Bédard v. R. - TCC: Mixed result in opening statute-barred years in an RRSP scam

Bédard v. R. - TCC:  Mixed result in opening statute-barred years in an RRSP scam

http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/169124/index.do#

Bédard v. The Queen (August 4, 2016 – 2016 TCC 179, Boyle J.).

Précis:   The six appellants in this decision were all the victims of a fraudster who was subsequently sentenced to prison for tax evasion.  The subject matter of the fraud was an RRSP strip which resulted in amounts being included in the income of the appellants.  The only questions before the Court was whether, on the facts, the Crown could open up the appellants’ 2001 taxation years by means of assessments issued in 2009, 4 years after the expiration of the normal reassessment period.  That in turn depended upon whether the Crown could establish negligence or carelessness on the part of the individual appellants.  After an extensive review of the facts the Court issued a somewhat Solomonic decision dismissing half of the appeals and allowing the balance.

Decision:   This case turned entirely upon the facts of the individual taxpayers but as Justice Boyle points out, it evidences a wider problem in the system:

[45]        As a final observation, I wish to point out that it is unfortunate for tax authorities, as well as for numerous Canadians, that such schemes designed to defraud or cheat tax authorities are set up regularly by creative yet unscrupulous swindlers and scam artists. In the case of RRSPs and other registered plans subject to exhaustive regulations, it seems somewhat surprising that more rigorous administrative controls are not implemented to protect the tax system from situations such as this one, and to protect Canadians themselves, especially since all Canadians can manage their RRSPs themselves if they want. The notion of qualified investments seems to exist, at least in part, precisely for that reason—to verify compliance with these requirements. With respect, I emphasize that there seems to be a systemic problem that must be resolved, otherwise the tax authorities will continue to lose money at the hands of swindlers, money that will never be recovered in full from them or from third parties. All Canadians suffer the consequences.

It is interesting to note that the always gallant Justice Boyle allowed the appeals of the three lady appellants.