http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/223637/index.do
Coley v. Canada (National Revenue) (February 22, 2017 – 2017 FC 210, Kane J.).
Précis: The Applicant, Donald Cooley and Tradelink Stucco & Construction Inc., applied for both income tax relief (penalties and interest) in connection with its 2004 and 2005 taxation years as well as payroll and GST/HST relief (penalties and interest) for the 2009-2014 tax years. Both applications were denied in two letters and the Applicant moved for judicial review. The Court treated the two letters as one decision. The requests for relief were premised on financial distress. In denying the relief sought CRA concluded that there was not sufficient evidence of distress and that the Applicant’s directors did not exercise the reasonable care expected to ensure proper filing and remittances.
The Federal Court held that the decision “within the range of possible and acceptable outcomes and she rendered a decision that is transparent, justifiable and intelligible (Dunsmuir at para 47)” [para. [40]]. As a result the application was dismissed. There was no order as to costs.
Decision: The Court concluded that the Applicant had not demonstrated that the CRA Team Leader, Ms. Doucette, had acted unreasonably:
[35] I do not agree that the circumstances are analogous to those in Lund. In Lund, the Court noted, among other things, “sloppiness and imprecision in CRA’s approach” to the requests, and factual and processing errors by the CRA that contributed to the taxpayer’s situation.
[36] I accept that the Court’s admonishment at paragraphs 12 and 13 was warranted on the facts in Lund:
[12] . . . It appears that the CRA's analysis was based on a bare review of financial statements for Mr. Lund's numbered company with little, if any, attempt made to understand the true extent of Mr. Lund's available cash flow or the disposition of the funds he did receive. While it may not be legally incumbent upon CRA to make inquiries of the taxpayer about such missing details, it runs the risk, in a complex case such as this, that a failure to do so will lead to serious and reviewable factual errors.
[13] The approach taken here suggests that CRA's assessment of Mr. Lund's financial situation was somewhat cursory, if not perfunctory. Whether a more thorough review would have led to a different outcome is not for me to decide, but I do not accept that the denial of relief to Mr. Lund was inevitable had the Company financial statements been thoroughly assessed against Mr. Lund's explanations.
[37] However, the circumstances in the present case differ. The affidavit of Ms. Doucette describes her comprehensive assessment of all the available information and the conclusions she reached based on that information. The onus was on the Applicant to provide all the relevant information. The Applicant does not point to any errors in the documents on the record considered by Ms. Doucette. There was no reason for Ms. Doucette to probe the Applicant for additional explanations.
[38] The Team Leader did not misunderstand the Applicant’s request; rather the information provided did not justify the relief.
[39] The Applicant’s submissions that explanations would have been available to elaborate on some of the financial information, that the Applicant had taken steps to address problematic bookkeeping, and that his compliance picture has improved, cannot be considered in assessing the reasonableness of the Team Leader’s decision which is based on the record before the Team Leader.
As a result the application was dismissed. There was no order as to costs.