http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/144408/index.do
Russell v. The Queen (May 18, 2016 – 2016 TCC 122, V. Miller J.).
Précis: Mr. Russell was a “non-taxer” who claimed that his income as a naturopathic doctor was not subject to tax based on a variety of gibberish arguments. His wife filed a similar appeal. Both notices of appeal were struck by the Tax Court without leave to amend. Both Mr. Russell and his wife and the Crown were given time to make written submissions as to costs.
Decision: The nub of Mr. Russell’s arguments was as follows:
[18] A brief summary of the “Reasons the Appellant Intends to Rely On” with respect to the ITA are as follows:
a) Her Majesty is the (legal) personification of all Canadians. Her Majesty has a dual individual capacity – as a natural person and a corporation sole. Therefore, all Canadians can also have dual individual capacity.
b) The Appellant quoted from various decisions and various sections of the ITA; gave his interpretation of the quotes and the sections; and, concluded that, while he performed services under the Contract, he was not “clothed with the powers of an officer” as that term is defined in section 248 of the ITA. Therefore he was without legal capacity to convert his income from any source of income into profit.
c) The income he earned pursuant to the Contract is not income from an office, employment, business or property because he did not claim any expenses. Therefore his income is deemed to be zero by paragraph 3(f) of the ITA.
d) He never filled an “office” when he earned income under the Contract and he was not charged for making omissions or false statements on a return under paragraph 239(1)(a) or with tax evasion under paragraph 239(1)(d) of the ITA.
e) He filed all income by T1 (taxable income for the “office” as “officer”) and also by letter (exempt income received not as “officer” under the Contract).
f) The income received by him under the Contract is exempt income and deemed to be zero so that it prevents Her Majesty from doing theft by conversion. That is, it prevents Her Majesty and her agents from converting his private property into “public money” within the meaning of section 2 of the Financial Administration Act.
g) With respect to the penalties under subsection 163(2), it is the Appellant’s position that an individual who deals with “public money” as an officer owes a fiduciary duty to the public to report all “public money” earned from such “office”. Since a fiduciary duty demands a high standard of performance, one cannot be forced to be such an “officer” and he has declined to receive the income he earned under the Contract as “public money”. He argued that the CRA agreed with him that he did not make an omission or false statement because he was not charged under paragraph 239(1)(a) of the ITA.
The Court’s reaction was predicable:
[26] In the Amended Notice of Appeal, the Appellant has not disputed the quantum of the reassessments. He has not raised any potential discrepancy as an issue in this appeal. His only argument is that he has elected not to be taxed on the amount he earned for his services as Manager for the Corporation. Therefore, I have concluded that the Appellant did not appeal the additional amount of the assessment for the 2012 year.
[27] The Appellant has been assessed gross negligence penalties and pursuant to subsection 163(3) of the ITA, “the burden of establishing the facts justifying the assessment of the penalties is on the Minister”. If this appeal proceeded to a hearing, the Respondent would have to prove (1) that the Appellant made a false statement or omission in his 2010, 2011 and 2012 income tax returns, and (2) that the statement or omission was either made knowingly, or under circumstances amounting to gross negligence.
[28] It is my view that the facts necessary to prove that the penalties were properly imposed were admitted in the Amended Notice of Appeal. The Appellant admitted in the Amended Notice of Appeal that he failed to include income of $108,000, $107,000 and $95,000 in his 2010, 2011 and 2012 income tax returns. Although he gave a “pseudolegal” argument as to why he did not report the income he earned under the Contract in his income tax returns, the Appellant also admitted that he knowingly omitted this income. Unlike the case of Ian E Brown v The Queen, 2014 FCA 301, the material facts necessary to meet the Minister’s burden were admitted in the Amended Notice of Appeal.
[29] I have carefully considered the Amended Notice of Appeal, the oral and written submissions made by the Appellant and counsel for the Respondent and I have concluded that the Amended Notice of Appeal should be struck. The Appellant has not raised a cause of action. It is plain and obvious that the position taken by the Appellant in his Amended Notice of Appeal has no chance of success and it is an abuse of this court’s process. I order that the Amended Notice of Appeal be struck in its entirety and the appeal is dismissed.
[30] Counsel for the Respondent requested that he be given the opportunity to address costs. He must serve and file his written representations with respect to costs by June 3, 2016. The Appellant must submit his written response regarding costs by June 17, 2016.