Date: 20011207
Docket: 2001-1657-IT-I
BETWEEN:
THE SOURCE ENTERPRISES LIMITED,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Agent for the Appellant: Frank Shorrock
Counsel for the Respondent: Nadine Taylor
____________________________________________________________________
Reasonsfor Judgment
(Delivered orally from the Bench
at Vancouver, British Columbia, on October 4, 2001)
Bowie J.
[1] The Appellant company has been assessed two penalties, one in the amount of $383.02 and the other in the amount of $450, pursuant to subsections 227(9) and (9.1) of the Income Tax Act. It appeals from those penalties pursuant to the Court's informal procedure.
[2] The penalties were imposed because income tax deducted from the pay of certain employees of the Appellant for the month of December 2000, which should have been remitted by January 15, 2001, was not received by the Receiver General for Canada until January 22, 2001.
[3] The facts are quite simple. The Appellant has six employees of whom two, Frank Shorrock and his wife Lorraine Shorrock, are principals of the company. When salary or wages were paid to the employees for the month of December 2000, a total of $4,330.21 was deducted by the Appellant from the wages of the other four employees, and a total of $5,000 was deducted by the Appellant from the salary paid to Mr. and Mrs. Shorrock. The company then remitted these amounts to the Receiver General, as it was required to do.
[4] For reasons that were never explained in the evidence, two cheques were sent to the Receiver General. One was for $4,330.21, which represents the deductions from wages paid to employees other than Mr. and Mrs. Shorrock. The other cheque was for $7,000, of which $5,000 was for the amounts deducted from the salaries of Mr. and Mrs. Shorrock, and the other $2,000 pertained to the Appellant's own taxes, and has no bearing in this appeal. The cheques were mailed to the Canada Customs and Revenue Agency in Surrey, B.C., from some point in or around Vancouver, B.C., on Saturday, January 13, 2001. It was proved quite conclusively at the hearing that the cheques were not received by the agency until January 22.
[5] Subsection 248(7) of the Act is clear, and it reads:
For the purposes of this Act,
(a) anything (other than a remittance or payment described in paragraph (b)) sent by first class mail or its equivalent shall be deemed to have been received by the person to whom it was sent on the day it was mailed; and
(b) the remittance or payment of an amount
(i) deducted or withheld, or
(ii) payable by a corporation,
as required by this Act or a regulation shall be deemed to have been made on the day on which it is received by the Receiver General.
Once deductions have been made at source by an employer, which section 153 of the Act requires, they must be remitted by the fifteenth day of the following month. Regulation 108(1) reads:
Subject to subsections (1.1), (1.11) and (1.12), amounts deducted or withheld in a month under subsection 153(1) of the Act shall be remitted to the Receiver General on or before the 15th day of the following month.
None of subsections (1.1), (1.11) or (1.12) apply here. The requirement of this Regulation is clear, unequivocal, and unambiguous. Given the clear words of paragraph 248(7)(b) that the remittance is deemed to have been made on the day it is received by the Receiver General, it is clear that in the present case there was non-compliance with Regulation 108; therefore, subsections 227(9) and (9.1) apply. Subsection 227(9) provides that:
Subject to subsection (9.5) every person who in a calendar year has failed to remit or pay as and when required by this Act or a regulation an amount deducted or withheld as required by this Act or a regulation or an amount of tax that the person is, by section 116 or by a regulation made under subsection 215(4), required to pay is liable to a penalty of
(a) 10% of that amount ...
Subsection 227(9.1) provides that the penalty is applied only to the amount not remitted in excess of $500. Through what could only be described as an administrative mistake, the Appellant in this case, having sent two cheques, received twice the benefit of the $500 relief which subsection 227(9.1) provides.
[6] Much time was taken up at the hearing over the question whether the Minister's employees could have, or should have, waived the penalty. One of the grounds suggested for such waiver was that Mr. Shorrock and Mrs. Shorrock both received substantial refunds of overpaid taxes, which in fact exceeded the amount of the December 2000 withholdings from their respective incomes. This may well be a consideration for the Minister to take into account if an application under subsection 220(3.1) is made to have the penalties waived. However, I have no power to waive the penalties, only to determine whether or not those penalties have been imposed according to law.
[7] A good deal of time was also taken up over the question whether the post office in this country operates efficiently, and whether the Canada Customs and Revenue Agency should take some sort of steps to ensure that its mail is delivered more expeditiously than the post office seems able to do. All of that is outside my jurisdiction, and moreover I should have thought it nothing but an academic discussion, given that these cheques were mailed on a Saturday and were required to be received on the following Monday. It would take a great deal of optimism to expect that they could be delivered within that period of time. In any event, as I have said, that is a matter quite outside the jurisdiction of this Court. I am here to determine whether or not the penalties have been imposed in accordance with the provisions of the Act and the Regulations. They clearly have been, and the appeal is therefore dismissed.
Signed at Ottawa, Canada, this 7th day of December, 2001.
"E.A. Bowie"
J.T.C.C.
COURT FILE NO.: 2001-1657(IT)I
STYLE OF CAUSE: The Source Enterprises Limited and
Her Majesty the Queen
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: October 4, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge E.A. Bowie
DATE OF JUDGMENT: October 9, 2001
APPEARANCES:
Agent for the Appellant: Frank Shorrock
Counsel for the Respondent: Nadine Taylor
COUNSEL OF RECORD:
For the Appellant:
Name: N/A
Firm: N/A
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-2416(IT)I
BETWEEN:
KUMARA S. RACHAMALLA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on June 1 and June 28, 2001 at Toronto, Ontario, by
the Honourable Judge Diane Campbell
Appearances
Counsel for the Appellant: A. Christina Tari
Counsel for the Respondent: Sointula Kirkpatrick
ORDER FOR COSTS
In respect to costs, it is ordered that the appeals from the assessments made under the Income Tax Act for the 1990, 1991, 1992 and 1993 taxation years be awarded to the Appellant in accordance with the attached Reasons for Order.
Signed at Ottawa, Canada, this 7th day of December 2001.
|
"Diane Campbell" |
J.T.C.C.