Date: 20040113
Docket: T-666-02
Citation: 2004 FC 46
TORONTO, ONTARIO, this 13th DAY of JANUARY 2004.
PRESENT: THE HONOURABLE MADAM JUSTICE LAYDEN-STEVENSON
BETWEEN:
ALICE MILLER,
Applicant,
- and -
CANADA CUSTOMS AND REVENUE AGENCY,
Respondent.
[1] The applicant, Alice Miller, applies for judicial review of the decision of the Minister of National Revenue as determined by the ministerial delegate (Director of Taxation, Sudbury Tax Services Office, Canada Customs and Revenue Agency (CCRA)), dated March 18, 2002. The Director declined to exercise the discretion conferred on the Minister by subsection 220 (3.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (The Act) to cancel or waive the interest and penalties accrued on Ms. Miller's tax debt in respect of the 1998 taxation year.
[2] Subsection 220 (3.1), commonly referred to as one of the fairness provisions, provides as follows:
| (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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[3] The facts can be summarily stated. Ms. Miller is a self-employed computer consultant. Until the 1997 and 1998 taxation years, she was a model taxpayer and filed all of her tax returns on time. She has paid her taxes for 27 years. In February, 1998, she temporarily placed her belongings in storage and left Toronto, Ontario for Vancouver, British Columbia to care for her disabled brother who was dying of stomach cancer. During this time, her mother was diagnosed with aggressive breast cancer. Ms. Miller returned to Toronto in September, 1998 and eventually moved back into her former apartment. She did not obtain a consulting contract until February, 1999.
[4] In April, 1999, Ms. Miller was reminded, by a friend, that she had stored a box in the friend's home. The box contained Ms. Miller's tax records. Ms. Miller took her records to her accountant, who allegedly prepared her tax returns for both the 1997 and 1998 taxation years. Ms. Miller claims, and a letter from her accountant corroborates, that both tax returns (1997 and 1998) were mailed to the CCRA by her accountant on April 21, 1999. A cheque for the tax owing with respect to the 1997 taxation year was included with the 1997 return. Ms. Miller did not include a payment for the 1998 taxation year. She claims that she did not have the means to pay the taxes at the time and decided to wait for the Notice of Assessment before remitting payment. In January, 2000, CCRA issued a request for her 1998 tax return and in March, 2000, issued a demand for the 1998 tax return. Ms. Miller contacted her accountant who submitted the 1998 return cover page by fax and a copy of the complete return by mail on May 25, 2000.
[5] Ms. Miller was assessed penalties for late filing in the amount of $4,662.56 and arrears interest in the amount of $2,481.23 pursuant to subsection 162(2) of the Act. That particular subsection allows for higher penalties and rates of interest where an individual has previously failed to file on time in the three preceding years. Ms. Miller's 1997 return had been filed a year late allegedly due to her temporary relocation to Vancouver and the circumstances giving rise to the relocation. When Ms. Miller received her 1998 Notice of Assessment in November, 2000, she immediately objected to the penalty and interest on the basis that she did not submit the 1998 return late. She suggested then, and continues to maintain, that the 1998 return was either lost by Canada Post or by the CCRA.
[6] Various CCRA officers, at various levels, reviewed the file under the fairness provisions of the Act. Ultimately, the Director determined that the interest and penalties assessed with respect to the 1998 taxation year would not be waived. His reasons for denying Ms. Miller's request are contained in his correspondence dated March 18, 2002:
My review of your file indicates that you did not change your address with the CCRA, that you never questioned the whereabouts of a Notice of Assessment for the 1998 tax year and that both a request and demand to file were issued before a 1998 return was submitted.
After careful consideration of the facts presented I have concluded that this is not a situation in which it would be appropriate to cancel the late filing penalty and arrears interest in question.
