http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/127817/index.do
Robichaud v. The Queen (January 22, 2016 – 2016 TCC 19, Rowe D.J.).
Précis: Ms. Robichaud claimed a business loss of $354,351.72 in 2008 which she applied to eliminate her taxable income in 2008 and she carried the balance back to 2005, 2006 and 2007. The Minister denied the loss claims and imposed a gross negligence penalty of $46,698.91 in her 2008 taxation year. Mrs. Robichaud had not carried on any business activity in 2008. The only issue in this appeal was the imposition of the penalty.
The Tax Court found that Ms. Robichaud was willfully blind to the false loss claims and dismissed her appeal with costs.
Decision: This is one of a number of reported cases of schemes involving fictitious loss claims. The Court dealt with this appeal relatively succinctly:
[39] The facts in the within appeal are not like those where material has been inserted in a return without the taxpayer’s knowledge or consent. There is no suggestion that the lack of education or intelligence or language skills played any role in the willingness of Robichaud to accept the radical new approach to tax filing promoted by Rasool. This is not the case where there was an omission by a tax preparer that was not noticed by the taxpayer prior to signing the return. It is apparent that Robichaud made a statement that was false, namely that she was engaged in business in 2008 and in those earlier years that were subject of her request for a carryback. Documents in support of those claimed business losses were false as she had not carried on any activity as an agent nor had she engaged one as a principal. Her income was from employment. Did she know that the statement of income was false or was she wilfully blind in the making of, assenting to or acquiescing in the making of those false statements? The evidence leads me to conclude that she knew the statements were false and did not take any steps to refrain from asserting that she had been engaged in business and as a consequence was grossly negligent as defined by subsection 163(2) and the jurisprudence pertaining thereto.
[40] Robichaud needed money and was motivated by promises of a large tax refund that was rarely – if ever – received in the past when filing returns either personally or through her tax preparer, yet she accepted without question the advice provided by Rasool to use a new and unusual method of filing without understanding or attempting to understand the basis thereof and – most importantly – did not care because of an all-absorbing desire to obtain that refund. This intentional and egregious suspension of rational thinking constitutes wilful blindness as to the falsity of the statements in her return.
[41] The respondent has discharged the requisite onus and the penalty imposed by the Minister is justified in respect of the claimed business loss for the 2008 taxation year.
As a result the appeal was dismissed with costs.