Grewal – Federal Court of Appeal confirms that a voluntary disclosure which included loans did not stop CRA from later applying s. 163(2) for failure to include them in income

A voluntary disclosure included a description of various loans, but did not volunteer that they gave rise to taxable benefits. After the voluntary disclosure was accepted through reassessments, a subsequent audit of one of the taxpayer’s companies caused CRA to conclude that these loans gave rise to additional income under s. 246(1) of over $14M to the taxpayer for years that had been covered by the voluntary disclosure, and CRA not only reassessed for these s. 246(1) benefits, but also for significant gross negligence penalties.

In confirming the Federal Court’s dismissal of the taxpayer’s application for judicial review of the decision to impose the penalties, Laskin JA stated:

[T]he appellant’s submissions, if accepted, would place this taxpayer in a better position than that of other taxpayers who did not avail themselves of the VDP. When a taxpayer makes use of the VDP, the taxpayer can still be audited and the taxpayer’s filings can still be assessed like those of any other taxpayer. Additional tax, interest, and penalties arising from the failure to disclose income may be due. The appellant’s submissions, if accepted, would restrict the Minister’s ability to assess penalties in these circumstances. …

Neal Armstrong. Summary of Grewal v. Canada (Attorney General), 2022 FCA 114 under s. 163(2).