Goldhar – Tax Court of Canada finds that the taxpayer could rely on his accountants regarding his taxation years being statute-barred and avoiding penalties for T1134 filing failures

In finding that CRA could not reassess beyond the normal reassessment period to include substantial amounts as alleged unreported shareholder benefits from non-resident corporations in the income of the taxpayer (Mr. Goldhar) for his 2008 to 2011 taxation years, Visser J stated:

Mr. Goldhar carried on an international business, and engaged professional lawyers and accountants to assist in organizing his financial affairs and in filing his personal and corporate tax returns. … Considering the complexity of Mr. Goldhar’s businesses and his lack of tax expertise, it is my view that he took all reasonable steps that a wise and prudent person would to ensure that his tax returns were filed properly during the taxation years under appeal. … Mr. Goldhar lacked the expertise to undertake a more thorough review. He would have had to be a tax expert to do so. That is not the standard. That is why he engaged a professional accounting firm, which had professional tax experts within its ranks, to provide him with tax advice and file his tax returns.

Visser J made similar findings that Mr. Goldhar had established a due diligence defence to the imposition of penalties under ss. 162(7)(a) and 162(10.1)(f) regarding his failure to file T1134 forms for some but not all the taxation years under review and, in this regard:

• quoted with approval the application in Chiang of an SCC statement that under such defence “[a] defendant can also avoid liability by showing that he or she took all reasonable steps to avoid the particular event...”
• and stated: “Due to complexity of his financial affairs, and his lack of tax background, it is my view that Mr. Goldhar reasonably relied on his accountants to properly file his tax returns in each of his 2008 to 2011 taxation years.”

Neal Armstrong. Summaries of Goldhar v. The King, 2023 TCC 30 under s. 152(4)(a)(i) and s. 162(10.1).