Docket:
T-817-13
Citation: 2014 FC
100
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BETWEEN:
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JOHN HIGGINS
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Applicant
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and
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ATTORNEY GENERAL OF CANADA
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Respondent
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REASONS FOR JUDGMENT
PHELAN J.
I. INTRODUCTION
[1]
This is the judicial review of a decision by the
Minister’s Delegate allowing only partial relief from penalty and interest
charged in relation to the 2001 and 2002 taxation years.
II. BACKGROUND
[2]
In 2007 the Applicant was assessed for
unreported income for the 2001 and 2002 taxation years. The unreported amounts
resulted in the assessment of gross negligence penalties in the amount of
$17,101.
[3]
In 2009 the Applicant pled guilty to wilfully
evading payment of income taxes by failing to correctly report taxable income
for the 2001 and 2002 taxation years. He was sentenced in provincial court to a
fine and one year of probation.
[4]
The Applicant applied for relief from penalties
and arrears on the basis of financial hardship and that he had not intended to
be grossly negligent in declaring his income for the 2001 and 2002 taxation
years.
[5]
A 1st level review denied relief. The
Applicant filed what became a 2nd level review claiming mistreatment
by Canada Revenue Agency [CRA] and personal hardship. A conclusion by CRA that
the Applicant had been consistently late in filing his returns was ultimately
corrected.
[6]
The decision by the Delegate recommended partial
relief of $850 as compensation for correcting the late filing conclusion of a
CRA official but otherwise denying the request for relief in the range of
$9,000.
[7]
The decision was based on the following factors:
•
there were no extraordinary circumstances beyond
the Applicant’s control related to his failure to report income for the 2001
and 2002 taxation years;
•
the abuse of alcohol and prescription drugs from
1989 to 1993 occurred long before the under-reported tax years;
•
the Applicant’s guilty plea was an admission of
a wilful evasion of income taxes;
•
there was no mistreatment of the Applicant in
respect of the 2001 and 2002 taxation years;
•
the error of CRA with respect to alleged “late
filing” was corrected and $850 would compensate the Applicant for the costs of
correcting CRA’s error; and
•
there was no evidence of financial hardship: the
Applicant’s assets exceeded his liabilities including tax liability; mortgage
expenses were overstated; only a small amount of tax liability was paid from a
signing bonus; RRSP funds were withdrawn but no amount went to the tax
liability; and no information was filed regarding the income of the Applicant’s
wife and share of household expenses.
[8]
The Delegate also considered that the Applicant
had allowed a tax liability to exist upon which interest accrued and for which
regular payments began only in 2013. The Delegate also considered the failure
to accurately report income for 9 of the 13 years between 1991 and 2004.
[9]
The Delegate does not appear to have factored
into the decision the Applicant’s conviction in 1996 for the tax evasion for
his 1991 and 1992 tax returns.
[10]
The issues that the Applicant appears to have
raised are:
•
Was there a breach of procedural fairness?
•
Was the decision reasonable?
III. ANALYSIS
A. Procedural
Fairness/Natural Justice
[11]
The Applicant’s complaint is that CRA took too
long to address his 2nd level complaint. He has a litany of
complaints about time taken to address his issues between 2010 and 2013.
[12]
However, in the time frame at issue, 2011 was
taken up with dealings with CRA regarding the Applicant’s filing history for
which some compensation was granted; 2012 was the period awaiting the
Applicant’s financial information; and in 2013 the decision was made.
[13]
I can find no breach of procedural fairness.
Most particularly, the Federal Court of Appeal in Canada (Minister of Public
Safety and Emergency Preparedness) v Prue, 2012 FCA 108, 352 DLR (4th)
351, held that increased interest charges are not a breach of natural justice.
The ratio of that decision governs the circumstances of this case.
B. Reasonableness
[14]
The Federal Court of Appeal has held in Telfer
v Canada (Revenue Agency), 209 FCA 23, [2009] 4 CTC 123, that the Minister’s
decision is to be assessed on the reasonableness standard.
[15]
I cannot find any basis whatsoever for finding
that the Minister’s decision was unreasonable. The decision addresses all the
relevant factors and weighs them in a manner that exhibits justification,
transparency and intelligibility. It would be difficult, if not impossible, to
justify granting relief to a taxpayer who had such a record of tax
non-compliance and evasion where there was no evidence of significant financial
hardship in meeting his tax obligations.
[16]
The Applicant’s claim that he has accepted
responsibility for his past is undermined by his request to avoid the
consequences of his past actions.
IV. CONCLUSION
[17]
Therefore, this judicial review will be
dismissed with costs.
[18]
An order to this effect and amending the
Respondent by deleting Canada Revenue Agency and substituting the Attorney
General of Canada will issue.
"Michael L. Phelan"
Ottawa, Ontario
January 29, 2014
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