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Citation: 2004TCC544
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Date: 20040813
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Docket: 2000-4699(IT)I
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BETWEEN:
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GEORGES GOSSELIN,
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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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[OFFICIAL ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
ParisJ.
[1] This is an appeal from an
assessment dated April 4, 1996, for the 1994 taxation year.
With this assessment, the Minister of National Revenue (the
"Minister") imposed a penalty for late filing, pursuant to
subsection 162(2) of the Income Tax Act.
[2] The only issue at bar is whether
the Appellant exercised due diligence to ensure that his income
tax returns were filed within the timeframe prescribed by the
Act.
[3] The evidence submitted by
Christian Plouffe, witness for the Respondent, shows that the
Appellant filed his 1994 income tax return with the Minister on
March 13, 1996. Prior to this date, the Minister had sent
the Appellant two requests to file a return for the 1994 taxation
year.
[4] According to the Appellant, his
1994 return was sent to the Minister prior to April 30, 1995, and
sent a second time in March 1996, further to the Minister's
requests to file. Revenue Canadahas no record prior to
March 13, 1996, of the receipt of a return filed by the Appellant
for 1994.
[5] Even where a taxpayer fails to
file an income tax return within the prescribed timeframe,
subsection 162(2) of the Act allows for a due diligence
defence. This defence requires that the taxpayer
demonstrate a high level of diligence with respect to the
obligations imposed on him by the Act. In this case, it is
not possible for me to conclude that due diligence was
exercised.
[6] The Appellant testified that he
had hired an accountant to prepare and file his income tax
return, because his tax situation was complicated by the fact
that he had taken his retirement from Hydro Québec in
1994, and he had received large sums from his pension plan.
He claimed that he received a letter from the accountant stating
that the accountant had sent his federal and provincial returns
and that a cheque for $14,822 was payable to the Minister of
National Revenue. A copy of this letter, dated May 9, 1995,
was filed in evidence. The letter reads as follows:
[TRANSLATION]
May 9, 1995
Personal and confidential
GEORGES GOSSELIN
2056 MEXICO
CHOMEDEY
QUEBEC
H7M3C6
GEORGES GOSSELIN
Attached is a copy of your federal and Quebec income tax
returns for 1994. Please keep these copies for your
files.
FEDERAL
Your federal income tax return shows that you have a balance
owing of $14,822.00. Please attach a cheque or money order
payable to the Receiver General before APRIL 30, 1995.
Write down your social insurance number and "1994 taxation year"
on the back of your cheque.
PROVINCIAL
Your Quebec income tax return shows that you are entitled to a
refund of $3,246.50.
The income you are reporting includes the sum of $21.00 in
capital gains to which an election applies. This election
was made to benefit from the $100,000 capital gain deduction for
the last year.
Should you receive a Notice of Assessment that is different
from the return as it was submitted, please forward it to
us. We must determine whether the Notice of Assessment is
accurate prior to the expiry of the time limitation for filing an
objection.
You must make federal instalment payments totalling $14,820 to
Revenue Canada.
Based on the income you earned, you can contribute up to
$10,657 to your registered retirement savings plan in 1995.
Regards,
DESJARDINS GAGLIARDI, C.A.
[7] The evidence does not show what
took place with the accountant regarding the Appellant's income
tax return. The accountant was not called to testify about
what he did to file this return, and the Appellant was unable to
provide this information. His recollection of his dealings
with the accountant was unclear. When counsel for the
Respondent asked him whether the accountant had sent the return
directly to the Agency, he replied:
[TRANSLATION]
Well, I think that's what was done, because I received the
letter telling me that they were sending me my copies of the tax
returns and that I should keep these two copies.
The Appellant also said that he sent a cheque to the Minister,
as requested in the letter from the accountant, but the cheque
was never cashed. He claims that he followed up by
telephone in May, June, and July, and that he had been told that
there was a delay of up to three months for processing
files. During cross-examination, the Appellant admitted
that, after the first telephone call in May 1995, he may have
waited until January 1996, following the receipt of a provincial
assessment for his 1994 taxation year, to enquire again about his
federal return. It appears that, in January 1996, the
Appellant received a request from Revenue Canada to file this
return. The fact that the Appellant waited until
January 1996 to seek information from the Minister further
supports the statement of facts he made in his Notice of
Objection prepared in August 1996, rather than the facts he
related in Court. Evidently, he believed that his
accountant had already filed his returns.
[8] It is my opinion that the
appropriate time to determine whether the Appellant's conduct
meets the requirements for a due diligence defence is the time at
which the return was to be filed. Does the simple fact that
the Appellant used the services of an accountant to file his
return show that he exercised due diligence? I feel that,
to successfully make his claim, the Appellant had to demonstrate
that the accountant exercised due diligence in performing his
duties. In the absence of evidence to show that this was
the case, the Appellant cannot successfully appeal this matter
before this Court.
[9] In Roberts v. Canada,
[1997] T.C.J. No. 771, Bowman J. said:
Here it is true the appellant hired bookkeepers for one of the
periods in question and paid them what appears to me to be
excessive amounts for their incompetence and
inaction. This might justify an action by the
appellant against them, but it does not amount to due
diligence. The accountants are after all the
appellant's agents and the appellant is responsible of what
they did or failed to do. In the same way as the
exercise of due diligence on the part of a taxpayer's
accountants or bookkeepers would be attributed to the taxpayer
and would justify the removal of a penalty, so too does the
absence of due diligence on the part of the taxpayer's
accountants or bookkeepers disentitle him or her to the relief
envisaged by the Pillar Oilfield case.
[10] Some inconsistencies in the May 9,
1995, letter from the accountant should be noted. For
example, the Appellant was asked to "Please attach a cheque or
money order payable to the Receiver General before APRIL 30,
1995," even though the Appellant claimed that his return had been
sent by the accountant directly, and even though the letter from
the accountant was dated nine days later than April 30,
1995. These points raise more questions about what had been
agreed on with respect to filing the return and the steps taken
by the accountant; these questions remain unanswered.
[11] The burden in establishing a due
diligence defence is the Appellant's. In this case, he has
not discharged this burden, and the appeal is dismissed.
Signed at Ottawa, Canada, this 13th day of August
2004.
Paris J.
Translation certified true
on this 25th day of January 2005.
Colette Dupuis-Beaulne, Translator
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