http://decisions.fct-cf.gc.ca/site/fc-cf/decisions/en/item/62946/index.do 
Suissa et al. v. Canada (August 23, 2013)[1] involved six non-resident family members who owned and disposed of four properties, three in 2007 and one in 2009. They failed in each case to file notices with the Minister as required by subsection 116(3) of the Income Tax Act and the Minister imposed penalties and interest. The taxpayers applied for relief from the penalties and interest and that relief was denied. They appealed to the Federal Court for judicial review of that decision:
Facts
[4] The basic facts of this case are not in dispute. Four properties located on the Island of Montréal were registered in the name of Yale Towers Inc., an entity incorporated in Canada. The applicants concede that David Suissa was responsible on behalf of the family for ensuring compliance with Canadian tax requirements.
[5] Three of the four properties were sold in 2007. The fourth property was sold in 2009. All four were sold at a loss.
[6] Section 116 of the
Income Tax Act, RSC 1985, c 1 (5th Supp) (ITA) provides that, on the disposition of certain property by non-residents, the Minister of National Revenue may be notified before the disposition and must be notified after the disposition. The applicants do not deny that they have run afoul of the provision. They take issue though with the penalties that were imposed in each individual file.
[7] The failure to notify the Minister resulted in penalties being imposed in accordance with subsection 162(7) of the ITA. The applicants, in each of these cases, were assessed three penalties of $2500 in respect of the properties disposed of in 2007 and of $2500 for the disposition of the property in 2009.
[8] The applicants sought to avail themselves of the relief made available by subsection 220(3.1) of the ITA. On October 7, 2011, the remedy was denied. Upon reconsideration, the same decision was made on July 10, 2012; the decision was taken that reconsideration was not warranted. This is the decision the applicants wish to see overturned on judicial review.
CRA’s position was clear. The taxpayers had not established a basis for relief:
[9] The request made on May 3, 2011 to cancel the penalty and interest was denied on October 7, 2011. The reason given was that it did not qualify under guidelines found in Circular IC07-1, Taxpayer Relief Provisions, for cancellations of interest and penalties. A more fulsome reply came from André St-Amand, the Assistant Director of the Audit Division in Montréal, on July 10, 2012.
[10] The reply notes that the relief is available where, through no fault of their own, taxpayers find themselves in extraordinary circumstances, or the penalty or interest is due mainly to the actions of CRA. However, the reply stresses that, in a system of self-assessment as the one applicable in Canada, the taxpayer is responsible for filing returns that are true, correct and complete. As a result, CRA considers there are no extraordinary circumstances and that neither errors nor delays on the part of CRA would justify granting the relief sought. In the words of Mr. St-Amand, “(A) taxpayer is considered to be responsible for errors made by third parties acting on their behalf for income tax purposes”.
The taxpayer’s argument in the Federal Court was equally clear:
[12] The applicants raise three issues:
(a) Did the CRA err by misapprehending the scope of its discretion authorized by subsection 220(3.1) of the ITA?
(b) Was the decision of the CRA reasonable?
(c) Did the CRA fail to respect the rules of natural justice by rendering a decision without giving the chance to the applicant to respond and provide more explanations as to the reasons for the refusal of the request for relief of penalties and interest?
[13] Basically, the applicants claim that the decision-maker unduly fettered his discretion in the application of subsection 220(3.1). …
The court concluded that the applicants had not made out a case that the Minister’s decision was unreasonable. Nevertheless in view of the comparative harshness of the penalties (the properties were in fact sold at a loss) the court recommended that the Minister consider a remission order or some other form of relief:
[42] As I have tried to explain in these reasons, the decision-maker made six different decisions which, in view of the full record before the Court and that was in support of the decisions (not ex post facto), were reasonable in each individual case, and that considered all of the circumstances, including of course ensuring that the law is enforced, thus not fettering the discretion that exists at law. In other words, I am satisfied that, as a matter of law, the decision-maker considered the matter without fettering the discretion in each individual case and that, in each case, the decision was reasonable. The issue is not so much individual cases as the accumulation of the six decisions on one family.
[43] There are six individual decisions before the Court, each of which is reasonable on its own terms. The penalties in each decision are provided by law: no relief is afforded. The accumulation of penalties in one single family is not a matter that is before this Court. It is rather the six individual decisions that are before the Court.
[44] I find myself in general agreement with the tenor of the comments made by Justice Jorré of the Tax Court of Canada, in Lipson v Canada, 2012 TCC 20 at paras 35 to 42, [2012] TCJ No 13. Although these paragraphs are in the nature of observations they make the point that “(S)uch penalties seem unduly higher in the circumstances know to me and it is hard to imagine how such high penalties enhance compliance with the Act” (para 37).
[45] But there remains the fact that penalties are imposed on each of the six members of one single family who evidently did not have a say in the matter. And all of this because they have an interest in the properties sold, at a loss. Despite the conclusion reached as a matter of law in each of the six applications for judicial review taken individually, I would urge the respondent to consider providing some relief, through remission or otherwise, given the particular circumstances of this case. It would seem excessive to impose penalties, which although reasonable on an individualized basis, end up penalising unduly, in my view, a family by operation of law. There exist mechanisms in our law to allow for a more perspicacious enforcement of penalties. The circumstances of this case may command themselves to the use of those tools.
[1] 2013 FC 897.