[7] At the hearing of the application, Ms. Miller conceded that the Director's decision with respect to arrears interest could not be faulted in view of her decision not to make a payment for the taxes owing with respect to the 1998 taxation year by April 30, 1999, when the payment was due. Ms. Miller stated that she had "no problem with the decision regarding the interest" and took no issue with respect to her obligation to pay the interest. She maintained her position that the decision relating to waiver of penalties was flawed. In this respect, she relied on Barron v. Canada (Minister of National Revenue) (1997), 209 N.R. 392 (F.C.A.) and in particular the following excerpt:
The court may intervene and set aside the discretionary decision under review only if that decision was made in bad faith, if its author clearly ignored some relevant facts or took into consideration irrelevant facts or if the decision is contrary to law.
Ms. Miller maintained that the Director failed to consider relevant factors.
[8] The standard of review with respect to discretionary decisions in relation to subsection 220 (3.1) is patent unreasonableness: Cheng v. Her Majesty the Queen (2001), D.T.C. 5575 (F.C.T.D.); Sharma v. Minister of National Revenue (2001), D.T.C. 5360 (F.C.T.D.). In view of the standard of review, it is not open to me to interfere with the exercise of the ministerial delegate's discretion merely because I might have been inclined to exercise it differently had I been charged with the responsibility. In Kaiser v. The Minister of National Revenue (1995), 93 F.T.R. 66 (F.C.T.D.), Mr. Justice Rouleau stated:
The purpose of this legislative provision is to allow Revenue Canada Taxation to administer the tax system more fairly by allowing for the application of common sense in dealing with taxpayers who, because of personal misfortune or circumstances beyond their control, are unable to meet deadlines or comply with rules under the tax system. The language used in the section bestows a wide discretion on the Minister to waive or cancel [penalties] at any time. To assist in the exercise of that discretion, policy guidelines have been formulated and are set out in Information Circular 92-2.
[9] In Sharma, supra, Mr. Justice Pelletier determined that the taxpayer's entire compliance history is relevant to the question of whether it is fair to relieve the taxpayer of a present obligation. Subsection 244 (21) of the Act provides that "a document presented by the Minister purporting to be a print-out of the information in respect of a taxpayer received under section 150.1 by the Minister from a person shall be received as evidence and, in the absence of evidence to the contrary is proof of the return filed by the person under that section" [emphasis added].
[10] Having reviewed the contents of the record, there is no question that the factors disclosed therein as having been considered by the ministerial delegate were relevant. However, I agree with Ms. Miller that there were relevant factors that appear to have been ignored. There is no indication that Ms. Miller's assertion (corroborated by her accountant) that the 1998 tax return had been prepared and mailed on time was considered. There is no indication that the date of completion indicated on the 1998 tax return (April 20, 1999) was considered. There is no indication that Ms. Miller's entire compliance history was considered nor is there an indication that consideration was given to serious emotional or mental distress.
[11] While it is not open to me to substitute my opinion for that of the ministerial delegate, neither is it my function to speculate on what the ultimate decision might have been had all relevant factors been considered. Thus, the application for judicial review of the decision of the ministerial delegate dated March 18, 2002 with respect to the late filing penalties will be allowed. Success has been divided and there will be no order with respect to costs.
ORDER
IT IS HEREBY ORDERED THAT:
(a) The application for judicial review is allowed in part. The decision of the ministerial delegate dated March 18, 2002 with respect the late filing penalties is quashed and the applicant's request is remitted for redetermination.
(b) No costs are awarded.
_____________________________
Judge
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-666-02
STYLE OF CAUSE: ALICE MILLER v. CANADA CUSTOMS AND REVENUE AGENCY
DATE OF HEARING: January 13, 2004
PLACE OF HEARING: Toronto, Ontario.
REASONS FOR ORDER
AND ORDER BY: Madam Justice Layden-Stevenson
DATED: January 13, 2004
APPEARANCES BY: Ms. Alice Miller (self-represented)
For the Applicant
Ms. Carol Calabrese
For the Respondent
SOLICITORS OF RECORD: Ms. Alice Miller
Haliburton, Ont.
For the Applicant
Ms. Carol Calabrese
Department of Justice Ontario Regional Office.
For the Respondent