Date: 19990726
Docket: 98-1075(IT)I
BETWEEN:
DR. WAHEED K. MICHAEL,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, J.T.C.C.
[1] This appeal pursuant to the
Informal Procedure was heard in Toronto, Ontario on July 23,
1999. The Appellant was the only witness.
[2] Paragraphs 7 to 10 inclusive of
the Reply to the Notice of Appeal read as follows:
7. In
assessing the Appellant for the 1985, 1986 and 1987 taxation
years by Notices of Assessment mailed on December 21, 1988 the
Minister of National Revenue, (the "Minister") assessed
the Appellant's returns as filed and for the 1985 and 1986
taxation years the Minister assessed late filing penalties in the
amounts of $711.48 and $547.56, respectively, pursuant to
subsection 162(1) of the Income Tax Act (the
"Act") and arrears interest in the amounts of
$1,265.32, $592.33 and $367.34, respectively, pursuant to
subsection 161(1) of the Act.
8. In
assessing the Appellant for the 1990 and 1991 taxation years by
Notices of Assessment mailed on January 6, 1993 the Minister
assessed the Appellant's returns as filed.
9. In so
assessing the Appellant, the Minister made the following
assumptions of fact:
(a) the
Appellant's returns of income for the 1985, 1986, 1987, 1990
and 1991 taxation years (the "Returns") were required
to be filed with the Minister on or before April 30, 1986,
April 30, 1987, May 2, 1988, April 30, 1991 and April
30, 1992, respectively;
(b) the Appellant
failed to file the Returns for the 1985, 1986, 1990 and 1991
taxation years as and when required by the Act;
(c) the Appellant
filed his T-1 income tax returns for both the 1985 and 1986
taxation years on May 10, 1988, 1987 taxation year on
May 2, 1988 and both the 1990 and 1991 taxation years on October
30, 1992;
(d) on May 10, 1988,
the Appellant had an unpaid balance of tax owing in the amounts
of $4,163,39 and $3,220.96 respectively with respect to his 1985
and 1986 taxation years;
(e) on May 2, 1988,
the Appellant had an unpaid balance of tax owing in the amount of
$5,938.50 with respect to his 1987 taxation year;
(f) the Appellant
was assessed late filing penalties in the amounts of $711.48 and
$547.56, respectively with respect to his 1985 and 1986 taxation
years pursuant to subsection 162(1) of the Act;
(g) the Appellant
was assessed arrears interest in the amounts of $1,265.32,
$592.33 and $367.34, respectively with respect to his 1985, 1986
and 1987 taxation years pursuant to subsection 161(1) of the
Act;
(h) for the 1990 and
1991, the Appellant was allowed a refund of $17,492.71 and
$16,046.99, respectively;
B. ISSUES
TO BE DECIDED
10. The issues are
whether:
(a) the RRSP amount
of $3,500.00 reported by the Appellant in the 1985 taxation year
was properly included in the Appellant's income and assessed
by the Minister;
(b) late filing
penalties for the 1985 and 1986 taxation years were properly
assessed in accordance with subsection 162(1) of the Act;
(c) arrears interest
for the 1985, 1986 and 1987 taxation years were properly assessed
in accordance with subsection 161(1) of the Act;
(d) the Minister
properly calculated the interest due to the Appellant for the
1990 and 1991 taxation years.
[3] At the opening of the hearing,
counsel for the Respondent consented to the appeal for a judgment
that an RRSP refund of $3,500 in the 1985 taxation year is not to
be included in the Appellant's income and for that reason
income tax, penalties, and interest assessed respecting that sum
of $3,500 should be reconsidered and reassessed by the Minister
of National Revenue.
[4] The assumptions contained in
paragraph 9 of the Reply respecting the remaining items assessed
are correct.
[5] The Appellant's evidence is
that he failed to file income tax returns on time because his tax
advisors at that time told him that he did not have to on the
basis of what they said was Revenue Canada's advice. This
testimony is entirely hearsay. In addition, during the years in
question, the Appellant's mother and child died, he was
moving, and, while he had previously filed his own income tax
returns, relied upon his tax advisors' advice during the
years in question. He also testified that he was advised by this
tax advisors that he could offset any income tax owed by the
amount of income tax refund to which his wife was entitled during
the years in question and he adopted this procedure.
[6] The Appellant was sincere in his
testimony. However, the law is clear. Canada taxes each person
individually and there is no provision for a husband and wife
whereby taxes owing are offset between the two of them. Nor are
the reasons give for the failure to file income tax returns
during the years in question satisfactory in fact or in law. No
detail was given as to why the death of the Appellant's
mother and child caused a delay in filing an income tax return in
any of the years in question. Nor is the wrong advice of an
advisor a satisfactory reason for failing to file income tax
returns on time. The fact that the Appellant, himself, had filed
his own income tax returns in previous years indicates that he
had every reason to know the requirements respecting income tax
returns and that he did know them, himself. Any incorrect advice
that was give to him by a tax advisor is a matter to be
determined between him and his advisor. However, it does not
constitute a satisfactory excuse for the failure to file income
tax returns, or to pay income tax when due.
[7] For these reasons, the penalties
were properly assessed for 1985 and 1986. Moreover, since income
tax was in arrears for the years in question, interest is
properly due in compliance with the statutory provisions of the
Income Tax Act. The appeals respecting these matters are
dismissed.
[8] This matter is referred to the
Minister of National Revenue for reconsideration and reassessment
respecting the $3,500 income assessed on account of an RRSP
refund for the Appellant's 1985 taxation year.
Signed at Ottawa, Canada this 26th day of July 1999.
J.T.C.C.
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