Section 163

Subsection 163(1) - Repeated failures

Cases

Morrison v. Canada (Attorney General), 2018 FC 141

The taxpayer's accountant inexplicably failed to include a T4 for $47,770 in the taxpayer’s return. In confirming that CRA’s decision to deny...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) s. 163(1) penalty relief denial was reasonable where taxpayer could have reviewed his return for missing employment income 183

Sturgess v. The Queen, 83 DTC 5434, [1984] CTC 1, [1984] CTC 666 (FCTD), varied at 84 DTC 6525)

"It is clear that 'to evade' in subsection 163(1) imports a notion of never paying the tax and not of merely putting off payment temporarily." ...

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The Queen v. Pongratz, 82 DTC 6200, [1982] CTC 259 (FCA)

Deliberately filing tax returns late, without more, is insufficient to come within s. 163(1). The result of the contrary interpretation "would be...

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See Also

Polubiec v. The Queen, 2019 TCC 146

The taxpayer was now retired, but had run his own investment banking business. In his 2007, 2008, 2010 and 2011 returns, had failed to report...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) relief suggested based on harshness of s. 163(1) penalty 250

Chiasson v. The Queen, 2014 DTC 1139 [at 3374], 2014 TCC 158 (Informal Procedure)

In finding that a taxpayer was not duly diligent in failing to review her return and spot an income omission of over $70,000, D'Aurray J noted...

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Galachiuk v. The Queen, 2014 DTC 1153 [at 3494], 2014 TCC 188

The taxpayer failed to report $683 of investment income in his 2008 return (representing less than 0.1% of his taxable income and corresponding to...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus prima facie proof of due diligence shifts the onus to the Minister 173

Strimaitis v. The Queen, 2013 DTC 1220 [at 1221], 2013 TCC 274 (Informal Procedure)

The taxpayer failed to report some employment income in his 2008 to 2010 taxation years, and was assessed a penalty of $5,570 for his failure to...

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Morgan v. The Queen, 2013 TCC 232

The taxpayer withdrew funds from his employer's pension plan, $143,510 of which were paid to him directly, and $36,102 of which were transferred...

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Jack v. The Queen, 2013 DTC 1041 [at 205], 2013 TCC 1 (Informal Procedure)

Rip CJ supported the Minister's assessment of penalties for her failure to report the income from her employment at the University of Alberta. ...

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Tacilauskas v. The Queen, 2012 DTC 1233 [at 3643], 2012 TCC 288 (Informal Procedure)

The taxpayer reported $269,338 of income in his 2008 return, $169,420 of which was dividend income, and $184,537 in 2009, none of which was...

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Chendrean v. The Queen, 2012 DTC1188 [at 3482], 2012 TCC 205 (Informal Procedure)

The taxpayer's lack of familiarity with Canada's tax system could not by itself support a due diligence defence against s. 163(1) penalties. The...

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Knight v. The Queen, 2012 DTC 1144 [at 3300], 2012 TCC 118 (Informal Procedure)

Jorré J. found that the taxpayer, having no reasonable excuse for his failure to report over $40,000 in salary and severance pay, being nearly...

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Franck v. The Queen, 2011 DTC 1142 [at 768], 2011 TCC 179 (Informal Procedure)

The taxpayer, a chef with a high school diploma, failed to include in his return the T4 slip from one of his four employment sources. Hogan J....

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Thompson v. The Queen, 2010 DTC 1259 [at 3815], 2010 TCC 381 (Informal Procedure)

After being reassessed for unreported investment income of $868 in 2006, the taxpayer requested her advisor at TD Waterhouse to ensure that she...

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Alcala v. The Queen, 2010 DTC 1147 [at 3277], 2010 TCC 198 (Informal Procedure)

The taxpayer failed to report nearly $1,800 in income for 2006, but she had reason to believe her employer had made source deductions in respect...

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Cooper v. The Queen, 2010 TCC 403, 2010 DTC 1277 [at 3934] (Informal Procedure)

The taxpayer switched from one accounting firm to another, and ensured that the old one had faxed her information to the new one. Webb J. found...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 82 - Subsection 82(1) - Paragraph 82(1)(a) gross-up effect on penalty 33

Iszcenko v. The Queen, 2009 DTC 794, 2009 TCC 229 (Informal Procedure)

The taxpayer failed to report investment income of $278 in 2003, and dividend income received in 2006 of $32,055 from a private corporation. In...

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Dunlop v. The Queen, 2009 DTC 650, 2009 TCC 177 (Informal Procedure)

In the first taxation year, the taxpayer did not report income from part-time employment because he had not received a T4 slip (due to a change of...

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Saunders v. The Queen, 2006 DTC 2267, 2006 TCC 51 (Informal Procedure)

After noting that the penalty in s. 163(1) was one of strict liability, so that it could be vacated if the taxpayer established due diligence,...

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Maltais v. The Queen, 91 DTC 1385 (TCC)

The taxpayer failed to include in his income the amount of withdrawals from his RRSP for which he had not received a T4RSP form at the time of...

