http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/144652/index.do
Whissell v. The Queen (May 30, 2016 – 2016 TCC 133, Owen J.).
Précis: Mr. Whissell was assessed for 2006, 2007, 2008, 2009 and 2010 in respect of unreported income. He was assessed penalties under subsection 163(1) for each of 2007, 2008, 2009 and 2010. The sole issue before the Tax Court was the imposition of these penalties. The Court held that he had not made out a due diligence defence. All of the appeals with the exception of 2006 were dismissed with costs. The 2006 appeal was allowed, without costs, only to the extent of recognizing a charitable donation of $150 which was conceded by the Crown.
Decision: The facts of this case were not complex:
[4] The ASF states that the Appellant filed his returns for the Taxation Years on April 5, 2011 and was initially assessed as filed by notices dated April 21, 2011. The Minister subsequently reassessed the Taxation Years by notices dated December 12, 2011, January 16, 2012, January 23, 2012, February 3, 2012 and January 30, 2012 respectively (collectively, the “Reassessments”), as follows:
1. For the 2006 taxation year, to increase the Appellant’s RRSP income by $4,871.
2. For the 2007 taxation year, to increase the Appellant’s employment income by $21,725, other pension income by $2,090 and interest income by $9,024.
3. For the 2008 taxation year, to increase the Appellant’s other pension income by $2,170 and interest income by $1,463.
4. For the 2009 taxation year, to increase the Appellant’s other pension income by $3,157 and dividend income by $131,961.
5. For the 2010 taxation year, to increase the Appellant’s other pension income by $3,052 and RRSP income by $7,025.
Penalties were imposed pursuant to subsection 163(1) in respect of each taxation year after 2006:
[6] Subsection 163(1) of the ITA states:
163. (1) Every person who
(a) fails to report an amount required to be included in computing the person’s income in a return filed under section 150 for a taxation year, and
(b) had failed to report an amount required to be so included in any return filed under section 150 for any of the three preceding taxation years
is liable to a penalty equal to 10% of the amount described in paragraph (a), except where the person is liable to a penalty under subsection (2) in respect of that amount.
[7] Subsection 163(1) of the ITA describes what is commonly referred to as a strict liability offence. A penalty under the subsection may be assessed for a taxation year of the Appellant (I will refer to this taxation year as the “penalty year”) if the Appellant has failed to report an amount required to be included in income in the return he filed for the penalty year and had failed to report an amount required to be included in income in a return that he filed for one of the three taxation years preceding the penalty year.
The only issue to be determined was the application of the penalties.
The Court found that the evidence did not disclose a due diligence defence:
[22] With respect to counsel for the Appellant’s reference to a pattern demonstrating due diligence, the only relevant pattern I can discern from the facts is that the Appellant failed to report income in every one of the returns that he filed for the Taxation Years. Without further explanation, this pattern suggests to me that the Appellant was not diligent in filing any of those returns.
The appeals, other than 2006, were all dismissed with costs. The 2006 appeal was allowed, without costs, to recognize a small concession ($150) made by the Crown:
[25] For the foregoing reasons, the appeal of the reassessments of the Appellant’s 2007, 2008, 2009 and 2010 taxation years are dismissed with costs to the Respondent. The appeal of the reassessment of the Appellant’s 2006 taxation year is allowed without costs and the reassessment is referred back to the Minister for reconsideration and reassessment on the basis that the Appellant is entitled to claim an additional amount of $150 as a charitable donation made in his 2006 taxation year.