Docket: T-1511-16
Citation:
2017 FC 529
Ottawa, Ontario, May 30, 2017
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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KANAK BISWAL
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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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JUDGMENT AND REASONS
[1]
Ms. Biswal seeks judicial review of a decision
of a delegate of the Minister of National Revenue denying her request to waive
penalties and interest assessed against her for the late filing of her T1135
Foreign Income Verification Statements for 2013 and 2014.
[2]
As requested by the Respondent, the style of
cause will be amended to delete the reference to the Canada Revenue Agency.
[3]
The Court had ordered that Ms. Biswal’s son
could speak for her at the hearing of this matter, and as was observed at the
hearing he did a very credible job, and is congratulated.
[4]
Given the discussion with counsel and the
representative of the Canada Revenue Agency [CRA] in attendance at the hearing,
I need not go into many of the facts or the vigorous submissions made by the
parties’ representatives.
[5]
The Income Tax Act, RSC 1985, c 1,
requires a taxpayer who owns foreign income property costing more than $100,000
to file a Foreign Income Verification Statement. If a taxpayer fails to file
the statement by the due date, a penalty is assessed.
[6]
Ms. Biswal is relatively new to Canada, and she
failed to filed form T1135 by the required deadlines as she was under the
impression that when no tax is owed, the deadlines do not apply. She complains
that she was unaware that she had to file these forms and would have done so
had she been advised by Canada. Since the penalties for the late filing were
assessed against her for 2013 and 2014, her son notes that she has filed the
required returns in a timely manner.
[7]
On January 22, 2015, Ms. Biswal received a
Notice of Assessment with respect to the 2013 tax year. She was advised that
since she indicated “yes” to the question “Did you own or hold foreign property at any time in 2013
with a total cost of more than CAN$100,000?” she was required to fill
out Form T1135 and submit it to the CRA. On June 24, 2015, Ms. Biswal received
a Notice of Re-Assessment for the 2013 tax year indicating that she owed
$2,613.45 in penalties/interest due to late filing of the T1135.
[8]
On July 7, 2015, Ms. Biswal submitted a letter
to CRA requesting that it cancel the penalty for failing to submit the T1135
for 2013. She indicated, among other things, that she was retired and living
with her son, and therefore could not pay the penalty.
[9]
On October 16, 2015, Ms. Biswal submitted the
T1135 for 2014, which was due on April 30, 2015. On April 13, 2016, she
received a Notice of Re-Assessment for the 2014 tax year indicating that she
owed $2,604.41 in penalties/interest due to late filing of the T1135.
[10]
On April 27, 2016, Ms. Biswal submitted a letter
request for a second review to cancel the penalty for failing to submit the
T1135 for 2013 and 2014. The Applicant stated that she did not believe that
the CRA exercised its discretion in a “fair, reasonable
and compassionate” manner given her circumstances. The penalty for
failure to file the T1135 for both years was approximately $5,217. In her
letter, Ms. Biswal stated that her intent was “to do
the right thing and report [her] filings accurately”, and she attempted
to fix the situation as soon as she was notified of the issue. Moreover, she
stated that she filled the T1135 incorrectly in 2013, because the format was
different. She also stated that as a new immigrant with no income, the penalty
caused her financial hardship.
[11]
On July 21, 2016, a second-level administrative
relief report was completed. It found that Ms. Biswal:
[did not] give the CRA any grounds for
cancelling the [Late Filing Penalties] as she does not demonstrate that
circumstances beyond her control prevented her from filing on time. The
arguments she makes are not relevant considerations. I recommend the late
filing penalties and interest remain.
[12]
This was followed by the final decision by the
Director of the Ottawa Technology Centre in the Canada Revenue Agency and
delegate to the Minister, who confirmed the denial of relief and stated the
following which became relevant during the hearing:
You conclude by saying that paying the late
filing penalties will cause you immense financial hardship. As mentioned in
the first request, you may contact your Tax Service Office Collection unit to
make arrangements regarding the penalty or you can send a completed form
RC4288 and identify “Financial hardship/inability to pay” by checking the
proper box. This form is available on our CRA website. [Emphasis added]
[13]
At the hearing of the application for judicial
review, Mr. Biswal, handed-up the decision of the Tax Court of Canada in Douglas
v Canada, 2012 TCC 73, the facts of which are remarkably similar to those
before the Court. However, unlike this application it was an appeal of the
assessment of the penalty for failure to file Form T1135 in a timely manner.
There, as here, the taxpayer did all he could to comply with the Canadian
taxation requirements. The Tax Court found that there was no readily available
information to alert him to the requirement to file the form – an argument also
advanced here by Ms. Biswal. Justice Woods applied the “judge-made due diligence defence” and vacated the
penalty and allowed the appeal.
[14]
Ms. Biswal was informed that this Court has no
similar jurisdiction and that an appeal would have to be filed to the Tax Court
of Canada with respect to the penalties imposed. Counsel for Canada advised
the Court that such an appeal would still be timely.
[15]
More critical to this application, the Court
pointed out to the parties that Form RC4288 referenced in the decision under
review is in fact entitled “Request for Taxpayer Relief
– Cancel; or Waive Penalties or Interest”. It seemed to me that this is
the very process that Ms. Biswal has already gone through without success.
[16]
When asked, counsel for Canada confirmed, after
consultation with his client, that if a Form RC4288 request were made by Ms.
Biswal regarding the penalties and interest at issue here, it would be assessed
and considered by CRA, and it would not take the position that the request was res
judicata, having already been considered. It was also noted that if such
an application were made, Ms. Biswal should provide more fulsome information as
to her personal financial circumstances than was provided in her earlier letter
requests. Indeed, her son raised several “facts” in this regard at the
hearing.
[17]
In light of the fact that Ms. Biswal has at hand
the very relief this Court can offer if she succeeds, i.e. to have her request
reconsidered, there is no equitable reason why this Court should grant the
requested relief. Accordingly, this application will be dismissed, without
costs. Ms. Biswal is encouraged to take the actions indicated by way of a
further application to CRA and/or an appeal to the Tax Court of Canada.
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