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Administrative Policy

May 2016 Alberta CPA Roundtable, Q.4

The amended version of s. 163(1) imposes penalties for the 2015 and subsequent taxation years in accordance with a more favourable formula than...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) s. 163(1) penalties for 2014 and prior will not be reduced to reflect the more favourable post-2014 penalty calculation 139

May 2013 ICAA Roundtable, Q. 4 (reported in April 2014 Member Advisory)

How often would CRA consider it "just and equitable" to waive a portion of the S 163(1) penalty such that the taxpayer's penalty does not exceed...

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30 October 2012 Ontario CTF Roundtable, 2012-0462951C6 - Ontario CTF - Penalty Relief

The waiving of partial interest within the 10 year limitation period is part of [Voluntary Disclosure Program] policy and is applied to all...

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30 October 2012 Ontario CTF Roundtable, 2012-0462921C6 - Ontario CTF - 163(1) Penalty

CRA answered several questions about s. 163(1):

  • A taxpayer who does not file a return cannot be subject to s. 163(1) penalties for the relevant...

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3 December 2009 Internal T.I. 2009-0344951I7 F - Pénalité imposée en vertu du paragraphe 163(1)

Mr. X was reassessed in December 2005 to add unreported income for his 2004 year and then, six month later, following an audit, was reassessed for...

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25 June 2009 Internal T.I. 2009-0328171I7 F - Pénalité pour omission - 163(1)

An individual claimed fictitious expenses in Year 1 and was assessed a s. 163(2) penalty. In Year 2 the individual failed to report income. ...

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18 October 2005 Internal T.I. 2005-0133411I7 F - Penalty for repeated failures to report income

Mr. Y filed his T1 income tax returns for the 2001, 2002, and 2003 taxation years at the same time in the 2004 calendar year. In his 2001, 2002...

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16 May 1994 External T.I. 9401865 - MEANING OF PRESCRIBED AND AUTHORIZED FOR PENALTY PURPOSE

The penalty under s. 163(1) is based on the gross rather than the net amount of unreported income. However, a penalty under s. 163(1) will not be...

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3 May 1990 T.I. (October 1990 Access Letter, ¶1482)

The fact that the taxpayer failed to declare certain amounts on the basis of a decision of the Federal Court, Trial Division which subsequently...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) 31

Subsection 163(2) - False statements or omissions

Cases

Grewal v. Canada (Attorney General), 2022 FCA 114

A voluntary disclosure included a description of various loans and did not volunteer that they gave rise to taxable benefits. After the voluntary...

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Canada v. Rattai, 2022 FCA 106

The Tax Court had vacated the imposition of a gross negligence penalty on the taxpayer on the basis that his return, for the year in issue, that...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence Court is not bound by an admission shown to be nonfactual 68

Khanna v. Canada, 2022 FCA 84

The taxpayer and her husband conceded in the Tax Court that they had unreported rental income for their 2008 taxation year. At issue before...

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Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 146 - Subsection 146(2) taxpayer could have been called as witness by Crown because she was present in the courtroom 172

Canada v. Paletta, 2022 FCA 86

After finding that the taxpayer’s activity of FX straddle trading, which had the appearance of commerciality but was not engaged in for profit,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit straddle trading, with an appearance of commerciality but not engaged in for profit, was not a business 449
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Business common law concept of business informs the s. 248(1) definition 161
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) applicability of gross negligence penalty necessarily precludes statute-barring 102

De Geest v. Canada, 2022 FCA 22

The taxpayer stated that in 2006 he formed the subjective activity to no longer carry on his work of installing windows and other construction...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit taxpayer's stated intention not to generate profit was belied by his intention to support himself with his business 145

Carroll v. Canada, 2022 FCA 5

The taxpayer filed a return prepared by a firm known as Fiscal Arbitrators in which he claimed a loss from a fictitious business that exceeded his...

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Deyab v. Canada, 2020 FCA 222

The taxpayer was assessed for approximately $2.4 million in shareholder benefits respecting amounts received by him over five years from his...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) neglect in not maintaining a shareholder’s account 247
Tax Topics - General Concepts - Evidence adverse inference drawn from failure to call bookkeeping evidence after prima facie case made out against the taxpayer 331

Xia v. Canada, 2020 FCA 35

The income of the taxpayer from working as a slot attendant at a casino in 2011 and 2012 was approximately doubled as a result of his receipt of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) a share of pooled tips paid by casino patrons was taxable 177

Wynter v. Canada, 2017 FCA 195

The taxpayer, who after starting to use DSC Lifestyle Services in preparing her returns, claimed very large business losses despite not having...

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Words and Phrases
wilful blindness

Melman v. Canada, 2017 FCA 83

A senior merchant-banking executive with financial acumen received a $15M dividend, deposited the estimated tax thereon of $4.7M to mature on the...

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Weinberg Family Trust v. The Queen, 2016 TCC 37

V. Miller, J found that the Tax Court did not have the jurisdiction to consider an appeal by a purported Alberta trust which had been assessed by...

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Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Ontario - Taxation Act 2007 - Section 125 - Subsection 125(3) no TCC jurisdiction to address Ontario (s. 121(2)) penalty 208

Lacroix v. Canada, 2008 FCA 241

The Minister determined, under a net worth assessment, that the taxpayer had $559,673 of unreported income over four years, and thus reassessed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) no credible explanation for net worth appreciation 368

Canada (Attorney General) v. Villeneuve, 2004 DTC 6576, 2004 FCA 20

The taxpayers received substantial tax refunds by misrepresenting that they were married (when they were not) or that they had dependants (when...

