Muir v. R. - FC: Taxpayer bid for judicial review of taxpayer relief application dismissed

Muir v. R. - FC:  Taxpayer bid for judicial review of taxpayer relief application dismissed

http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/143166/index.do

Muir v. Canada (National Revenue) (March 31, 2016 – 2016 FC 362, Annis J.).

Précis:   Mr. Muir filed his 2005 tax return in 2011 and was assessed penalties and interest.  His application to CRA for taxpayer relief was refused and he applied to the Federal Court for judicial review.  The taxpayer’s claims that CRA was partially responsible for the delay in processing the return were rejected.  Similarly the Court concluded that his argument based on financial hardship was without merit.  The application was dismissed with costs of $500 awarded to the Crown.

Decision:    The taxpayer claimed that he filed his 2005 return twice prior to 2011.  The Court rejected this evidence:

[4]               With respect to the first issue concerning the alleged processing errors and mistakes in assessing the Applicant’s 2005 income tax return, the record does not support the factual allegations advanced by the Applicant that form the basis of this submission.

[5]               The Applicant alleges that he first filed his 2005 return with his 2004 return in 2006. There is no evidence on the record to support this claim, and indeed the subsequent evidence indicates that he acknowledged that he had not filed his 2005 return as claimed.

[6]               The Applicant similarly submitted that he filed his 2005 return in late 2006/2007, after the CRA notified him on three occasions that his 2005 return was outstanding. Again, the record does not support this allegation, and indeed, the Applicant acknowledges as much in his November 1, 2012 submissions when seeking taxpayer relief. I quote from the submission as follows:

When Mr. Muir examined the notification he received after both returns had ostensibly been sent to the CRA and did not see his 2005 income information included, he realized that his return for 2005 must not have been submitted. Mr. Muir proceeded to instruct his accountant, again, to file his 2005 return, providing her with information about his income in 2005.

The accountant, making an error that calls into question her ability to meet elementary professional standards, submitted the information he supplied her as a T1 adjustment to Mr. Muir’s 2004 return, not as a return for 2005.

[My emphasis.]

The Court also rejected the taxpayer’s claim that CRA had unfairly treated his claim of financial hardship:

[14]           First of all, the amount being garnished from his salary is only $720 a month. More importantly, his returns indicate that he has consistently earned over $100,000 annually, and moreover, had the ability to spend $9,124.77 on discretionary expenses during the month of August 2012, the one occasion it was requested by the CRA. The Applicant claims that such spending was not discretionary, as these amounts were used for his children’s university tuition. The Court can take judicial notice that in many Canadian families, children are expected to finance their own university education as an investment which would be recovered in the future by the benefits of the knowledge and skills acquired by a higher education.

[15]           In any event, I agree with the CRA’s interpretation that financial hardship for an individual is financial suffering or lack of what is needed for basic living requirements, such as food, clothing, shelter and reasonable nonessentials. Even if one was to expand on what constitutes financial hardship, the Officer’s decision was reasonable in rejecting the Applicant’s claim for taxpayer relief under the Act when it appears that the Applicant is quite able to repay outstanding tax arrears without unduly affecting a style of living that represents that of a relatively well-off Canadian taxpayer.

As a result the application was dismissed with costs of $500 to the Crown.