http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/127169/index.do
Canada (National Revenue)v. Schimpf (December 7, 2015 – 2015 FC 1354, Russell J.).
Précis: The taxpayer was held in contempt of a compliance order issued by the Federal Court.
Decision: The facts of the contempt were clear cut:
[2] The Applicant, acting through the Canada Revenue Agency [CRA], is attempting to conduct an audit of the Respondent for the 2010 and 2011 taxation years.
[3] On August 8, 2013, the CRA sent the Respondent a compliance warning letter requesting information, pursuant to s 231.7 of the ITA [First Request for Information]. It was personally served on the Respondent on August 13, 2013.
[4] The Applicant sent a second compliance warning letter on October 23, 2013 [Second Request for Information]. It was personally served on the Respondent that same day.
[5] Both requests for information indicated that the information and documents requested were required within thirty days of the date of each of the requests. The information requested was as follows:
All operational records:
- Accountant’s working papers and adjusting entries for the years under audit
- General ledger or similar item showing day-by-day, the amount of business income and disbursements
- All sales invoices, sales reconciliations, quote sheets, etc.
- All vouchers to support the amounts expensed and input tax credits (ITCs) claimed
- Inventory, accounts payable, and accounts receivable records
- All purchase and sale documents for capital acquisitions and dispositions
- Business investment statements (purchase documents for the business and assets)
- All business and personal bank account statements, duplicate deposit books, cancelled cheques, and bank account reconciliations and loan documents
- All credit card statements, line of credit statements and loan documents, including the repayment schedules and the purpose of the loans
- All insurance policy documents
- List purchased business items and their values (purchased at time of business and additional items)
- Print outs of business activities from the phone app you have been using
- Till Z reports
Concerning personal records:
- List of major household personal assets (e.g. real estate, vehicles, equipment, recreational, etc.) along with the approximate costs/proceeds of disposition and years of sale or purchase
- Personal investment statements (e.g. RRSP, mutual funds, term deposits, etc.)
- All (including spouse’s) personal bank account statements/passbooks, transaction records, cancelled cheques, and bank account reconciliations
- All credit card statements, line of credit statements and loan/mortgage documents, including repayment schedules and the purpose of the loans
- All insurance policy documents
- Details of any non-taxable sources of funds received that would impact your financial situation during the audit period (e.g. inheritances, lottery winnings, etc.) pertaining to the household
- House purchase documents
[6] The Applicant obtained a Compliance Order on February 16, 2015 against the Respondent, which found that under s 231.7 of the ITA, the Respondent had failed to comply with the requests for information. The Compliance Order compelled the Respondent to provide the information forthwith and, in any event, no later than thirty days after being served with the Compliance Order.
[7] The Respondent was served with a copy of the Compliance Order on March 4, 2015 and has not yet complied with its stipulations by providing the relevant information to the CRA.
[8] On August 26, 2015, Justice Bell granted an Order pursuant to Rules 467(1) and 369 of the Federal Courts Rules, SOR/98-106 [Rules], requiring that the Respondent appear before a judge of the Federal Court to attend a contempt hearing. The Order was made in response to an ex parte motion that was brought by the Applicant. In making the Order, the Court demonstrated its satisfaction that a prima facie case that contempt has been committed exists.
[9] In addition, Justice Bell indicated that the Applicant could introduce the contents of the Court file, including any correspondence from the Registry of the Court and correspondence from the Respondent contained therein, directly and without the need for oral proof of the documents. Furthermore, the Applicant was permitted to prove personal service of the Order by way of affidavit which occurred on September 2, 2015.
Justice Russell’s order imposed both a fine, a costs award and imprisonment if the fine and costs award were not paid as well as imprisonment for failure to comply provide the information and documents sought within 30 days.
ORDER
THIS COURT ORDERS that
1. The Respondent is guilty of contempt of this Court’s Orders of February 16, 2015 and August 26, 2015, and shall pay a fine of $3,000.00 within 30 days from the date of service of this Order, and shall pay the Applicant’s legal costs in the amount of $7,000.00, together with the costs of $1,000.00 ordered on February 16, 2015 but still unpaid, within 30 days from the date of service of this Order. Failure to pay this fine and the legal costs within 30 days shall subject the Respondent to 30 days’ imprisonment.
2. The Respondent shall also provide the information and documents set out in the Court’s order dated February 16, 2015 within 30 days from the date of service of this Order, or provide the Applicant with a full explanation why the Respondent does not have this information and these documents, failing which the Respondent shall be imprisoned for 10 days, such term to run consecutive to any other term of imprisonment imposed by this Order.
3. The Respondent shall not be imprisoned for failure to pay the fine or the legal costs if within 30 days from the date of service of this Order the Respondent arranges with the Applicant for an oral examination under oath and provides evidence satisfactory to the Court that she is not able to pay the fine or the legal costs, or that she needs an extended time period in which to pay.
4. If the Applicant informs the Court by affidavit that payment of either the fine or the legal costs has not been made within 30 days from the date of service of this Order, and that the Respondent has not arranged with the Minister for an oral examination under oath with respect to her ability to pay the fine or the legal costs, the Court shall issue a warrant for the imprisonment of the Respondent for 30 days.
5. If the Applicant informs the Court by affidavit that the Respondent has not provided the information and documents set out in the Court’s Order dated February 16, 2015, within 30 days from the date of service of this Order or provided the Applicant with a full explanation why the Respondent does not have this information and these documents, then the Court shall issue a warrant for the imprisonment of the Respondent for a term of 10 days, such term to run consecutive to any other term of imprisonment imposed by this Order.