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Canada (Attoreny General) v. Simard, 2004 DTC 6381, 2003 FCA 427

The Court has no discretion as to the amount of the penalty under s. 163(2), nor does it have any regarding interest thereon.

Findlay v. Canada, 2000 DTC 6345 (FCA)

A firm that the taxpayer used to prepare both his personal return and the return of a corporation to which he had transferred his business had...

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Can-Am Realty Ltd. v. The Queen, 94 DTC 6293, [1994] 1 CTC 336 (FCTD)

In reversing a penalty imposed on the taxpayer with respect to a shareholder benefit that had not been reported in the taxpayer's return because...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) honest belief re appropriateness of cost recovery method 202

The Queen v. Caseley, 90 DTC 6618 (P.E.I.S.C.)

Because proceedings under s. 163(2) are of an administrative nature (there being no charge, no trial, no sentence or any fine in excess of an...

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Crown Cork & Seal Canada Inc. v. The Queen, 90 DTC 6586 (FCTD)

The claiming by the corporation of CCA on an asset which had not yet been substantially completed was based on a misunderstanding of the kind of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property not yet depreciable property if not usable 98

Hazlewood v. The Queen, 89 DTC 5537, [1990] 1 CTC 5 (FCTD)

The taxpayer did not report amounts paid to him on his withdrawal from a professional partnership as income, on the basis of an incorrect belief...

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Kerr v. The Queen, 89 DTC 5348, [1989] 2 CTC 112 (FCTD)

The Court rejected a submission of counsel for the taxpayer that because the Minister had not established the precise quantum of unreported income...

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Hudson Bay Mining and Smelting Co., Ltd. v. The Queen, 86 DTC 6244, [1986] 1 CTC 484 (FCTD), aff'd 89 DTC 5515 (FCA)

No penalty was exigible where the taxpayer made a supposedly deductible "gift" to the Manitoba Crown which, in fact, was characterized as partial...

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De Graaf v. The Queen, 85 DTC 5280, [1985] 1 CTC 374 (FCTD)

The taxpayer was liable under s. 163(2) for taxable capital gains that he failed to report. He was found to have a "relatively high degree of...

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Patricio v. The Queen, 84 DTC 6413, [1984] CTC 360 (FCTD)

"[T]he plaintiff was very aware of the necessity of keeping accurate records for the purpose of claiming expenses against income but he seemed to...

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Venne v. The Queen, 84 DTC 6247, [1984] CTC 223 (FCTD)

A possible mistake of law by the taxpayer, i.e., a belief that interest from "'escrow mortgages'" was not taxable, would not have been...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) failure to review return with obvious errors 75

The Queen v. Columbia Enterprises Ltd., 83 DTC 5247, [1983] CTC 204 (FCA)

A company is criminally liable for statements and omissions made by an independent public accountant in the company's tax returns if the company's...

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Courtois v. The Queen, 80 DTC 6175, [1980] CTC 243 (FCTD)

The taxpayer was able to show that the Minister's reassessments, and the corresponding s. 163(2) penalties, were unfounded by establishing that he...

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Re R. v. Whittle, 79 DTC 5011 (BCSC)

There is nothing that precludes the Crown from pursuing remedies both under s. 163(2) and s. 239(1).

Hawrish v. M.N.R., 76 DTC 6455, [1976] CTC 748 (FCA)

The majority held that "a failure to report legal fees was not due to wilful evasion or suppression but was due to the taxpayer's ignorance of...

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See Also

Paletta Estate v. The Queen, 2021 TCC 11, rev'd 2022 FCA 86

The taxpayer in Friedberg entered into spread positions in gold futures contracts, and in the same taxation year closed out the losing legs on his...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Timing straddle trade losses recognized consistently with Friedberg 337
Tax Topics - Income Tax Act - Section 3 - Paragraph 3(a) - Business Source/Reasonable Expectation of Profit losses generated under straddles were deducible from a source notwithstanding that they generated small economic losses 261
Tax Topics - General Concepts - Sham FX straddles were not shams, and “window dressing” is not a standalone anti-avoidance doctrine 241

Hansen v. The Queen, 2020 TCC 102

An individual in the concrete pouring or foundation repair business sold five homes in succession over a six-year period after having occupied and...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) no carelessness given bona fide belief that principal residence exemption applied 178
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate annual purchase, improvement and sale of homes following their occupation was on income account 229

Grewal v. Canada (National Revenue), 2020 FC 356

A voluntary disclosure included a description of various loans and did not volunteer that they gave rise to taxable benefits. After the voluntary...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) disclosure of loan amounts in VDP application did not protect against penalties when CRA later concluded they were income 435

Frank-Fort Construction Inc. v. The Queen, 2020 CCI 6

D’Auray J found that a one-man corporation that had a business of constructing (through using third-party contractors) and selling about 10 or...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 285 gross negligence penalty where failure of new home builder to report two sales 254

Wardlaw v. The Queen, 2019 TCC 199

In his return for 2009 prepared by “Fiscal Arbitrators,” the taxpayer claimed a fictitious business loss of over $357,000, and requested that...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2.1) carryback of false claim to lower-tax rate years generated 70% effective penalty rate 179

Wall v. The Queen, 2019 TCC 168, aff'd on other grounds 2021 FCA 132

A licensed real estate agent, who had been reporting income of about $20K a year, realized gains from the construction and sale (in 2006, 2008 and...

