Docket: A-369-16
Citation:
2017 FCA 122
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CORAM:
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GAUTHIER J.A.
DE MONTIGNY J.A.
WOODS J.A.
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BETWEEN:
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GRAHAM ENGEL
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Appellant
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and
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HER MAJESTY THE
QUEEN
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Respondent
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on June
13, 2017).
GAUTHIER J.A.
[1]
Graham Engel appeals from the judgment of
Pizzitelli J. of the Tax Court of Canada (TCC) dismissing his appeal of tax
assessments made pursuant to the Income Tax Act, R.S.C., 1985, c. 1 (5th
Supp.) (the Act) for the taxation years 2002-2006. The TCC denied
deductions for business losses and upheld the gross negligence penalties
assessed by the Minister of National Revenue (Minister).
[2]
In filing his 2005 and 2006 income tax returns,
Mr. Engel reported business losses in the amounts of $426,511.40 and $84,329.89
respectively. He also filed a Request for Loss Carryback with his 2005 return and
sought and received refunds in the aggregate amount of over $140,000.00 for the
2002 to 2006 taxation years.
[3]
In upholding the disallowance of business
losses, the TCC found that Mr. Engel led absolutely no evidence of carrying on
any type of business whatsoever, nor of incurring any business expenses. In
fact, Mr. Engel admitted before the TCC that he conducted no business in 2005
and 2006. Thus, it concluded that Mr. Engel had not met his burden of refuting
the Minister’s assumptions.
[4]
The TCC was also satisfied that the Minister had
established that, on a balance of probabilities, Mr. Engel was wilfully blind
in placing his trust in Fiscal Arbitrators, an unscrupulous tax preparer, after
reviewing the indicia set out in Torres v. The Queen, 2013 TCC 380, 235
A.C.W.S. (3d) 844, which decision was affirmed by this Court in Strachan v.
The Queen, 2015 FCA 60, 250 A.C.W.S. (3d) 352.
[5]
The TCC also dismissed as having no merit the
constitutional argument of Mr. Engel based on subsection 15(1) of the Canadian
Charter of Rights and Freedoms (the Charter). Mr. Engel had argued
that the Act discriminates against individuals, contrary to subsection
15.1 of the Charter, because individuals are not entitled to be taxed
only on their profits like corporations. The TCC added that in any event, as
Mr. Engel’s Charter argument was not raised in the Notice of Appeal, and
since no notice of constitutional question had been served on the Attorney
General of Canada and the Attorney General of each province, this argument
should not be further entertained and the adjournment sought by Mr. Engel was
denied as being too late.
[6]
Before us, Mr. Engel made no submissions
contesting the TCC’s findings in respect of the lack of evidence to demolish the
Minister’s assumptions, and its conclusion that on the facts the Minister had
established that gross negligence penalties were warranted.
[7]
Rather, Mr. Engel argues that the TCC failed to
properly consider his constitutional arguments based on subsection 15(1) of the
Charter, despite the fact that his affidavit evidence which was read
into the record as his testimony was uncontradicted. He also submits that the
TCC breached the principles of procedural fairness in dismissing his request
for an adjournment. Mr. Engel also appears to raise a new argument not raised
before the TCC to the effect that his rights under paragraph 6(2)(b) of
the Charter were violated as the Minister did not take into account his
right to pursue “the gaining of a livelihood”.
No notice of a constitutional question was served.
[8]
We are satisfied that the TCC made no error of
law or any palpable and overriding error in reaching the conclusions that it
did in respect of the merits of the assessments. Nor have we been persuaded
that the TCC erred in refusing the adjournment or in dismissing the Charter
argument.
[9]
Among other things, it is clear that this case
does not involve any discrimination made on the basis of a ground enumerated in
subsection 15.1 of the Charter or of an analogous ground.
[10]
Considering the lack of merit of the
constitutional argument raised and the lateness of the request, the TCC did not
breach procedural fairness by refusing to grant the adjournment.
[11]
As mentioned during the hearing, the appellant
did not raise the argument based on paragraph 6(2)(b) of the Charter
before the TCC and thus, we shall not deal with it.
[12]
Therefore, the appeal should be dismissed with
costs fixed in the amount of $1,000.00 (all inclusive).
“Johanne Gauthier”
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