Date: 20040818
Docket: T-2121-02
Citation: 2004 FC 1143
Calgary Alberta, August 18, 2004.
Present: The Honourable Madam Justice Danièle Tremblay-Lamer
BETWEEN:
BRUCE D. DOWNEY
Applicant
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an application for judicial review of a decision by the Minister of National Revenue (the "Minister") denying the applicant's request under the Fairness Provision, subsection 220(3.1) of the Income Tax Act, R.S.C. 1985, c.1 (5th supp.) ( « the ITA » ), for the cancellation or waiver of interest and penalties accrued.
[2] The applicant reported taxable income in the 1985 to 1989 taxation years as well as in the pre-1985 taxation years, but failed to pay income tax assessed and owing for those years. The following are the amounts of income tax owing by the applicant:
| Taxation Year Pre-1985 1985 1986 1987 1988 1989 |
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Income Tax Assessed and Owing $6,029.56 $10,416.53 $2,471.61 $769.85 $1,076.93 $432.77 |
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[3] As a result of the applicant's failure to pay the income tax owing, interest accrued on these amounts. The applicant was also charged a late filing penalty for the 1989 taxation year.
[4] On February 12, 2001, the applicant submitted a fairness request to the Canada Customs and Revenue Agency ("CCRA") seeking relief from penalties and interest on the basis that the applicant's unpaid tax balance was incurred as a result of an error on the part of the CCRA. The CCRA had denied the applicant's employer, Dicore Ltd. ("Dicore"), investment tax credits and refundable investment tax credits for research and development for the 1982 and 1987 taxation years. The applicant stated that as a result, Dicore was unable to attract investors and raise funds to carry out its projects. It was also unable to pay its employees. The applicant claimed that he was unable to pay his outstanding income tax balance because he had not been paid in full by Dicore. The applicant indicated that he would pay his outstanding balance if the CCRA waived the interest.
[5] On July 2, 2002, the Minister informed the applicant that he did not meet the criteria necessary for the relief sought.
[6] On August 15, 2002, the applicant filed another fairness request to the CCRA. On November 14, 2002, the Minister advised the applicant of its decision to deny the fairness request.
[7] The applicant submits that it was because of an error on the part of the CCRA that Dicore was unable to pay him his full salary which rendered him unable to pay his income tax. He submits that the CCRA's error created a human-made disaster for Dicore and himself. Moreover, according to the applicant, the guidelines set out in the "Guidelines for the Cancellation and Waiver of Interests and Penalties", Information Circular 92-2 (the "Guidelines"), and more specifically subsections 10(a), (b) and (d), should not be considered as reasons for rejecting his request since the CCRA's actions directly affected his ability to pay the amounts owing.
[8] Subsection 220(3.1) of the ITA reads as follows:
| 220(3.1) The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to 152(5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest. |
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(3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable ou une société de personnes en application de la présente loi, ou l'annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation. |
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[9] Section 10 of the Guidelines reads:
| 10. The following factors will be considered when determining whether or not the Department will cancel or waive interest or penalties:
a)whether or not the taxpayer or employer has a history of compliance with tax obligations;
b)whether or not the taxpayer or employer has knowingly allowed a balance to exist upon which arrears interest has accrued;
c)whether or not the taxpayer or employer has exercised a reasonable amount of care and has not yet been negligent or careless in conducting their affairs under the self-assessment system;
d)whether or not the taxpayer or employer has acted quickly to remedy any delay or omission. |
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10.Le Ministère tiendra compte des points suivants dans l'étude des demandes d'annulation des intérêts ou des pénalités ou de renonciation à ceux-ci :
a) si le contribuable ou l'employeur a respecté, par le passé, ses obligations fiscales;
b) si le contribuable ou l'employeur a, en connaissance de cause, laissé subsister un solde en souffrance qui a engendré des intérêts sur arriérés;
c) si le contribuable ou l'employeur a fait des efforts raisonnables et s'il n'a pas fait preuve de négligence ni d'imprudence dans la conduite de ses affaires en vertu du régime d'autocotisation;
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[10] As I stated in Salomon v. Canada (Deputy Attorney General), [2002] F.C.J. No. 1531, when reviewing the discretionary decision of the Minister made pursuant to subsection 220(3.1) of the ITA, a considerable degree of deference is required, and the standard of revision is that of patent unreasonableness. The reviewing Court may only intervene and set aside the Minister's discretionary decision if it was made in bad faith, if the decision-maker clearly ignored some relevant facts or considered irrelevant ones, or if the decision is contrary to law.
[11] Having reviewed the materials, it is my opinion that the Minister's decision must stand. In its decision, the Minister cited a number of factors that were considered and that weighed in against the applicant. The applicant had an outstanding balance prior to 1985 which he never attempted to settle. The applicant reported business income for the years 1986 to 1989 but no tax deductions had been made. The applicant had employment income for 1985 from which no tax deductions had been made. The Minister also considered the fact that the applicant had left Canada with a tax balance owing and without providing a proper forwarding address.
[12] In light of the above, I am satisfied that the Minister fairly exercised the discretion granted by subsection 220(3.1) of the ITA and that the decision is not patently unreasonable.
[13] For these reasons, the application for judicial review is dismissed.
ORDER
THIS COURT ORDERS that the application for judicial review be dismissed.
"Danièle Tremblay-Lamer"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2121-02
STYLE OF CAUSE: Bruce D. Downey v. Attorney General
of Canada
PLACE OF HEARING: CALGARY, Alberta
DATE OF HEARING: August 17, 2004
REASONS FOR ORDER AND ORDER : TREMBLAY-LAMER J.
DATED: August 18, 2004
APPEARANCES:
Mr. Bruce D. Downey FOR HIMSELF
(APPLICANT)
Ms. Carla Lamash FOR RESPONDENT
SOLICITORS OF RECORD:
Mr. Bruce D. Downey FOR HIMSELF
Calgary, Alberta (APPLICANT)
Mr. Morris Rosenberg
Deputy Attorney General of Canada FOR RESPONDENT