Carlson v. The Queen, 73 DTC 5192, [1973] CTC 360 (FCTD)

Bastin, DJ:—It was agreed that the trial of the action by Elmer T Carlson and that of Gordon E Carlson should be heard together. Both actions seek to recover a penalty imposed by the Minister of National Revenue for late filing of income tax returns for the year 1970, in the case of Elmer T Carlson of $27.12 and in the case of Gordon E Carlson of $107.31.

The plaintiffs are brothers who farm in partnership at Watrous in Saskatchewan. As Elmer T Carlson was physically handicapped, his brother Gordon kept the books of the partnership, attended to its business and to the preparation and filing of income tax returns with the assistance of an accountant in Saskatoon named Donald G Clandinin. Gordon E Carlson was to deliver to Clandinin the necessary information to prepare income tax returns for the brothers at an appointment on April 15, 1971, but on April 1 he informed Clandinin that an urgent business trip to Calgary would prevent him from keeping this appointment. Clandinin thereupon prepared income tax forms for the Carlsons marking them “temporary returns” and filed them on April 30, 1971. These forms bore no signatures and did not contain all the prescribed information as to the income of the two brothers. Subsequently income tax returns containing all required information were prepared and signed by the Carlson brothers which were dated May 5, 1971 and filed on May 18, 1971.

On or about July 30, 1971 the Carlson brothers each received a notice of assessment which included the assessed penalties. They filed notices of objection and on the assessment of the penalties being confirmed by the Minister they appealed the decision of the Minister to the Tax Review Board. By its decision of July 10, 1972 the Tax Review Board dismissed their appeals. I hold that it has not been proved that it was impossible for the plaintiffs to complete, sign and file their income tax returns by April 30, 1971. The plaintiffs argue that on the authority of R v Hart Electronics Limited, [1959] CTC 507; 59 DTC 1192, the documents delivered by Clandinin to the income tax department on April 30, 1971 were income tax returns.

The judgment in question was a decision of the majority of the Manitoba Court of Appeal on a case stated by Magistrate D C M Kyle following his dismissal of a charge of failing to file an income tax return. The fact which distinguishes that case from the case at bar is that the taxpayer in the Hart case enclosed the income tax return in a letter. I conclude that the learned judges considered that the income tax form was sufficiently identified by the letter to become a binding representation of the taxpayer. In the case of the Carlson brothers the returns prepared by Clandinin and filed on April 30, 1971 would not be binding on the taxpayers. This is a very important distinction. Obviously for the penalties for giving wrong information to apply, the taxpayer must be bound by the representations in the form. Section 44 requires an individual without notice or demand therefor to file a return with the Minister on the prescribed form and containing the prescribed information by April 30 in each year. The word “prescribed” by paragraph 139(1 )(af) means “in the case of a form or the information to be given on a form, means prescribed by order of the Minister, and, in any other case, means prescribed by regulation”.

The prescribed information is clearly indicated by the various headings in the income tax form. The form calls for the certificate as to the accuracy of the information given by the taxpayer over his signature. Paragraph 44(1 )(d) excuses the filing of the return by the taxpayer “if he is unable for any reason to file the return” and the return may then be filed by “his guardian, curator, tutor, committee or other legal representative”. To enable the plaintiiffs to rely on this provision, they must plead and prove that they were unable to file the return. As they have neither pleaded nor proved the fact, this provision does not avail them so it is not necessary for me to decide whether Mr Clandinin comes within the scope of the words “other legal representative” as used in this paragraph.

It is admitted that the returns filed by Clandinin did not contain all the prescribed information as to the income of the Carlson brothers. The returns which were signed by the Carlsons and filed on May 18, 1971 did contain all required information to enable the Department to make an assessment. It is obvious that the Carlson brothers intended these later and complete returns to be the income tax returns on which they intended their assessment for income tax to be based. If so they never intended the forms sent in by Clandinin to be treated as income tax returns. I know of no principle which entitles a taxpayer to avoid the penalty for late filing by sending in a document which is not intended to be the taxpayer’s income tax return but merely an intimation that a return will be filed at some later date.

I hold that the penalties were properly assessed and I dismiss the two actions.

From the evidence of Mr Clandinin it appears that the local offices of the income tax Department in Saskatchewan and Alberta have permitted the practice of accepting temporary or interim returns to be filed and replaced later by proper returns without objection or penalty. In view of this I am not imposing costs on the plaintiffs.