Date: 20100429
Docket: T-1299-09
Citation: 2010 FC 459
Ottawa, Ontario, April 29,
2010
PRESENT: The Honourable Mr. Justice O'Reilly
BETWEEN:
STAN
SANDLER
Applicant
and
ATTORNEY
GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
I. Overview
[1]
Mr. Stan Sandler was required to file a Foreign Income
Verification Statement (Form T1135) with the Canada Customs and Revenue Agency
(CRA) in respect of his 2005 income. It was due on June 15, 2006. Mr. Sandler
filed it on April 27, 2007. The CRA imposed a penalty of $2500 and interest.
Mr. Sandler freely admits that he was required to file the form and that he
filed it late.
[2]
However, Mr. Sandler maintains that the penalty is unjustified
and excessive. The form did not report any income that he had not already
disclosed and on which he paid tax. It was a mere formality, identifying the
amount of his foreign holdings and their location. Under the circumstances, he
asked the CRA to waive the penalty and interest. It declined. Mr. Sandler made
a second request. An Acting Director of the CRA in Charlottetown turned him
down again.
[3]
Mr. Sandler asks me to order a reconsideration of his request.
However, I can find no grounds for overturning the Acting Director’s decision
and must, therefore, dismiss this application for judicial review.
[4]
The only issue is whether CRA treated Mr. Sandler unfairly or
rendered an unreasonable decision on his request for relief.
II. Analysis
(1) Legislative Framework
[5]
A person who files a tax form late is subject to
a penalty of $25 a day, for up to 100 days (Income Tax Act, R.S.C. 1985,
c. 1 (5th Supp.), s. 162(7)). That is why the CRA imposed on Mr. Sandler a penalty
of $2500.
[6]
The Minister of National Revenue (or delegate)
has the discretion to waive any penalty or interest imposed under the Act (s.
220(3.1)). This is often referred to as the “fairness” provision.
[7]
The Court can overturn the Minister’s decision
under the fairness provision only if it was unreasonable, in the sense that it
falls outside the range of possible acceptable outcomes based on the facts and
the law (Telfer v. Canada Revenue Agency, 2009 FCA 23, at para.
25).
(2) The
Acting Director’s decision
[8]
The Acting Director endorsed a recommendation of
the federal-provincial coordinator in the Charlottetown office of the CRA. The coordinator reviewed the history of Mr.
Sandler’s file and noted the following:
• Mr.
Sandler had not yet filed his 2008 income tax return;
• Mr. Sandler had filed his 1999, 2000, 2001,
2005, 2006 and 2007 income tax returns late;
• Mr. Sandler had filed his 2007 T1135 form
late;
• the CRA had sent Mr. Sandler a letter in
2005 informing him that an earlier T1135 was late, but it did not impose a
penalty.
[9]
The coordinator concluded that Mr. Sandler had
not exercised due care to ensure he was complying with tax rules. Further, no
special circumstances, departmental errors or financial hardship would justify
waiving the penalty and interest imposed on Mr. Sandler.
[10]
The Acting Director agreed, and so informed Mr.
Sandler by letter on July 8, 2009. In her letter, she referred to the various
circumstances that might justify waiver of penalties and interest – disasters,
illness, serious distress, errors by the CRA, or financial hardship. None of
these situations was present in Mr. Sandler’s case and, therefore, the CRA
could provide no relief.
(3) Was Mr. Sandler treated fairly?
[11]
Mr. Sandler was given a fair opportunity to
present his concerns to the CRA and attracted the attention of the senior
officials who reviewed his request for relief. No issue of fairness arises from
the manner in which the CRA dealt with Mr. Sandler’s requests. Mr. Sandler
argues, however, that a fundamental unfairness arises from the imposition of a
penalty and interest on him because:
• he
had not failed to disclose any income;
• Form T1135 is poorly named (“Foreign Income
Verification Statement”) because it does not actually involve the reporting of
foreign income. It describes foreign holdings;
• the form does not mention penalties for late
filing; and
• the three-page guide to the form mentions
that “[t]here are substantial penalties for failing to complete and file Form
T1135 by the due date” but only at the very end.
