Tremblay v. R. – FCt: Court Refuses to Quash Penalties on Judicial Review

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Tremblay v. Canada (Attorney General)[1] (October 17, 2013) was an application for judicial review of the Minister’s refusal to cancel penalties for late filing of tax returns for 1998 and 1999:

[2]               The applicant is a businessman who has been working in the field of construction for 50 years.

[3]               He made a first request for relief to cancel the penalties and interest for the taxation years of 1998 and 1999, in which he described his precarious financial situation (Respondent’s Record, Affidavit of Diane Michaud, Exhibit 1, at pp 6-8).

[4]               In a decision rendered on April 19, 2011, the CRA’s Team Co-ordinator, Revenue Collections, granted the cancellation of interest for the taxation years of 1998 and 1999, but refused the cancellation of penalties (Respondent’s Record, Decision of April 19, 2011, at pp 10-12).

[5]               On May 20, 2011, the applicant made a second request for relief relating to the taxation years of 1998 and 1999 to obtain the cancellation of penalties (Respondent’s Record, Affidavit of Diane Michaud, Exhibit 3, at pp 14-15).

[6]               On June 7, 2012, the minister’s delegate rejected the applicant’s second request for relief and refused to cancel the penalties (Respondent’s Record, Decision of June 7, 2012, at pp 17-20). The applicant acknowledges that he already had the interest cancelled but [translation] “now requests that the Federal Court grant the cancellation of penalties …” (Applicant’s Record, Applicant’s Memorandum of Fact and Law, at page 2).

[7]               The decision under judicial review before the Court is the decision of June 7, 2012, by the minister’s delegate.

The court found that the applicant was the author of much of his own difficulties as, for example, the late filing in 1998:

[11]           The applicant finds that the delays caused by the conflict with his accountant justify the late filing of its returns and that it was not reasonable to uphold the penalties. In the facts, the applicant relied on an error committed by a third party, in this case his accountant, as a situation beyond his control or exceptional circumstances explaining his delay. The Court cannot accept this argument for the following reasons.

[12]           The evidence does not show that the applicant’s accountant was negligent or incompetent or that he engaged in misconduct. The applicant’s filing with the Ordre des comptables en management accrédités du Québec was for a mediation relating to fees (Tribunal Record, Letter from Gilles Cossette, trustee of the Ordre des comptables en management accrédités du Québec, to Michel Tremblay, October 18, 2000, tab 42) and no misconduct by the accountant was brought to the attention of the minister’s delegate or this Court. The evidence shows that the applicant, in financial difficulty, was not able to pay the fees due to the accountant, who then kept the uncompleted financial statements. The Court can only note that the evidence submitted by the applicant shows that the accountant hired to complete the financial statements was hired only for the year 1998, although the year 1999 is also at issue in this matter (Tribunal Record, Letter from Jacques Doucet to Michel Tremblay, May 31, 1999, tab 41).

Also, the Minister was entitled to take into account a long track record of non-compliance:

[15]           Also, the Court noted the applicant’s numerous late returns as well as his repeated delays to pay the amounts due to the CRA between 1993 and 2009. The Court noted that, among the factors used to arrive at its decision, the minister’s delegate may consider whether the taxpayer has a history of compliance with tax obligations (Respondent’s Record, Income Tax Information Circular No IC07-1, at para 33, p. 61).

[16]           The guidelines specify that an applicant’s difficult financial situation does not justify the cancellation of penalties except in extraordinary circumstances, such as natural disasters or serious illness or when the financial situation of a company is such that the enforcement of penalties would jeopardize the survival and welfare of the community (Respondent’s Record, Income Tax Information Circular No IC07-1, at para 23-27 and 33, pp 60-61). None of these extraordinary circumstances were established.

[17]           While the Court finds the applicant’s situation unfortunate, it did not discern any error in the exercise of the discretion of the minister’s delegate. He conducted a reasonable assessment of the facts and the evidence submitted before him and applied the relevant provisions. The decision of the minister’s delegate is clear and falls within the range of possible, acceptable outcomes justified by the facts and the law. Therefore, the Court’s intervention is not warranted.

Accordingly the court dismissed the application with costs.

[1] 2013 FC 1049.