http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/169557/index.do
Herrington v. Canada (National Revenue) (August 22, 2016 – 2016 FC 953, Gagné).
Précis: The applicant omitted amounts of investment income in his 2009, 2011, 2012 and 2013 tax returns. He was assessed penalties and interest in each of 2011, 2012 and 2013. He obtained relief against the penalties and interest in 2011. He then applied for relief in 2012 and 2013 which was denied. He applied to the Federal Court for judicial review and argued that there was a duty on the part of CRA to advise taxpayers when they omitted to report investment income on their tax returns in cases where CRA had received T3 or T5 forms from the payee of such income. The Federal Court dismissed the application with costs of $500, all inclusive, to the Crown.
Decision: Mr. Herrington failed to report items of investment income in 2009, 2011, 2012 and 2013:
[6] The Applicant’s 2009, 2011, 2012 and 2013 income tax returns were reassessed by the CRA due to omitted investment income. No penalties were levied for the 2009 taxation year as it was the first omission in a four-year period, but the Applicant was assessed $8.51 of arrears interest.
[7] With respect to the omissions in the 2011, 2012, and 2013 taxation years, the following penalties and interest were levied against the Applicant:
• In 2011, the Applicant omitted to declare T3 slips from TD Canadian Money Market Fund and Ishares Global Gold Index Fund, totalling $882.00. The Applicant was assessed $176.40 for omission penalties and $14.06 of arrears interest. The Applicant applied for relief from those penalties and interest under the Taxpayer Relief Provisions. On June 26, 2014, the Applicant’s penalties and interest were cancelled.
• In 2012, the Applicant omitted to declare T5 slips from TD Greenline for $2,303.00. The Applicant was assessed $460.40 for omission penalties and $12.03 of arrears interest.
• In 2013, the Applicant omitted to declare T5 slips from TD Greenline for $1,617.00. The Applicant was assessed $323.40 for omission penalties and $19.67 of arrears interest.
He initially argued that the fault was that of TD which failed to act on a change of address form he had sent to them. He subsequently modified his argument to allege a duty on the part of CRA to advise in respect of T3 and T5 slips they received from financial institutions which were not reported in a taxpayer’s income tax return:
[17] He better articulated his position during the hearing. He blames the Respondent’s computer system for not having provided him with advanced warnings that one of the T5 slips received by the CRA from TD Greenline, which matched his Social Insurance Number, was missing from both his 2012 and 2013 income tax returns. In other words, the Applicant argues that the duty of care the CRA owes Canadian taxpayers (Leroux v Canada Revenue Agency, 2014 BCSC 720) includes an obligation to inform them every time a T3 or T5 slip, a copy of which is eventually sent by financial institutions to the CRA, is missing from that taxpayer’s income tax return. The Applicant wants to change the ITA and CRA’s system so penalties are levied only if a proper warning was provided to the taxpayer.
The Court rejected his argument:
[18] The focus of subsection 220(3.1) of the ITA is rather whether relief should be granted due to extenuating circumstances beyond the control of the taxpayer that would have prevented him from complying with the ITA (Stemijon Investments Ltd v Canada (Attorney General), 2011 FCA 299 at para 50).
The Court concluded that the decision to deny relief in 2012 and 2013 was reasonable:
[20] First, it was reasonable for the Team Leader to conclude that there were no extraordinary circumstances beyond the Applicant’s control which prevented him from complying with his obligation to report all of his income when filing his income tax returns. Given the Applicant’s similar omissions of investment income in the past, it was reasonable for the Team Leader to expect that he would ensure that the information slips he filed accurately reflected his investment portfolio. The responsibility to include all of a taxpayer’s revenue earned during a year belongs to that taxpayer and it cannot be transferred on the CRA just because the latter is eventually provided with a copy of the T3 and T5 slips issued by financial institutions.
[21] Second, the Team Leader considered all representations made by the Applicant in reviewing the Second Level Request, and did not rely on irrelevant considerations. Thus, the Team Leader’s decision falls within the range of possible and acceptable outcomes and she rendered a decision that is transparent, justifiable and intelligible (Dunsmuir v New Brunswick, 2008 SCC 9).
Thus the application was dismissed with costs of $500 to the Crown inclusive of all disbursements and taxes.