Delmer
E
Taylor:—This
is
an
appeal
against
the
penalty
levied
on
the
taxpayer
under
subsection
163(2)
of
the
Income
Tax
Act,
SC
1970-71-72,
as
amended,
for
the
1972,
1973,
1974
and
1975
taxation
years.
The
notice
of
appeal
read,
in
part,
as
follows:
In
1971
I
have
disposed
of
a
piece
of
property
in
Oliver,
BC
and
I
have
moved
to
Penticton,
BC.
I
gave
the
agreement
for
sale
to
the
Imperial
-Bank
of
Commerce,
Oliver,
BC,
who
collected
and
recorded
the
payments
and
disbursed
the
money
partly
to
pay
on
another
agreement
what
I
have
owed
on
the
same
property.
I
paid
the
handling
costs
to
the
bank
as
I
wanted
the
agreements
to
be
handled
and
recorded
properly.
Since
I
have
moved
from
Oliver
and
got
a
job
in
another
city,
I
have
been
completely
distracted
from
this
matter
and
I
have
forgotten
to
include
the
taxable
portion
of
the
interest
earned
on
the
agreement
in
my
income
tax
return.
I
have
been
making
up
my
returns
myself
in
those
years
and
there
was
nobody
to
remind
me
and
there
was
no
T5
slips
issued
by
the
bank
either.
When
the
district
office
asked
for,
information
on
the
interest
income
from
the
agreement,
I
was
shocked
and
when
relaized
(sic)
that
I
have
forgotten
about
it.
I
got
the
records
from
the
bank
and
the
district
office
received
a
properly
kept
accounting
in
respect
of
my
interest
income
and
expenses.
I
have
been
reassessed
and
I
have
agreed
with
it,
except,
I
did
not
feel
that
the
imposition
of
a
25%
penalty
under
subsection
163(2)
of
the
Income
Tax
Act
is
proper.
The
reporting
of
my
income
was
incomplete
for
those
years,
but,
I
have
never
ever
made
an
ommission
knowingly
and
I
do
not
feel
that
I
was
grossly
negligent
in
conducting
my
affairs,
as
I
retained
the
bank
to
keep
proper
records.
In
reply
the
respondent
while
not
admitting
the
above,
contended
that:
—in
1971
the
appellant
sold
the
Bellflower
Motel
in
Oliver,
British
Columbia
to
Carl
Lutz
under
an
agreement
for
sale
in
the
amount
of
$65,500
at
7%
interest,
to
be
repaid
at
$500
per
month
including
interest;
—he
received
these
payments
of
interest
and
principal
until
he
disposed
of
the
agreement
in
1976;
—until
March
15,
1974
he
was
making
monthly
payments
of
principal
and
interest
under
an
agreement
for
sale
with
the
previous
owner,
Richard
L
Nyholt;
—as
a
result
of
an
audit
carried
out
the
following
net
interest
income
was
found
to
be
unreported
for
the
years
1971
to
1975:
|
1971
|
1972
|
1973
|
1974
|
1975
|
|
$1,662.08
|
$4,086.34
|
$4,210.30
|
$4,124.91
|
$4,073.57
|
—the
appellant
was
reassessed
for
each
of
the
above
years,
except
1971,
adding
the
unreported
net
interest
income
to
the
incomes
for
each
year;
—penalties
were
imposed
pursuant
to
subsection
163(2)
to
all
of
the
above
years
reassessed.
In
verbal
evidence
the
appellant
reiterated
that
the
matter
had
been
neglected
since
the
transactions
were
all
handled
through
the
bank,
and
that
he
expected
his
accountant
to
make
out
his
tax
returns
properly.
He
had
not
actually
handled
any
money
and
received
no
T5
slips
in
connection
with
the
matter.
During
all
the
time
in
question,
his
full-time
occupation
had
been
as
a
baker
with
Safeway
Canada
Ltd
in
Penticton,
British
Columbia,
although
he
had
lived
in
Oliver,
British
Columbia,
travelling
back
and
forth
each
day.
Essentially
the
position
of
the
Minister
(holding
the
onus
for
supporting
the
assessment)
was
that
the
appellant
could
not
possibly
have
been
unaware
of
the
taxable
nature
of
the
interest
portion
of
the
funds
paid
into
his
account
at
the
bank.
Further,
it
was
the
Minister’s
position
that
since
the
appellant
had
reported
other
interest
income
in
the
year
1972,
he
was
cognizant
of
the
fact
that
interest
income
was
taxable.
The
Board
can
find
no
reason
to
reject
the
Minister’s
conclusion
in
the
matter.
The
appellant
was
competent
and
experienced,
and
certainly
well
aware
of
business
matters
generally.
In
addition,
a
matter
brought
out
at
the
hearing
was
of
significance
to
the
Board—that
the
appellant
had
retained
the
same
accountant
to
prepare
his
tax
returns
while
he
operated
the
hotel
in
Oliver,
during
the
sale,
and
for
a
period
of
one
or
two
years
thereafter.
Obviously
the
circumstances
during
this
entire
period
were
uninterrupted
and
well
known
to
both
parties.
The
appeal
is
dismissed.
Appeal
dismissed.
Email this Content