[12]
Mr. Sandler’s submissions suggest that Form
T1135 and the instructions for completing it could be clearer. That may be a
valid comment but it does not amount to unfairness. Taxpayers self-report their
income and are expected inform themselves of the applicable filing
requirements. There is nothing fundamentally unfair about that.
(4) Was the Acting Director’s
decision unreasonable?
[13]
Mr. Sandler’s submissions do not demonstrate
that the CRA erred when it decided not to waive the penalty and interest
imposed on him for late filing. He had not presented any basis for concluding
that his circumstances justified extraordinary relief from the statutory consequences
of late filing. Therefore, I cannot find anything unreasonable about the CRA’s
decision.
i.
Conclusion
and Disposition
[14]
While Mr. Sandler may have raised some valid observations
about Form T1135 and the instructions accompanying it, he has not persuaded me
that he was treated unfairly or that the CRA’s decision not to waive the usual
penalty and interest was unreasonable. Therefore, I must dismiss this
application for judicial review, with costs fixed at $200.00.
JUDGMENT
THIS COURT’S JUDGMENT IS
that
1. The application for judicial
review is dismissed with costs fixed at $200.00.
“James
W. O’Reilly”
Annex “A”
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Income
Tax Act,
R.S.C. 1985, c. 1 (5th Supp.)
162. (7) Every person (other
than a registered charity) or partnership who fails
(a)
to file an information return as and when required by this Act or the
regulations, or
(b)
to comply with a duty or obligation imposed by this Act or the regulations
is liable in respect of
each such failure, except where another provision of this Act (other than
subsection 162(10) or 162(10.1) or 163(2.22)) sets out a penalty for the
failure, to a penalty equal to the greater of $100 and the product obtained
when $25 is multiplied by the number of days, not exceeding 100, during which
the failure continues.
220. (3.1) The Minister may,
on or before the day that is ten calendar years after the end of a taxation
year of a taxpayer (or in the case of a partnership, a fiscal period of the
partnership) or on application by the taxpayer or partnership on or before
that day, waive or cancel all or any portion of any penalty or interest
otherwise payable under this Act by the taxpayer or partnership in respect of
that taxation year or fiscal period, and notwithstanding subsections 152(4)
to (5), any assessment of the interest and penalties payable by the taxpayer
or partnership shall be made that is necessary to take into account the
cancellation of the penalty or interest.
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Loi
de l’impôt sur le revenu,
1985, ch. 1 (5e suppl.)
162. (7) Toute personne (sauf un organisme de bienfaisance enregistré)
ou société de personnes qui ne remplit pas une déclaration de renseignements
selon les modalités et dans le délai prévus par la présente loi ou le Règlement
de l’impôt sur le revenu ou qui ne se conforme pas à une obligation
imposée par la présente loi ou ce règlement est passible, pour chaque défaut
00 sauf si une autre disposition de la présente loi (sauf les paragraphes (10)
et (10.1) et 163(2.22)) prévoit une pénalité pour le défaut — d’une pénalité
égale, sans être inférieure à 100 $, au produit de la multiplication de 25 $
par le nombre de jours, jusqu’à concurrence de 100, où le défaut persiste.
220. (3.1) Le ministre peut, au plus tard le jour qui suit de dix années
civiles la fin de l’année d’imposition d’un contribuable ou de l’exercice
d’une société de personnes ou sur demande du contribuable ou de la société de
personnes faite au plus tard ce jour-là, renoncer à tout ou partie d’un
montant de pénalité ou d’intérêts payable par ailleurs par le contribuable ou
la société de personnes en application de la présente loi pour cette année
d’imposition ou cet exercice, ou l’annuler en tout ou en partie. Malgré les paragraphes
152(4) à (5), le ministre établit les cotisations voulues concernant les
intérêts et pénalités payables par le contribuable ou la société de personnes
pour tenir compte de pareille annulation.
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