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Xia v. The Queen, 2019 TCC 30 (Informal Procedure), aff'd 2020 FCA 35

The taxpayer, who received wages from working as a slot attendant at a casino in 2011 and 2012 of $27,011 and $29,327, respectively, which he...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) pooled tip money received at casino was taxable gratuities 127

Mady v. The Queen, 2017 TCC 112

The taxpayer executed an agreement to sell all the shares of his dental corporation (“MDPC”) for $4.5 million and then implemented a s. 86...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 74.5 - Subsection 74.5(11) transfer from wife to higher-income husband was infused with his income-splitting purpose (as well as regulatory breach if she didn’t transfer) 393
Tax Topics - General Concepts - Ownership wife and children did not acquire beneficial interest in shares the taxpayer was to transfer to them, under tax plan, until the share transfer occurred 263
Tax Topics - Income Tax Act - Section 86 - Subsection 86(2) family members did not acquire beneficial interest in new shares until after completion of s. 86 reorg 297
Tax Topics - General Concepts - Fair Market Value - Shares arm’s length sales price established FMV for closing-date internal transfer of same shares 482
Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) - Subparagraph 69(1)(b)(i) contemporaneous arm’s length sale price established that shares previously transferred at undervalue 478
Tax Topics - General Concepts - Price Adjustment Clause no jurisdiction to comment on application of price adjustment clause where the affected taxpayers are not appellants 233

Canada (Attorney General) v. Bellil, 2017 CAF 104

An unemployed engineer spent 11 weeks in Tunisia. On his weekly Employment Insurance declarations he answered “no” to the question as to...

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Words and Phrases
knew sciemment
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Employment Insurance Act - Section 38 - Subsection 38(1) - Paragraph 38(1)(a) intent to defraud irrelevant to knowingly making a false statement 397

Melman v. The Queen, 2016 TCC 167, aff'd 2017 FCA 83

In February 2007, two holding companies owned and controlled by the taxpayer disposed of their holdings in the merchant banking company, Onex...

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Khattar v. The Queen, 2016 DTC 1011 [at 2566], 2015 TCC 338

The taxpayer, who had never operated a business, had a tax preparer who claimed very large fictitious business losses on his 2008. CRA sent a...

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Taylor v. The Queen, 2016 DTC 1012 [at 2575], 2015 TCC 335

The taxpayer, a university educated technical support worker, had always prepared his own returns since emigrating to Canada in 1990, but on the...

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Atutornu v. The Queen, 2014 DTC 1150 [at 3485], 2014 TCC 174 (Informal Procedure)

The taxpayers' return was prepared by an individual whose last name they could not recall at the hearing. The return claimed meaningless...

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AgraCity Ltd. v. The Queen, docket 2014-1537

The taxpayer purportedly arranged to have most of the profits arising from sales of a product earned by a Barbados company. The Minister assessed...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) factual allegation that foreign affiliate did nothing was fatal to ss. 247(2)(a) and (c) pleadings but not ss. 247(2)(b) and (d) 230
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 53 argument inconsistent with assumed facts struck from pleadings, but might be reintroduced at trial as an alternative argument 172

9016-9202 Quebec Inc. v. The Queen, 2014 TCC 281

Until 1995, a Quebec garbage collection company ("EBI") employed its garbage collectors and drivers. It then encouraged most of them to each...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Personal Services Business incorporated garbage collectors continued to be controlled 286

Bolduc v. The Queen, 2014 DTC 1127 [at 3338], 2014 TCC 128

The taxpayer (and thousands of others) participated in a bogus tax scheme based around fake business losses, and was assessed for gross negligence...

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Lavoie v. The Queen, 2014 DTC 1104 [at 3218], 2014 TCC 68

The taxpayer ran a sales and marketing business. His clients were principally livestock breeders and producers, and he worked from a home office....

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 169 - Subsection 169(1) cottage used 10 days for personal use and 160 days for business was primarily for business use 57
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(h) cottage used 10 days for personal use and 160 days for business was primarily for business use 57

Vachon v. The Queen, 2014 DTC 1070 [at 3023], 2013 TCC 330, vacated 2014 CAF 224

The taxpayer, who was a consultant, provided signed cheques to his accountant without filling in the recipient. The accountant misappropriated...

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Morton v. The Queen, 2014 DTC 1093 [at 3162], 2014 TCC 72 (Informal Procedure)

After having filed returns for 1998-2001 that were essentially correct, the taxpayer submitted fraudulent T1 Adjustment Requests. Bocock J found...

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Words and Phrases
form

Torres v. The Queen, 2014 DTC 1028 [at 2659], 2013 TCC 380

A firm ("Fiscal Arbitrators") promoted a tax refund scheme that relied on claiming fictitious business losses, with the result that the taxpayers...

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Vicars v. The Queen, 2013 DTC 1259 [at 1443], 2013 TCC 329

VA Miller J found that the Minister's decision to use a net worth assessment, and impose penalties on the taxpayers based on the amount thus...

