http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/169094/index.do
Price v. Canada (National Revenue) (August 9, 2016 – 2016 FC 906, Russell J.).
Précis: During the period from 2005 to 2013 the applicant failed to file personal income tax returns and GST/HST returns. In 2013 he applied for taxpayer relief from interest and penalties for the entire period from 2005 to 2013. The Minister granted limited relief at the first review level; at the second level review that relief was expanded to some degree. He applied for judicial review and led evidence of the history of personal tragedies that he alleged caused him to fail to file returns for the period in question. While the Court expressed sympathy for his position it concluded that the evidence was “insufficient in terms of the support it lends to the conclusion that the Applicant could not meet his tax obligations” [para. [37]]. The Minister’s decision to grant only limited relief was not unreasonable; the application was therefore dismissed with costs.
Decision: Mr. Price had a very tragic period of his life between 2005 and 2013 and he failed to file personal income tax returns and GST/HST returns during the entire period. He applied for taxpayer relief with only limited success:
[4] By way of letter dated December 12, 2013, the Applicant applied for relief under s 220(3.1) of the Income Tax Act, RSC, 1985, c1 (5th Supp) [ITA] and s 281.1 the Excise Tax Act, RSC, 1985, c E-15 [ETA] from interest and penalties in respect of his failure to comply with obligations for the period from 2005 to 2013 on the basis of a series of extraordinary events [First level request]. These included several personal health issues and family tragedies:
• 2005: Mother-in-law diagnosed with breast cancer;
• 2005: Wife has appendectomy and is hospitalized for two months;
• 2006: Father is diagnosed with Parkinson’s disease;
• 2007: Father is admitted to geriatric mental health facility;
• 2008: Father is transferred to a restricted long-term care facility;
• January 2009: Father-in-law suffers renal failure and spends five weeks in hospital;
• April 27, 2009: 14-year old son goes missing and is later admitted to pediatric psychiatric ward after a suicide note was found in the Applicant’s home by police;
• October 2009: Father dies of Parkinson’s disease;
• 2010: Mother-in-law is diagnosed with lung cancer and shows signs of dementia;
• 2011: Applicant has high cholesterol and irregular heartbeat;
• 2012: Applicant undergoes double hernia operation;
• April 2013: Sister-in-law, and business partner, dies of terminal cancer.
[5] The Applicant was granted partial relief by the Canada Revenue Agency [CRA] in respect of events (namely, his son’s troubles) that could reasonably have impacted his ability to comply with his tax obligations. Specifically, the penalty in respect of the return for the period ending March 31, 2009 that was due on April 30, 2009 was waived by way of a decision letter dated January 30, 2015.
[6] On May 20, 2015, the Applicant made his second level review application [Second level request] for the CRA to cancel all interest and penalties assessed during 2005 to 2013. In addition to the circumstances included in his First level request, the Applicant claimed to suffer from additional extraordinary circumstances that prevented him from complying with his tax obligations:
• 2014: Son is hospitalized and undergoes counselling at an adult psychiatric mental health facility;
• January 2015: Son attempts suicide, resulting in serious physical injuries for which he is still recovering.
The relief granted on the second level review more extensive but still very limited:
[7] Jennifer Noftall, a Taxpayer Services Agent, was assigned by the CRA to review the Second level request and ultimately recommended granting the Applicant additional relief as a result of the deaths of his sister-in-law and mother-in-law in April and May 2013, respectively. Ms. Noftall’s recommendations were adopted by the CRA and the Applicant was advised by letter dated October 27, 2015 that the late filing penalty in respect of his return of income for the 2012 taxation year as well as the failure to file penalties and arrears interest in respect of returns for the periods ending June 30, 2013 and September 30, 2013, had been waived.
[8] However, relief was not granted for:
• Interest assessed on the Applicant’s personal account during the years 2005-2013
• Interest assessed on the Applicant’s GST/HST account during the periods ending March 31, 2005 to December 31, 2013
• Penalty relief for the penalties assessed on the Applicant’s GST/HST account for the periods ending March 31, 2005 to December 31, 2008, the period ending June 30, 2009 to March 31, 2013 and for the period ending December 31, 2013
The relief granted by the Minister was based on the following analysis:
[27] The CRA accepted the Applicant’s December 12, 2013 request for relief in part. It accepted that the problems experienced by the Applicant’s son in April 2009, could reasonably have prevented the Applicant from filing his GST/HST return for the period ending March 31, 2009, which was due on April 30, 2009.
