Docket: T-1515-13
Citation:
2015 FC 177
Ottawa, Ontario, February 13, 2015
PRESENT: The
Honourable Madam Justice Mactavish
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BETWEEN:
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EARL J. MACDONALD
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Applicant
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and
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ATTORNEY GENERAL OF CANADA
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Respondent
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JUDGMENT AND REASONS
[1]
Earl MacDonald seeks judicial review of a
decision of the Canada Revenue Agency (CRA) refusing to grant him relief from
penalties and interest assessed in relation to his payroll and GST/HST accounts
for a number of taxation years between 1995 and 2010.
[2]
Mr. MacDonald is a 62 year old farmer
living in Prince Edward Island. He based his request for fairness relief on the
financial hardship that he says that he has suffered over the last several
decades. Mr. MacDonald states that his economic difficulties started in
the 1980s and 1990s, when poor potato prices and a virus negatively affected his
potato crops. This led him to stop growing potatoes, and to go into the cattle
and lumber industries. However, the emergence of “Mad Cow” disease in the 1990s
caused a drop in beef prices, and the softwood lumber dispute caused the lumber
market to collapse. The combined effect of these events was to leave
Mr. MacDonald seriously in debt.
[3]
Mr. MacDonald says he has now planted
blueberries on his property. He does not enjoy an elaborate lifestyle, and is
simply trying to make a living, pay his debts and cooperate with the CRA.
[4]
In 2005, Mr. MacDonald sought relief with
respect to his payroll and GST/HST accounts for a number of tax years between 1991
and 2004. By letter dated November 15, 2005, the CRA denied this request.
[5]
Mr. MacDonald filed a second request in
March of 2011 for relief from penalties and interest that had been applied to
his payroll account for the years between 1995 and 2005, and to his GST/HST
account for the 1995 to 2001 tax years. Mr. MacDonald cited financial
hardship as the basis of his second request, describing the challenges that he
had faced as a farmer during the 1990s and 2000s. Mr. MacDonald provided
the CRA with a list of his assets and liabilities in support of his request, as
well as income and expense statements and other financial information.
[6]
Because it was not clear which taxation years
had been considered by the CRA in connection with its 2005 decision, the CRA
decided to treat Mr. MacDonald’s 2011 request for relief as a second-level
request. This operated to Mr. MacDonald’s benefit, as it allowed the CRA
to go back 10 years from the date of his 2005 request, and to consider the
possibility of granting him relief for the 1995-2001 tax years. Had the CRA
treated Mr. MacDonald’s 2011 request as a fresh request for relief, it
could only have considered granting relief for the tax years dating back to
2001. The CRA also appears to have considered whether relief was appropriate for
the tax years between Mr. MacDonald’s first and second requests.
[7]
A second level reviewer considered Mr. MacDonald’s
submissions, noting that payroll deductions and GST/HST remittances were trust
funds, and were not to be used to fund Mr. MacDonald’s farming operations.
The reviewer further noted that Mr. MacDonald had a history of
non-compliance with his tax obligations, failing not only to make the necessary
remittances, but also to file his tax returns on a timely basis.
[8]
Based upon a telephone discussion with
Mr. MacDonald, the reviewer concluded that Mr. MacDonald had a net
worth of $137,500, with the result that he had assets available to satisfy his
tax debt. The reviewer further noted that Mr. MacDonald had sold property
in 2011 and 2013, and that he had applied the proceeds to his mortgage debt with
Farm Credit Canada and to his payroll. It was also observed that
Mr. MacDonald had gone through farm debt mediation twice, and that trust
examiners had noted that Mr. MacDonald was uncooperative, either failing
to meet with them or breaking their payment arrangements.
[9]
Accordingly, the reviewer recommended that the
Minister deny Mr. MacDonald’s request for the cancellation of penalties
and interest for the taxation years in issue. This recommendation was accepted,
and the negative decision was communicated to Mr. MacDonald in a letter
dated August 13, 2013.
[10]
In his Notice of Application and memorandum of
fact and law, Mr. MacDonald asks this Court to review his financial situation
and his ability to pay the amounts that he owes for the period in question, and
to grant him relief from the interest and penalties that he has incurred for
the tax years in issue.
[11]
As I explained to Mr. MacDonald at the
hearing, my role on an application such as this is not to review the material
that was provided to the CRA and decide for myself whether Mr. MacDonald
should receive taxpayer relief. My role is limited to determining whether or
not the CRA’s decision was reasonable, and whether Mr. MacDonald was
treated fairly in the fairness relief process.
[12]
Mr. MacDonald has not identified any
procedural irregularity in the review process. Consequently, there is no basis
for the Court to intervene on the grounds of procedural fairness.
[13]
Mr. MacDonald has also not persuaded me
that the second-level decision was unreasonable. For a decision to be
unreasonable, it must lack justification, transparency or intelligibility, or
the outcome must be beyond the range of possible, acceptable outcomes that are
defensible in light of the facts and the law: see Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 47, [2008] 1 S.C.R. 190.
[14]
Mr. MacDonald did not identify any error on
the part of the CRA that would make its decision unreasonable. Although he
raised a concern regarding the value that the CRA had ascribed to his real
estate holdings, a review of the record demonstrates that this value was based
on Mr. MacDonald’s own estimates as to the properties’ worth.
Mr. MacDonald has not identified any irrelevant considerations that were
taken into account by the CRA in concluding that he should not be afforded
discretionary relief. Moreover, Mr. MacDonald’s submissions were all
considered by the CRA, and he was given a clear explanation as to why his
submissions were not accepted.
[15]
While I am sympathetic to the financial
predicament in which Mr. MacDonald finds himself, no basis has been shown
for this Court’s intervention, and his application for judicial review must
therefore be dismissed. In the exercise of my discretion, I have determined
that each side should bear its own costs.
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