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Hedzic v. The Queen, 2013 DTC 1242 [at 1315], 2013 TCC 249 (Informal Procedure)

Following a net worth assessment, the Minister added a total of $41,441 to the income of the taxpayers for two successive years, an amount that...

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Bandula v. The Queen, 2013 DTC 1225 [at 1238], 2013 TCC 282

The taxpayer had limited English skills and no understanding of the Canadian tax system or appropriate record-keeping standards. Bocock J found...

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Harvey v. The Queen, 2013 TCC 298

Graham J found (citing Raposo) that the taxpayer's guilty plea under s. 239 for failing to report commission income from his real estate business...

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Raposo v. The Queen, 2013 DTC 1216 [at 1199], 2013 TCC 265

The taxpayer had pleaded guilty to fraud in misappropriating funds from her former employer. She was sentenced to imprisonment of two years less...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence guilty plea is prima facie proof of income from fraud 193

Brisson v. The Queen, 2013 DTC 1197 [1052], 2013 TCC 235

VA Miller J found that the taxpayers had been negligent in signing their tax returns, which had been prepared by a firm of "professional tax...

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McLeod v. The Queen, 2013 DTC 1187 [at 1008], 2013 TCC 228

Woods J found that the taxpayer was willfully blind in acquiescing to her tax preparers' plans to claim a fictitious business loss for her 2009...

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De Couto (Alco Windows Inc.) v. The Queen, 2013 DTC 1161 [at 880], 2013 TCC 198 (Informal Procedure)

Bocock J found that the taxpayer, having failed to maintain adequate records and having engaged in "inscrutable" tracking of expenses, shareholder...

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Lenneville v. The Queen, 2013 DTC 1196 [at 1045], 2013 TCC 56

The taxpayers ran a commercial fishing business. Because a substantial portion of that business was operated on a cash basis, a CRA auditor used...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) misrepresentation onus not met in net worth assessment 126

Schmidt v. The Queen, 2013 DTC 1063 [at 337], 2013 TCC 11

The Minister imputed additional income to the taxpayer based on deposits into his bank account that he had not included in his return, and on that...

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Murugesu v. The Queen, 2013 DTC 1046 [at 222], 2013 TCC 21

The Minister assessed the corporate taxpayer for gross negligence penalties for reporting income based on only $285,588 of gross revenue rather...

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Le v. The Queen, 2012 DTC 1297 [at 3948], 2012 TCC 349 (Informal Procedure)

Favreau J. affirmed the Minister's net worth assessment of the taxpayer for $61,874 of unreported income in three years arising from a...

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Hine v. The Queen, 2012 DTC 1244 [at 3688], 2012 TCC 295

The taxpayer was a certified contractor who started a business of buying homes, renovating them, and selling them. He sold one home for $319,000,...

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Chénard v. The Queen, 2012 DTC 1238 [at 3668], 2012 TCC 211 (Informal Procedure)

The taxpayer claimed personal expenses as business expenses but in fact never carried on a business. Bédard found that the taxpayer was grossly...

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Tyskerud v. The Queen, 2012 DTC 1179 [at 3453], 2012 TCC 196 (Informal Procedure)

The taxpayer's use of her corporation's line of credit to pay down her personal debt resulted in a clear shareholder benefit, and her failure to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) clear corporate appropriati0n 58

Chan v. The Queen, 2012 DTC 1171 [at 3421], 2012 TCC 168 (Informal Procedure)

The taxpayer was able to make out a due diligence defence for failure to report investment income, which only amounted to 1.06% of her income for...

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Mullen v. The Queen, 2012 DTC 1154 [at 3358], 2012 TCC 139 (Informal Procedure)

The taxpayer was reassessed in respect of income from stock options exercised in 1997, 1999, and in 2001. He argued that he was not a Canadian...

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McEwen v. The Queen, 2012 DTC 1080 [at 2905], 2012 TCC 31

The taxpayer had over-reported expenses and under-reported revenue connected with his moving business. Although previously warned to keep...

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Griffin v. The Queen, 2012 DTC 1024 [at 2621], 2011 TCC 531 (Informal Procedure)

The taxpayers' appeals from gross negligence penalties were dismissed. Their income was roughly 2.5 times and 3 times what they reported,...

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Fourney v. The Queen, 2012 DTC 1019 [at 2575], 2011 TCC 520

Seeking to protect herself from being sued by her brother, the taxpayer transferred title to all her real properties for no consideration to...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Agency 191
Tax Topics - General Concepts - Corporate/Separate Personality 257
Tax Topics - General Concepts - Ownership presumption of resulting trust where property transfer for no consideration 257
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) bare trust arising on creditor-proofing transfer 257
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition rebuttable presumption of resulting trust on transfer for no consideration 257

9067-9051 Québec Inc., Vincent v. The Queen, 2012 DTC 1073 [at 2842], 2011 TCC 456

Hogan J. confirmed s. 163(2) penalties against the taxpayers in respect of business expenses, given that the taxpayers' only proof that the...

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Lapalme v. The Queen, 2012 DTC 1003 [at 2511], 2011 TCC 396 (Informal Procedure)

The taxpayers were shareholders and directors of a corporation, which they caused to purchase insurance policies on their lives. The agent who...

