CRA decision has been
consistently held to be “reasonableness” (see Jones Estate v. Canada (Attorney
General),
2009 FC 646).
However, with
respect to procedural fairness, the standard of review is “correctness” (see Canadian
Union of Public Employees (C.U.P.E.) v. Ontario (Minister of
Labour),
[2003] 1 S.C.R. 539).
II. BACKGROUND
[3]
Ms.
Adams’ problems stem from her failure to appreciate the difference between the
obligation to file a tax return and the obligation to pay. She assumed that
they were the same and that by payment through the bank internet system, that
system also took care of the filing obligation. Her understanding of the
process is not attributable to CRA in any manner.
[4]
The
2006 tax filing was the first year Ms. Adams had to take care of tax filings
and payments. She was recently divorced and these tax matters had previously
been handled by her then husband.
[5]
Prior
to leaving Canada for a work stint and aware that she had taxes to pay on the
April 30 filing date, she attempted to obtain an estimate of taxes, both from
her part-time employers and from her tax advisors H & R Block.
[6]
Having
secured an estimate from H & R Block, she contacted CRA by phone and was
advised that payment could be made through her financial institution’s website
under the “payment on filing” option. This phrasing might well lead someone to
believe that there was an on-line correlation between payment under this method
and the tax return filing obligation.
[7]
As
matters turned out, Ms. Adams was unable to use this payment method at the BMO website
and having secured advice from an accountant that the consequences of late
payment were minor, awaited her return to Canada to complete
her taxes. She then filed her return and payment two weeks late.
[8]
The
Applicant was assessed a late penalty for filing and payment, from which she
commenced her request for “fairness” relief. The final decision by the
Minister’s delegate (Delegate) denying relief was issued May 20, 2008.
III. ANALYSIS
[9]
As
early as the first stage review, CRA found that there had been a late filing
penalty (LFP) in the 1999 return. This fact was one of the few substantive
facts listed in the final decision. The Applicant has denied this fact
throughout and CRA has yet to prove this conclusion to be true.
[10]
While
compliance history is one factor in a “fairness” assessment, it was clearly an
important factor in this case. It is one that was never established and one
that the Applicant was denied any real opportunity to challenge. It was an
important factor because the reviewer noted that a penalty balance was again
outstanding, and used this fact against the Applicant without regard for the
fact that the current penalty was the very issue in dispute.
[11]
The
final decision had a paucity of reasons. The Respondent attempted to supplement
the Record by submitting an affidavit of the Delegate in which she outlines the
information on file and the factors the Delegate considered.
[12]
It
is improper for the Delegate to attempt to try to supplement her reasons. That
effort is consistent with a finding that the Applicant did not receive proper
and full reasons and was therefore denied procedural fairness. Most
importantly, the Delegate’s actions confirm the inadequacy of reasons at the
second level and in letters exchanged which undermined the Applicant’s right to
make an adequate reply.
[13]
Therefore,
the Applicant was again denied procedural fairness.
[14]
While
the Applicant raised but did not fully articulate this next matter, the Court
is concerned that there was undue emphasis on “extraordinary” circumstances
without adequate attention to all of the factors raised. There was erroneous
consideration of compliance history, and no consideration of the payment method
other than noting that the failure was that of the financial institution (which
acts as at least a conduit for payment to CRA). The CRA focused on the issue of
whether the circumstances were beyond the control of the taxpayer without
proper regard to the Applicant’s efforts to ensure compliance.
IV. CONCLUSION
[15]
Therefore,
for all these reasons, this judicial review will be granted, the Delegate’s
decision quashed and the matter remitted back for a new consideration. The
Applicant will be entitled to her disbursements only.
JUDGMENT
THIS COURT
ORDERS AND ADJUDGES that this
application for judicial review is granted, the Delegate’s decision is quashed
and the matter is to be remitted back for a new consideration. The Applicant is
entitled to her disbursements only.
“Michael
L. Phelan”
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