Bolduc v. The Queen (October 10, 2017 – 2017 TCC 203, D’Auray J.).
Précis: The taxpayer was employed as a production team leader at Toyota. In 2008 he switched to a new firm of accountants, Solutions 21, on the recommendation of his wife’s aunt. In filing his 2009 tax return he claimed, on the advice of Solutions 21, a business loss of roughly $325,000 part of which was used in 2009 and the balance of which was used to claim refunds for 2006, 2007 and 2008. CRA rejected the loss claim and imposed a gross negligence penalty of roughly $42,000 for the taxpayer’s 2009 taxation year. He appealed to the Tax Court which allowed his appeal, with costs.
Decision: Essentially the Court concluded that the taxpayer might have been naïve but that his conduct did to reach the level of culpability or willful blindness necessary for the imposition of a gross negligence penalty:
 The appellant was deceived by organized and sophisticated tax schemers. Solutions 21 had professional offices, a website, advertised an affiliation with TD Bank and ran seminars explaining their products.
 Solutions 21 did not approach the appellant, but rather they were recommended to him by trusted family members. These family members had successfully used Solutions 21 for two years prior to the appellant getting involved.
 Solutions 21’s programs offered tax advantages, but in this case the appellant did not blindly accept these advantages. The appellant asked questions and sought to understand the programs he was participating in.
 It cannot be said that the appellant turned a blind eye to the amounts claimed in his tax return. The appellant went over his return with Solutions 21 page by page and specifically asked questions about the business loss claimed. Solutions 21 answered all the questions asked by the appellant.
 The appellant believed their explanations and signed his tax return. Solutions 21 promoted a program that was allegedly offered by the government of Canada and the CRA, whereby young families could apply and if they qualified could benefit from a tax break for a four-year period. Further, under this program the benefit was a loan and would need to be repaid after four years. The program offered and the explanations provided by Solutions 21 were not incomprehensible. Solutions 21 did not promote an obscure scheme that involved a separate existence for an individual and their social insurance number.
 The appellant’s behavior in this case does not meet the standard of wilful blindness and does not otherwise fall under conduct that occurred in circumstances that amount to gross negligence. The appellant’s conduct does not involve a degree of negligence tantamount to intentional acting or indifference as to whether the law is complied with or not. The appellant made a mistake by believing Solutions 21’s explanations but was not turning a blind eye in suspicious circumstances. It may be said that the appellant was naive, but in my view, his conduct, in light of what Solutions 21 told him, was not so reprehensible or unreasonable to be considered grossly negligent.
 Overall, the appellant may have been naive by participating in the programs offered by Solutions 21. However, his conduct does not meet the higher standard of gross negligence and therefore does not warrant the imposition of subsection 163(2) penalties.
Accordingly his appeal was allowed, with costs.
Comment: This is one of a very few cases where a taxpayer has successfully managed to resist the imposition of gross negligence penalties when claiming fabricated business losses. It will be interesting to see whether the decision is appealed and, if so, what the Federal Court of Appeal will make of it.