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Wong v. The Queen, 2011 DTC 1079, 2011 TCC 30 (Informal Procedure)

Payments received by the taxpayer from a corporation of which he was a shareholder and over which he had operational control clearly were payments...

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Mompérousse v. The Queen, 2010 DTC 1210 [at 3558], 2010 TCC 172 (Informal Procedure)

As the Minister had established a large gap between the business income of the taxpayer calculated by him and the business income reported by the...

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JDI 2000 Transport Ltd. v. The Queen, 2010 DTC 1206 [at 3541], 2010 TCC 310

In finding that the portion of penalties assessed against the taxpayer that were based on related company expenses should be reversed, Woods, J....

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Dao v. The Queen, 2010 DTC 1086 [at 2957], 2010 TCC 84

The taxpayer had a marijuana-growing operation at her house. The Minister reassessed her for over $300,000 of income from the operation, and...

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Pontarini v. The Queen, 2009 DTC 1462, 2009 TCC 395

Penalties were applicable to a doctor who, rather than providing to his accountant financial statements prepared by his medical clinic, prepared...

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Richer v. The Queen, 2009 DTC 1413, 2009 TCC 394

After finding that the debt forgiveness rules applied to the taxpayer contrary to the taxpayer's reporting of a transaction in which a claim...

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Charron v. The Queen, 2009 DTC 1401, 2009 TCC 290

Before finding that a penalty imposed on the taxpayer in respect of his deliberate overvaluation by $402,225 of losses from securities...

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Gestion Forêt-Dale Inc. v. The Queen, 2009 DTC 1378, 2009 TCC 255

The penalty was applicable, given that, at the time the corporate return of the recipient of a deemed dividend was signed, it was known that in...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date purported retroactive issuance and redemption of shares was ineffective 142

Sarwari v. The Queen, 2009 DTC 1170, 2009 TCC 357

In deleting a penalty for gross negligence assessed on the taxpayer in connection with a net worth assessment, Webb, J. stated (at para. 53)...

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O'Dea v. The Queen, 2009 DTC 912, 2009 TCC 295

The two principals of a limited partnership tax shelter were assessed gross negligence penalties. In vacating the assessments, Campbell, J. stated...

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Omer Reshad O/A Kabul Auto Sell v. The Queen, 2009 DTC 625, 2009 TCC 158 (Informal Procedure)

After noting that unreported income of the taxpayer was 4% (for one year) and 14% (for another) of his total revenues indicating that the...

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Séguin Boyer v. The Queen, 2008 DTC 4891, 2008 TCC 88

The failure of the taxpayer, who was an accounting secretary, to report taxable capital gains of approximately $168,000 realized by her in both...

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Laplante v. The Queen, 2008 DTC 4822, 2008 TCC 335 (Informal Procedure)

Gross negligence penalties were confirmed given that when the taxpayer "signed his income tax returns for the taxation years in question, he knew...

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Abinader c. La Reine, 2008 DTC 4785, 2007 TCC 111

The imposition of penalties on the taxpayer was justified given that he claimed charitable credits knowing that he had received false receipts.

Golden v. The Queen, 2008 DTC 3363, 2008 TCC 173

Proof in a previous criminal proceeding that the taxpayer had evaded income tax on an amount that he failed to include in his income satisfied the...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Abuse of Process relitigating an amount determined in criminal sentencing 179
Tax Topics - General Concepts - Estoppel 179

Hougassian v. The Queen, 2007 DTC 823, 2007 TCC 293

The taxpayer, who in his 2000 year had $2 million of employment income and interest income of $276,420 (representing a high interest rate on a...

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Harris v. The Queen, 2005 DTC 1179, 2005 TCC 501

The taxpayer's failure to report capital gains from transactions in an on-line account for which she received no T5008s was not demonstrated by...

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Riordan v. The Queen, 2005 DTC 397, 2005 TCC 150

The taxpayer was subject to the penalty for failure to report over $1 million of employee stock option benefits realized by him over a four-year...

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Villeneuve v. The Queen, 2004 DTC 2258 (TCC), rev'd 2004 DTC 6077 (FCA)

The taxpayer paid an individual $8,000 in cash for making a claim on his behalf for a tax refund of $12,364 in respect of deductions for...

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Klotz v. The Queen, 2004 DTC 2236, 2004 TCC 147, aff'd 2005 DTC 5279, 2005 FCA 158

Carelessness of the taxpayer in verifying the value of prints that he donated at an appraised value that was well in excess of his purchase price...

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Bernick v. The Queen, 2003 DTC 839, 2003 TCC 433

The balance sheet for a Bahamian partnership in which the taxpayer invested recorded bonds at their maturity value rather than the much lower...

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Drozdzik v. The Queen, 2003 DTC 445 (TCC)

After denying all expenses claimed by the taxpayer in respect of an alleged business of selling herbal products in chains (on the basis that they...

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Cox v. The Queen, 2002 DTC 1515 (TCC)

No penalty was payable under s. 163(2) by the taxpayer for failure to report significant income over a six-year period as he suffered from...

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Dwyer v. The Queen, 2001 DTC 725 (TCC)

The taxpayer was liable for penalties for failure to report interest income from numerous residential mortgage loans made by him, notwithstanding...

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Western Securities Ltd. v. The Queen, 97 DTC 977 (TCC)

Penalties imposed on the taxpayer were directed to be deleted given that there was no evidence that the overstated V-day values reported by him...