[28] The CRA also accepted in part the Applicant’s May 20, 2015 Second level request which was based upon additional information regarding extraordinary circumstances in 2013. Ms. Noftall recommended additional relief based upon the death of the Applicant’s sister-in-law in April 2013 and his mother-in-law in May 2013. Ms. Noftall accepted that these deaths could reasonably have impacted the Applicant’s ability to file his returns due on June 15, 2013.
[29] The rest of the Applicant’s request for relief was refused on the basis that events relied upon by the Applicant did not allow the CRA to reasonably conclude that they may have impacted his ability to comply with his tax obligations.
The Court rejected the argument that the Minister failed to give appropriate weight to the relevant documentation submitted by Mr. Price:
[37] As conceded by counsel at the hearing before me, the Applicant is really arguing, not that documentation was overlooked, but that the documentation he provided was sufficient to support his case for relief and it was unreasonable of the CRA not to accept it as such. A review of the documentation in question reveals that it refers to extraordinary circumstances but there is no obvious or reasonable basis that those circumstances prevented him from fulfilling his tax obligations. For example, as documentation in support of his First level request for interest and penalty relief, the Applicant submitted a Brampton Guardian article on his son who had gone missing, dated April 28, 2009, as well as a hospital visit record to corroborate his son’s disappearance and subsequent hospitalization. He also submitted hospital visit records in support of his wife’s appendectomy in 2005 and his own surgery for a double hernia in 2011. This documentation, while revealing in terms of the time he and members of his immediate family spent in the hospital over a six year span, is insufficient in terms of the support it lends to the conclusion that the Applicant could not meet his tax obligations. These documents simply chronicle events and do not speak to a level of mental or emotional distress in the Applicant.
Counsel for Mr. Price also argued that the decision of the Minister was internally inconsistent:
[38] In his written submissions, the Applicant asserted inconsistencies but withdrew some of them at the hearing and conceded he had been mistaken. However, he continues to maintain the following inconsistencies which, he says, render the Decision unreasonable:
a) On the GST/HST side, he says that penalty relief was granted in 2009 but not interest relief, while in 2013 both penalty and interest relief were granted;
b) The CRA granted penalty relief for late filing on his personal account for 2012 and for GST/HST reporting periods ending June 30 and September 30, 2013, but no interest relief was provided in 2012 or 2013 on his personal account.
The Court also rejected this argument:
[40] The reason why the penalty but not interest was waived on the March 2009 GST/HST return in the January 30, 2015 letter from the CRA to Philippe DioGuardi, the Applicant’s representative at the time, is:
As amounts withheld under the “ETA” are trust funds, the laws governing the handling of these funds are necessarily strict. As such, the goods and services taxes you collect are not to be used to fund the day to day operations of the business.
I have carefully considered the facts and specific circumstances of the case and have concluded that partial relief will be approved in this situation. Based on the documentation provided regarding [redacted], the failure to file penalty charged to your client’s GST account for the period ending March 31, 2009, will be cancelled, as the return was due during this timeframe.
However, the documentation provided does not warrant cancellation of the remaining penalties and interest charged to both accounts.
[41] The Applicant has not established that these distinctions do not reasonably justify the different treatment he refers to. These were wholly different events, each with its own factual issues and timeline. The Applicant has not shown me a reason as to why they should have been treated the same.
Finally the Court rejected the argument that the Minister failed to take into account the totality of the circumstances of Mr. Price during the period in question:
[44] In the Second level request, the Applicant’s representative made the specific allegation that the Applicant’s history of non-compliance had been held to outweigh the circumstances and the documentation provided. The Second level request analysis lists and analyses the factors that the Applicant felt ought to result in a positive decision. It was those factors that resulted in partial approval of the Applicant’s Second level request. The Applicant had listed extraordinary circumstances beyond his control, but the problem was that the Applicant had failed to respond to the CRA’s request for further documentation, so that the Decision had to be made “based on the available information and supporting documentation.” Given the limited information and documentation provided by the Applicant, it cannot be said that extraordinary circumstances were overlooked. And the CRA obviously took those extraordinary circumstances (the problems with the Applicant’s son and the two close deaths) into account in granting partial relief.
[45] If non-compliance outweighed everything else, then the Applicant would not have received the partial relief he did receive.
As a consequence the application was dismissed with costs.