O’Connor
7.C.J.:
This
appeal
was
heard
at
Toronto,
Ontario
on
August
13,
1999
pursuant
to
the
Informal
Procedure
of
this
Court.
The
relevant
facts
are
as
follows:
1.
In
computing
her
income
for
the
1990
taxation
year
the
Appellant
reported
total
income
of
$18,052.20,
including
employment
income
of
$17,127.39
from
her
employer
Re/Max
Central
Realty
Inc.
(“Re/Max”).
After
deducting
various
employment
expenses
of
$16,072.14
her
net
income
was
$1,980.06
and
her
taxable
income
was
nil.
2.
The
total
amount
of
income
tax
withheld
according
to
all
T4s
filed
amounted
to
$11,254.75.
Included
in
the
T4’s
was
one
issued
by
Re/Max
that
contains
only
one
figure
indicating
income
tax
deducted
of
$8,742.50.
When
one
adds
to
the
$11,254.75
certain
tax
credits
the
Appellant
apparently
became
entitled
to
a
refund
of
$14,087.07
which
she
received.
3.
The
Minister
initially
assessed
the
Appellant
in
July
of
1991
as
filed.
4.
The
Minister
contends
that
the
amount
of
$8,742.50
reported
as
tax
withheld
was
in
fact
not
tax
withheld
but
actually
consisted
of
further
commission
income
from
Re/Max.
5.
Consequently
and
relying
on
subsection
152(4)
of
the
Income
Tax
Act
(“Act”)
the
Minister
reassessed
the
Appellant
for
the
1990
taxation
year
by
notice
thereof
mailed
May
22,
1996
to
include
the
$8,742.50
as
real
estate
commission
received
in
the
year
and
further
disallowed
the
said
amount
as
income
tax
withheld.
The
Minister
also
levied
a
penalty
of
$575.41
pursuant
to
subsection
163(2)
of
the
Act
in
respect
of
the
said
$8,742.50
not
reported
as
income.
The
first
issue
is
whether
the
Appellant
in
filing
her
1990
taxation
year
return
made
a
misrepresentation
that
was
attributable
to
neglect,
carelessness
or
wilful
default
as
contemplated
in
subsection
152(4),
thus
enabling
the
Minister
to
assess
beyond
the
three
year
period
provided
for
in
that
subsection.
The
second
issue
is
whether
the
Appellant
must
pay
the
penalty
as
provided
for
in
subsection
163(2).
The
Respondent
alleges
that
an
amended
T4
slip
from
Re/Max
was
also
issued
which
simply
showed
the
$8,742.50
as
commission
income
with
no
deductions.
The
Appellant
contends
that
she
never
received
the
amended
T4
and
there
is
evidence
to
support
her
in
this
regard
besides
her
own
statement.
Apparently
the
amended
T4
slip
of
Re/Max
was
only
discovered
recently
in
the
possession
of
the
Trustee
of
Bankruptcy
of
Re/Max.
The
Appellant
states
further
that
in
the
period
in
question,
namely
1990
and
early
1991,
she
was
in
“bad
shape”
essentially
suffering
from
a
depression.
She
states
further
that
she
only
received
the
original
T4
slip
showing
the
amount
as
income
tax
withheld
one
or
two
days
prior
to
the
filing
date
of
April
30,
1991,
that
she
simply
provided
that
along
with
her
other
information
and
slips
to
her
accountant.
The
accountant
prepared
the
return
based
on
those
slips
and
the
return
was
filed.
The
Appellant
adds
that
cheques
representing
commission
income
were
only
received
sporadically,
often
sometime
after
the
income
was
actually
earned.
She
concludes
that
she
could
have
been
confused
as
to
the
erroneous
T4.
The
Appellant
concludes
from
all
of
the
foregoing
that
she
was
not
guilty
of
making
a
representation
that
was
attributable
to
her
neglect,
carelessness
or
wilful
default
and
that
consequently
the
reassessment
by
the
Minister
in
1996
is
statute
barred.
She
filed
her
1990
return
in
accordance
with
the
T4
slips
in
her
possession
at
that
time.
The
Respondent
points
to
the
large
amount
of
the
refund
and
the
fact
that
after
claiming
expenses
on
her
original
return
the
Appellant
had
negligible
income
and
that
the
she
should
have
been
aware
of
the
fact
that
there
must
have
been
a
mistake
in
the
T4
slip
showing
$8,742.50
as
tax
withheld.
In
other
words
she
should
have
been
alerted
and
consequently
she
made
a
misrepresentation.
The
Respondent
also
referred
to
a
series
of
cheques
received
by
the
Apellant
from
Re/Max
(Exhibit
R-3)
and
concluded
that
the
Appellant
must
have
known
that
the
original
T4
slip
was
erroneous.
The
Minister
contends
further
that
there
was
gross
negligence
and
that
the
penalties
provided
for
in
subsection
163(2)
of
the
Act
are
applicable.
Analysis
and
Decision
I
accept
the
credibility
of
the
Appellant
including
her
testimony
as
to
her
depressed
state
in
1990
and
1991.
The
fact
that
she
received
the
original
slip
showing
that
income
tax
withheld
only
at
a
very
late
date
and
relied
on
her
accountant
who
filed
on
the
basis
of
slips
he
had
supports
a
conclusion
that
she
did
not
wilfully
misrepresent.
Moreover,
she
never
saw
the
amended
T4.
It
should
also
be
noted
that
the
Minister
was
aware
of
the
amended
T4
in
October
of
1991
but
only
reassessed
in
1996.
In
conclusion,
based
on
all
the
evidence,
the
Appellant
did
not
make
a
misrepresentation
attributable
to
neglect,
carelessness
or
wilful
default
as
contemplated
in
subsection
152(4)
of
the
Act.
Having
thus
decided
there
is
obviously
no
justification
for
the
penalty
imposed
by
the
Minister.
Consequently
the
appeal
is
allowed
and
the
reassessment
in
question
is
vacated.
Appeal
allowed.
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