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N .J . Martin Management Services Ltd. v. R., [1997] 1 CTC 2005, 97 DTC 487

In finding that the taxpayers had not been grossly negligent in representing that customer lists had belonged to them rather than their company,...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) reported goodwill as personal rather than corporate asset 51

Fortino v. The Queen, 97 DTC 55, [1997] 2 CTC 2184 (TCC), briefly aff'd on procedural grounds 2000 DTC 6060 (FCA)

In finding that even if (contrary to her actual finding) that amounts received for non-compete covenants by the taxpayer were taxable, penalties...

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Ganne v. The Queen, 95 DTC 363, [1994] 1 CTC 2124 (TCC) (Informal Procedure)

Following testimony of the taxpayer that he did not declare interest income on the deferred purchase price payable to him following the sale of a...

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Dutil v. The Queen, 95 DTC 281 (TCC)

In finding that the taxpayer, who purchased a painting and then immediately donated it to a gallery for an appraised value that was five times his...

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Johnson v. The Queen, 94 DTC 1009, [1994] 1 CTC 2025 (TCC)

As a result of the negligence of the chartered accountant who was preparing the taxpayer's return, a dividend of $181,211 received by the taxpayer...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(3) 25

Armstrong v. The Queen, 93 DTC 1043, [1993] 2 CTC 2681 (TCC)

The taxpayer purchased a farm property for consideration comprising $166,824 plus his commitment to build a residence for the vendor with an...

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Dunleavy v. The Queen, 93 DTC 417 (TCC)

The failure of the taxpayer, a medical practitioner, to report a gain on the sale of a condominium unit in his return was not subject to penalty...

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Arvisais v. MNR, 93 DTC 506, [1993] 1 CTC 2473 (TCC)

The taxpayer purchased works of art, through an individual said to be associated with a gallery, for 25% of the value ascribed to the works of art...

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Administrative Policy

May 2019 CPA Alberta CRA Roundtable, GST Session – Q.7

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 285 a gross negligence penalty generally should not apply to a genuine misinterpretation of the ETA or where no false statement has been made 276

25 February 2016 CBA Roundtable, Q. 9

Similarly to ITA s. 163(2), the ETA gross negligence penalty provision (s. 285) references the making of “a false statement or omission in a...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 285 gross negligence penalty can be imposed even where no return is filed 203
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(2.1) using VDP assessment to access rebate claim 114

May 2016 Alberta CPA Roundtable, GST Q.5

What is current policy in applying ETA s. 285 penalties? CRA responded:

Below are some examples of factors that may be considered…:

  • First...

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Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 285 penalty can be collected on understated net tax resulting from reasonable mistake 234

11 June 2014 Internal T.I. 2014-0519701I7 - Filing a NIL return to avoid late-filing penalties

A taxpayer files a NIL tax return (which does not report any of the transactions on which tax is payable) or a substantially incomplete tax...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) return with substantive missing elements 117
Tax Topics - Income Tax Act - Section 162 - Subsection 162(1) return with substantive missing elements 125

23 April 2013 Internal T.I. 2013-0485161I7 - Calculation of Gross Negligence Penalty

A taxpayer claimed a business loss and requested that the loss be carried back to the three prior taxation years. The loss was fictitious and CRA...

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6 September 2012 Internal T.I. 2012-0452151I7 - S. 163(2) Penalty on Fictitious Business Losses

In the event that a taxpayer reports false business losses in circumstances amounting to gross neglect, a taxpayer will still be liable for s....

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2 February 2006 Internal T.I. 2005-0129131I7 F - Assessing 163(2) penalty

A taxpayer requested an adjustment to the taxpayer’s return which CRA determined to be in respect of fictitious employment expenses and false...

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Application Policy 96-05 "Penalties Under Subsection 163(2)"

October 1992 Central Region Rulings Directorate Tax Seminar, Q. I (May 1993 Access Letter, p. 230)

Discussion comparing the conduct described in s. 163(2) and s. 152(4)(a)(i).

14 November 1991 Memorandum (Tax Window, No. 13, p. 21, ¶1595)

RC's Policy is not to levy a penalty on a taxpayer for an offence committed prior to the introduction of a particular penalty. For example,...

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3 May 1990 T.I. (October 1990 Access Letter, ¶1482)

In determining whether s. 163(2) applies, the courts will consider the taxpayer's capacity to understand the facts, the care exercised by him, his...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(1) 40

Articles

Colin Campbell, "Application of the Charter to Civil Penalties in the Income Tax Act", 2002 Canadian Tax Journal, Vol. 50, No. 1, p. 1.

Krishna, "Liability for False Statements or Omissions Due to Gross Negligence", Canadian Current Tax, March 1992, p. A5.

