Craig Nuttall v. Minister of National Revenue, [1980] CTC 2921, 80 DTC 1804

Roland St-Onge:—The appeal of Mr Craig Nuttall came before me on June 9, 1980, at the City of Thunder Bay, Ontario and the issue is whether he wilfully attempted to evade payment of the tax payable by him under Part I of the Income Tax Act by failing to file a return of income for his 1977 taxation year as and when required by subsection 150(1) of the Act and also within the meaning of subsection 163(2).

The facts of this case are well spelled-out at paragraphs 5, 6, 7 and 8 of the reply to notice of appeal which read as follows:

5. The appellant was late in filing his income tax returns for each of the six tax years prior to the 1977 tax year. He filed his income tax returns on the following dates:

Year	Date Return Filed
1971	2 January 1973
1972	11 January 1975
1973	1 November 1974
1974	7 October 1975
1975	19 October 1976
1976	6 October 1977

6. The appellant filed his income tax returns for the four tax years prior to the 1977 tax year only after the Minister requested the tax return from him.

7. The Minister of National Revenue sent a demand for a T-1 individual income tax return for the 1977 taxation year to the appellant on 10 July 1978, the said demand was made pursuant to subsection 150(2) of the Income Tax Act.

8. The appellant filed his income tax return for the 1977 taxation year on 30 August 1978.

The appellant contended that he did not wilfully attempt to evade payment of the tax payable by him under Part I of the Income Tax Act for the following reasons:

(a) Returns were late filed for several years prior to 1977 with penalties applied under subsection 162(1) and no indication by the department that subsection 163(1) would be considered.

(b) Letters were received by Mr Nuttall each year demanding his tax return and advising him of the subsection 162(1) penalty and the penalties under subsection 238(1). All demands were complied with. No indication in any correspondence from the department that subsection 163(1) would be considered.

(c) No intention to evade tax only to delay them.

(d) Penalty appears far too severe considering there was no criminal intent and no tax evaded.

At the hearing, these paragraphs were substantiated. The witness also testified that he had no working capital, a lot of debts and that he never refused to pay income tax. Furthermore, there was an extension of time granted by the Minister in 1977.

As may be seen, there is no evidence to show that the appellant wilfully attempted to evade payment of tax. He was merely late and he never thought that the Minister would consider his omission to file his return in time as an attempt to evade taxes.

As a matter of fact, the Minister, by his own conduct, gave this impression to the appellant. The appellant never did anything rash such as moving to another country, transferring his assets to a third party or hiding his money, etc to avoid payment of the tax. He was merely late as in previous years and this is not evasion of taxes.

There is a penalty for late filing and for many years the Minister has asked the appellant to file his returns by demanding them and advising him of subsection 162(1) and subsection 238(1) of the Act and he should now be satisfied with these penalties.

The appellant swore that he never attempted to evade to pay his taxes and the Minister failed to prove that the appellant’s intention was to wilfully attempt to evade payment of the tax. As already mentioned, the appellant never refused to pay taxes. Subsection 163(1) has to do with tax evasion and Subsection 163(2) gives the different ways it could happen but, in the present case, the appellant never intended to evade the payment of the tax. He had not filed his tax returns for a number of years, the issue would have been different but such is not the case here.

The following cases cited to me deal with suppression of income:

Jean Louis Tessier v MNR, [1980] CTC 2384; 80 DTC 1322;

George E Paveley v MNR, [1976] CTC 477; 76 DTC 6415.

These cases are distinguishable since in the case at bar their is no suppression of income.

Herein, it is more a question of fact than a question of law and the Board is satisfied with the explanation given by the appellant.

In the circumstances, the appeal is allowed and the assessment is vacated.

Appeal allowed.