http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/142649/index.do
Lamoureux v. The Queen (February 22, 2016 – 2016 TCC 47, V. Miller J.).
Précis: Mr. Lamoureux was a finishing carpenter. For his 2003 and 2004 reporting periods he was assessed for underreported GST. For his 2003 reporting period he was assessed a gross negligence penalty:
[4] The Appellant filed his Goods and Services Tax (“GST”) return for the 2003 Reporting Period on April 4, 2005. In the return, he reported that the GST collectible was $5,822.68; he was entitled to Input Tax Credits (“ITCs”) of $5,822.68; and the net tax was zero. He did not file a GST return for his 2004 Reporting Period and the Minister filed a nil return on his behalf.
[5] The Appellant was reassessed for both reporting periods on March 2, 2007, July 11, 2008 and June 28, 2010. A Gross negligence penalty was assessed for the 2003 Reporting Period in the March 2, 2007 reassessment and it was maintained in the subsequent reassessments. The Appellant objected to all three reassessments and the reassessment dated June 28, 2010 was confirmed so that the final net tax assessed was as follows:
|
2003
|
$6,697.97
|
$1,422.45
|
$5,275.52
|
|
2004
|
10,414.16
|
1,290.75
|
9,123.41
|
The gross negligence penalty which was assessed against the Appellant for the 2003 Reporting Period was maintained.
The Tax Court dismissed the appeal and sustained the gross negligence penalty for the 2003 reporting period.
Decision: The key to this decision was that the Court concluded that Mr. Lamoureux had fabricated evidence of his automobile expenses:
[21] For the 2003 Reporting Period, the Appellant reported that his GST collectible was $5,822.68 whereas the actual GST collectible was $6,697.97 – an increase of $875.29 or 15%. He reported that he was entitled to claim ITCs of $5,822.68 whereas the amount of ITCs was only $1,422.45. He over-claimed the amount of ITCs he was entitled to receive by 309%. He reported that the net tax which he had to pay was nil but it was actually $5,275.52.
[22] The discrepancy between the ITCs claimed and those which were assessed is substantial. This is also true with respect to the difference between the net tax reported and the net tax which the Appellant is required to pay. The magnitude of these inaccuracies coupled with the fact that the only documentary evidence he offered to justify some of the ITCs was a fabricated document (exhibit A7) has led me to conclude that the Appellant knowingly filed an inaccurate return or at the very least, he was totally indifferent to the accuracy of his return and this amounted to gross negligence. It is my view that a gross negligence penalty was properly imposed for the 2003 Reporting Period.
As might be expected the appeal was dismissed.