Paragraph 163(2)(a)

Subparagraph 163(2)(a)(i)

Administrative Policy

21 January 2013 Internal T.I. 2012-0442021I7 F - Assessing 163(2) penalty

Of the adjustments made to Mr. C’s return, only a portion relate to a false statement made by him. These adjustments result in his Quebec...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) - Paragraph 163(2)(c.2) penalty is computed on total RMES adjustment, not just the false portion 142
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) - Paragraph 163(2)(c) false RMES claim by husband does not generate any penalty for resulting overstatement of CCTB, WITB and GSTC by wife, assuming she made no false statement 312

Paragraph 163(2)(c)

Administrative Policy

21 January 2013 Internal T.I. 2012-0442021I7 F - Assessing 163(2) penalty

Mr. A, claimed a refundable medical expense supplement ("RMES") amount in his income tax return under s. 122.51(1) and made a false statement. In...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) - Paragraph 163(2)(c.2) penalty is computed on total RMES adjustment, not just the false portion 142
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) - Paragraph 163(2)(a) - Subparagraph 163(2)(a)(i) deduction against increase to income attributable to a false statement can be reduced by QPP contribution increase or by discretionary CCA claim that is wholly related to that income source 303

15 January 2013 Internal T.I. 2012-0459581I7 F - 163(2) Penalty - CCTB and GSTC

Two spouses (Mr. A and Ms. B) knowingly or with gross negligence underreported their business income in their respective returns for a particular...

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Paragraph 163(2)(c.2)

Administrative Policy

21 January 2013 Internal T.I. 2012-0442021I7 F - Assessing 163(2) penalty

Mr. A, claimed a refundable medical expense supplement ("RMES") amount in his income tax return under s. 122.51(1) and made a false statement. ...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) - Paragraph 163(2)(c) false RMES claim by husband does not generate any penalty for resulting overstatement of CCTB, WITB and GSTC by wife, assuming she made no false statement 312
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) - Paragraph 163(2)(a) - Subparagraph 163(2)(a)(i) deduction against increase to income attributable to a false statement can be reduced by QPP contribution increase or by discretionary CCA claim that is wholly related to that income source 303

Subsection 163(2.1)

See Also

Wardlaw v. The Queen, 2019 TCC 199

The taxpayer claimed a fictitious business loss of over $357,000, and requested that the excess of the claimed loss over what he could use in the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) effective s. 163(2) penalty rate can exceed 50% where there has been a loss carryback 288

Paragraph 163(2.1)(a)

Administrative Policy

21 April 2004 Internal T.I. 2004-0070901I7 F - 163(2) Penalty - Off-Calendar Fiscal Period

The penalty was applicable to reserves which the taxpayer should have brought back into income in the following years under s. 34.1(3), except...

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Subsection 163(2.21)

Articles

Gregory M. Johnson, Wesley R. Novotny, "An Update on Flow-through Shares in the Energy Sector", 2016 Conference Report (Canadian Tax Foundation),12:1-39

General release of claims on implementation of CCAA compromise (p. 12:25)

Generally, a [CCAA] plan that provides a release of claims that...

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Subsection 163(2.4) - False statement or omission

Administrative Policy

14 July 2014 Internal T.I. 2014-0537701I7 F - Voluntary disclosure - T1134 and FAPI

Representatives of a taxpayer initiated a voluntary disclosure for a taxpayer who had not filed T1134s and who had failed to report foreign...

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Subsection 163(3) - Burden of proof in respect of penalties

Cases

Kim v. Canada, 2019 FCA 210

The taxpayer, whose only source of income was employment income of under $100K p.a., claimed substantial and fictitious business losses based on...

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Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 138 - Subsection 138(2) effectively requiring the taxpayer to go first in a s. 163(2) hearing (where the Crown bore the onus) did not change the outcome 386

Lubega-Matovu v. Canada, 2011 DTC 5158 [at 6219], 2011 FCA 265

Although the taxpayer failed to substantiate business deductions claimed over two taxation years, the Court found that the Minister had not met...

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Can-Am Realty v. The Queen, 94 DTC 6069, [1994] 1 CTC 1 (FCTD)

The burden of proof on the Minister with respect to penalties under s. 163(3) did not alter the usual burden upon the taxpayer to show that the...

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The Queen v. Taylor, 84 DTC 6459, [1984] C.T.C 436 (FCTD)

The onus imposed by s. 163(3) on the Minister to establish the facts justifying the assessment of penalty does not relieve the taxpayer of the...

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Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Prior Cases 24

See Also

Last v. The Queen, 2012 DTC 1290 [at 3895], 2012 TCC 352

The taxpayer disputed, inter alia, the amount of revenue from various business activities. Woods J ruled against the taxpayer on the disputed...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence 84

Szollosi Bens v. The Queen, 2011 TCC 240

Webb J. quashed the Minister's motion to dismiss the taxpayer's appeal from assessments under the Income Tax Act and Excise Tax Act, even though...

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Johnson v. The Queen, 94 DTC 1009, [1994] 1 CTC 2025 (TCC)

In an appeal from a penalty imposed by the Minister pursuant to s. 163(2), the Crown was ordered to proceed with its case first.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) 69

Subsection 163(6)

Articles

Joint Committee, "July 27, 2018 Legislative Proposals", 10 September 2018 Submission

Penalty should not apply to s. 94 trust (pp. 6-7)

The s. 163(6) penalty should be reconsidered and, in any event, should not apply to a s. 94...

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Subsection 163(7)

Administrative Policy

30 October 2012 Ontario CTF Roundtable, 2012-0462951C6 - Ontario CTF - Penalty Relief

A taxpayer who makes a voluntary disclosure involving taxation years that end more than 10 years earlier will still be subject to late-filing...

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