Docket: T-478-14
Citation:
2014 FC 894
Ottawa, Ontario, September 19, 2014
PRESENT: The
Honourable Mr. Justice Diner
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BETWEEN:
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BRUCE GRAEME TAYLOR
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Applicant
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and
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CANADA REVENUE AGENCY
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Respondent
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JUDGMENT AND REASONS
I.
Introduction
[1]
This is a judicial review of a January 14, 2014
Decision [Decision] of the Canada Revenue Agency [CRA], in which the
Applicant’s second level request for relief from penalties and interest with
respect to his 2006 and 2007 taxation returns was denied. The relief is
requested pursuant to s 220 (3.1) of the Income Tax Act [Act] and s
18.1(3) of the Federal Courts Act.
[2]
The Applicant is Bruce Graeme Taylor, a taxpayer
residing in Toronto.
[3]
The case law has held that the reviewing court
must determine whether the decision under review falls within a range of
possible, acceptable outcomes which are defensible in respect of the facts and
the law. This Court must find significant issues with the Decision in order to find
that it was unreasonable (i.e. it lacked justification, transparency and
intelligibility).
[4]
The Court acknowledges that Mr. Taylor has faced
a difficult set of circumstances over the past decade, and is trying to do his
level best under a trying family situation to keep things together for his
family. However, the CRA Officer’s Decision was defensible in respect of the
facts and the law and defensible in its outcome.
II.
Facts
[5]
The Applicant requested a waiver of penalties
and interest in respect of his 2006, 2007 and 2008 income tax returns on July
30, 2009. This judicial review concerns only the 2006 and 2007 tax years.
[6]
Mr. Taylor was informed by letter of his initial
denial on June 18, 2010. He requested reconsideration of this decision on
January 8, 2013. On June 10, 2013, the CRA asked for additional details
regarding the personal circumstances mentioned in the Applicant’s request for
reconsideration.
[7]
As part of the second level review, a Second
Level Taxpayer Relief Report was prepared and this report recommended a denial
of relief. In the January 14, 2014 Second Level Review Decision, the Applicant
was denied a waiver of interest and penalties with respect to the 2006 and 2007
taxation years.
[8]
More specifically, the CRA found in its Decision
that the Applicant had not demonstrated circumstances beyond his control that
prevented him from meeting his filing obligations. In addressing the
Applicant’s grounds for relief, the CRA found:
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Delaying the filing of a 2006 return (filed in
September, 2007) until an issue with the 2003 return had been resolved was a
personal choice, not an extraordinary circumstance.
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The unfortunate passing of the Applicant’s
father-in-law in February, 2008 did not prevent compliance in filing a 2007 return
(filed January 23, 2009).
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The CRA asked for additional details regarding
the Applicant’s father-in-law’s illness and death in a letter dated June 10,
2013. No submissions were received.
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The Applicant had a history of non-compliance
with regards to filing obligations prior to the 2007 year, as well as for the
two subsequent tax years.
III.
Issue
[9]
The issue in this appeal is whether the CRA’s
Decision denying the Applicant relief from penalties and interest for the 2006
and 2007 tax years was reasonable.
IV.
Standard of Review
[10]
Discretionary decisions of the Minister which
provide relief from the imposition of interest and penalties are reviewed by
this Court on a standard of reasonableness: Canada Revenue Agency v Telfer,
2009 FCA 23 at para 24; Tremblay v Canada (Attorney General), 2013 FC
1049 at para 9.
[11]
As referenced above, in deciding whether a
decision is reasonable, this Court is primarily concerned with the existence of
justification, transparency and intelligibility within the decision-making
process, and the decision must fall within a range of possible, acceptable outcomes
which are defensible in respect of the facts and the law [Dunsmuir v New
Brunswick, 2008 SCC 9, at para 47].
A.
Applicant Submissions
[12]
The Applicant submits that he is current with
all of his income tax obligations up to and including the 2013 tax year. He
argues that the penalties and arrears contested in this application arose out
of circumstances beyond his control.
[13]
The 2003 reassessment (received in December
2006) resulted in significant penalties and interest and the Applicant stated
that he wanted to resolve this issue before proceeding to file returns for
other years.
[14]
The Applicant submits that the said 2003 issue
was resolved in his favour, as he was issued a refund in September 2007
relating to the 2003 return, which was also around the time his father-in-law
became ill, and subsequently died, resulting in his 2006 return not being filed
until August 21, 2008. The Applicant’s 2007 return was also filed late - on
January 21, 2009.
[15]
The Applicant explains that the recovery of
$56,213.88 in late filing fees and interest, which is being contested in this
application, would greatly assist his family, namely three children and a
disabled wife, in managing their future.
B.
Respondent Submissions
[16]
The Respondent submits that the CRA made no
reviewable error in rejecting Mr. Taylor’s application for relief.
[17]
The decision-maker acknowledged the illness and
bereavement in the Applicant’s family and noted that when the CRA had requested
details as to these submissions, no reply was received.
[18]
The Respondent further notes that the
Applicant’s filing history has been poor both prior to and subsequent to the
Applicant’s father-in-law’s illness and death. Notably, the Applicant had filed
his 1997, 2000, 2004, 2005, 2006, 2007, 2008 and 2009 tax returns late.
[19]
The Respondent submits that financial hardship
was not before the CRA, and that the officers at both levels of review cited
ample evidence of non-compliance that justified the ultimate denial by the
Minister of the discretionary relief requested, consistent with both the Act
and CRA guidelines.
C.
Analysis
[20]
The CRA’s policy with respect to taxpayer relief
is outlined in Information Circular IC07-1 [“IF”]. The Ministerial Delegate is
allowed to take these guidelines into account, but is not bound by them since
they are not law [3563537 Canada Inc v Canada Revenue Agency, 2012 FC
1290 at para 62].
[21]
Paragraph 34 of the IF cites a natural disaster
as an example of an extraordinary event. Paragraph 33 of the IF is also
illustrative:
33. Where
circumstances beyond a taxpayer’s control, actions of the CRA, or inability to
pay or financial hardship has prevented the taxpayer from complying with the
Act, the following factors will be considered when determining whether or not
the CRA will cancel or waive penalties and interest:
(a) whether or not
the taxpayer has a history of compliance with tax obligations;
(b) whether or not
the taxpayer has knowingly allowed a balance to exist on which arrears interest
has accrued;
(c) whether or not
the taxpayer has exercised a reasonable amount of care and has not been
negligent or careless in conducting their affairs under the self-assessment
system; and
(d) whether or not the taxpayer has acted
quickly to remedy any delay or omission.
[22]
While the Court has sympathy for the Applicant
and commends his resolve to provide a better life for his wife and children,
unfortunately the Applicant must meet a high threshold if the Court is to
conclude that the Decision by the CRA was an unreasonable one, pursuant to the
standard of review.
[23]
In the Decision, the CRA Officer turned his mind
to the unfortunate personal circumstances of the Applicant and provided Mr.
Taylor with an opportunity to make further submissions on this point.
[24]
The Applicant’s history of non-compliance with
CRA certainly did not help his cause.
[25]
While the Court wishes the Applicant the best of
luck with holding together a trying family situation, the Decision was
reasonable. Its reasons demonstrated the existence of justification,
transparency and intelligibility in both the Second Level Review Decision of
January 14, 2014, as well as the original CRA denial of June 18, 2010.
V.
Conclusion
[26]
The application is dismissed. Given Mr.
Taylor’s difficult situation and best efforts to represent himself in this
judicial review, no award of costs will be issued.
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