Date: 20031114
Docket: A-404-02
Citation: 2003 FCA 427
CORAM: DÉCARY J.A.
NOËL J.A.
NADON J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
JEAN-MARC SIMARD
Respondent
Hearing held at Montréal, Quebec, on November 6, 2003.
Judgment rendered at Ottawa, Ontario, on November 14, 2003.
REASONS FOR JUDGMENT BY: NOËL J.A.
CONCURRED IN BY: DÉCARY J.A.
NADON J.A.
Date: 20031114
Docket: A-404-02
Citation: 2003 FCA 427
CORAM: DÉCARY J.A.
NOËL J.A.
NADON J.A.
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
JEAN-MARC SIMARD
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1] This is an application for judicial review against a decision of the Tax Court of Canada on May 23, 2002 ([2002] 4 C.T.C. 208) reducing the penalty incurred by the respondent under subsection 163(2) of the Income Tax Act ("the Act") and reducing the interest levied on the penalty accordingly.
[2] The evidence in the Tax Court of Canada established that the respondent knowingly participated in a scheme organized by certain employees of the Canada Customs and Revenue Agency ("the Agency") which inserted false information in the Agency's computer system, the effect of which was to grant unauthorized tax credits and deductions.
[3] The respondent thus obtained tax rebates resulting from the credits for married persons and dependants and deductions for maintenance when he had never been married and had never had children.
[4] The Court acknowledged that the defendant had made false statements for each of the years in question which gave rise to the penalty mentioned in subsection 163(2) of the Act. However, it undertook to reduce the amount of the penalty to an [TRANSLATION] "appropriate" amount based on the applicant's ability to pay.
[5] In support of the application for judicial review, the applicant argued that subsection 163(2) conferred no discretion as to the amount of the penalty. Further, subsection 161(11) did not authorize the Court to strike out the interest levied on the penalties. According to the applicant, subsection 220(3.1) establishes clearly that it is the Minister of National Revenue ("the Minister") who has the power to "waive" or "cancel" interest and the only recourse against such a decision is by way of judicial review in the Federal Court (Lachance v. Minister of National Revenue, 92 TCJ 1628 (TCC); Grétillat v. Canada, 98 TCJ 1483 (TCC)).
Legislation
[6] The legislation applicable to resolution of the case at bar is the following:
False statements or omissions
|
163(2) Every person who, knowingly, or under circumstances amounting to gross negligence, has made or has participated in, assented to or acquiesced in the making of, a false statement or omission in a return, form, certificate, statement or answer (in this section referred to as a "return") filed or made in respect of a taxation year for the purposes of this Act, is liable to a penalty of the greater of $100 and 50% of the total of . . .
|
163(2) Toute personne qui, sciemment ou dans des circonstances équivalant à faute lourde, fait un faux énoncé ou une omission dans une déclaration, un formulaire, un certificat, un état ou une réponse (appelé « déclaration » au présent article) rempli, produit ou présenté, selon le cas, pour une année d'imposition pour l'application de la présente loi, ou y participe, y consent ou y acquiesce est passible d'une pénalité égale, sans être inférieure à 100 $, à 50 % du total des montants suivants : . . .
|
Interest on penalties
|
161(11) Where a taxpayer is required to pay a penalty, the taxpayer shall pay the penalty to the Receiver General together with interest thereon at the prescribed rate computed, . . .
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161(11) Tout contribuable tenu de payer une pénalité doit la verser au receveur général avec intérêts calculés au taux prescrit : . . . |
Waiver of penalty or interest
|
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 (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. |
220(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. |
Analysis and decision
[7] With all due respect for the contrary view, subsection 163(2) leaves no doubt about the amount of the penalty that must be imposed when the facts giving rise to it are present. The Tax Court of Canada based its decision on the word "liable", which in its opinion can suggest discretion, but it did not take into account the words that follow, which leave no doubt as to the amount of the penalty.
[8] This amount is set at 50% of the tax evaded, or as in the case at bar the tax credits unlawfully obtained, and is to be not less than $100. That is what both the French and the English texts state expressly and without ambiguity.
[9] Under subsection 163(2) the Minister must first determine whether the facts establish the existence of a false statement made knowingly or in circumstances amounting to gross negligence, and if they do, must apply the prescribed penalty. The Minister's decision regarding a penalty may be challenged by appeal to the Tax Court of Canada against the assessment levying it, but where the Court finds that the facts give rise to a penalty it can only confirm its application. Like the Minister, the Court has no discretion as to the amount of the penalty, nor does it have any regarding interest.
[10] It follows that the Tax Court of Canada could neither reduce the penalties nor the interest levied on those penalties.
[11] Accordingly, I would allow the application for judicial review and quash the part of the Tax Court of Canada's decision which reduced the penalties and the interest levied on those penalties. Since the respondent, who represented himself, only relied on the Tax Court of Canada's decision without filing a memorandum, I would not award any costs.
"Marc Noël"
J.A.
"I concur.
Robert Décary J.A."
"I concur.
M. Nadon J.A."
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L.
FEDERAL COURT OF APPEAL
SOLICITORS OF RECORD
DOCKET: A-404-02
JUDICIAL REVIEW OF TAX COURT OF CANADA DECISION OF MAY 23, 2002, IN CASE 2001-88(IT)I
STYLE OF CAUSE: ATTORNEY GENERAL OF CANADA
v.
JEAN-MARC SIMARD
PLACE OF HEARING: Montréal
DATE OF HEARING: November 6, 2003
REASONS FOR JUDGMENT: Noël J.A.
CONCURRED IN BY: Décary J.A.
Nadon J.A.
DATE OF REASONS: November 14, 2003
APPEARANCES:
Johanne Boudreau FOR THE APPLICANT
Anick Provencher
Jean-Marc Simard FOR THE RESPONDENT
Réjean Simard
SOLICITORS OF RECORD:
Morris Rosenberg FOR THE APPLICANT
Deputy Attorney General of Canada
Ottawa, Ontario
Jean-Marc Simard FOR THE RESPONDENT
St-Lin-Laurentides, Quebec