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Docket: 2002-4739(IT)I |
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BETWEEN: |
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ROY VAN OENE, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeal heard on April 9, 2003 and judgment rendered orally on April 16, 2003 at
Vancouver, British Columbia
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Before: The Honourable Judge L.M. Little |
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Appearances: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Johanna Russell |
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JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 2000 taxation year is dismissed, without costs, in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 25th day of April 2003.
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"L.M. Little" |
J.T.C.C.
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Citation: 2003TCC257 |
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Date: 20030425 |
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Docket: 2002-4739(IT)I |
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BETWEEN: |
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ROY VAN OENE, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Little, J.
The issue in this appeal is whether the Minister of National Revenue was correct in levying a penalty of $2,920.80 under subsection 163(1) of the Income Tax Act (the "Act").
The facts may be summarized as follows:
[1] The Appellant is an Industrial Mechanic. The Appellant was employed by various companies to service and repair industrial equipment located in pulp mills and other business locations.
[2] The Appellant is a member of the Millwrights, Machine Erectors & Maintenance Union Local 2736 (the "Union") and was assigned by the Union to various jobs.
[3] In the 1998 taxation year the Appellant was employed by a number of companies including Interior Power and Chemical Services Ltd. ("Interior"). When the Appellant filed his income tax return for the 1998 taxation year he did not include the amount of $14,627.00 that was paid to him by Interior. The Minister of National Revenue (the "Minister") reassessed the Appellant's 1998 taxation year to include the amount of $14,627.00 that was paid to him by Interior. The Minister did not levy a penalty.
[4] In the 1999 taxation year the Appellant was employed by a number of companies including Specialty Pipe & Mechanical Services Ltd. ("Specialty"). When the Appellant filed his income tax return for the 1999 taxation year he did not report the amount of $914.00 paid to him by Specialty. The Minister reassessed the Appellant's 1999 taxation year to include the amount of $914.00 that was paid to him by Specialty. The Minister did not levy a penalty.
[5] In the 2000 taxation year the Appellant was employed by the following companies:
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Name |
Payment Received
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(1) Whelen Mechanical Installation (1981) Ltd. ("Whelen")
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$29,208.00 |
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(2) UMA Constructors Ltd.
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7,768.83 |
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(3) Komtech Services Inc.
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482.24 |
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(4) American Eco Service
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4,267.77 |
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(5) Interior Power and Chemical |
3,695.00 |
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(6) Van Installations Ltd. |
4,927.00 |
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(7) Mitchell Installations Ltd. |
577.00 |
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(8) PIC Industrial Equipment |
$12,043.00 |
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Total 2000 Employment Income |
$62,948.84 |
[6] The Appellant testified that he mislaid the T-4 slip issued by Whelen and therefore did not provide H & R Block with a copy of the T-4 slip covering the amount of $29,208.00 when H & R Block prepared his 2000 income tax return.
[7] By Notice of Reassessment dated the 11th day of March 2002 the Minister reassessed the Appellant's 2000 taxation year to include the unreported income received from Whelen plus a penalty of $2,920.80 imposed under subsection 163(1) of the Act.
[8] Subsection 163(1) of the Act reads as follows:
163. (1) Every person who
(a) fails to report an amount required to be included in computing the person's income in a return filed under section 150 for a taxation year, and
(b) had failed to report an amount required to be so included in any return filed under section 150 for any of the three preceding taxation years
is liable to a penalty equal to 10% of the amount described in paragraph (a), except where the person is liable to a penalty under subsection (2) in respect of that amount.
[9] The Appellant said that he had a serious heart attack in August 2001 and for some time prior to the heart attack he was frequently confused and tired. The Appellant also said that he was away from his home in Surrey approximately 60% of the time in the 2000 year. The Appellant suggested that his health and his frequent absences from his home caused him to overlook the invoice from Whelen.
[10] During cross-examination the Appellant indicated that he had signed his 2000 income tax return in the office of H & R Block but he said that he did not read the tax return.
[11] In reviewing the above facts it will be noted that the Appellant failed to include the amount of $29,208.67 in his income for 2000. This amount was approximately 46% of the Appellant's income for the year. The Appellant also testified that he did not read his income tax return for 2000 at the office of H & R Block to ensure that the return contained all of the income received by him in the year.
[12] Before reaching my conclusion I have reviewed a number of court decisions. In Maltais v. The Queen, 91 DTC 1385, Judge Bowman (as he then was) said at page 1387:
... The Appellant struck me as an honest and honourable young man and I find as a fact that it was not his intention to evade the payment of income tax. If it had been, more serious penalties under subsection 163(2) might have been considered. Mr. Ghan on behalf of the Respondent contended that subsection 163(1) in the form which is applied to 1989 did not require that there be a wilful intention to evade tax. In support of this position he pointed to the wording of the former 163(1) which referred to "Every person who wilfully attempts to evade the payment of tax payable by him" and to the wording of subsection 163(2) which uses the expression "knowingly or under circumstances amounting to gross negligence". These provisions require a mens rea of intent or of recklessness. I agree with the Respondent on this point. In my opinion, the omission giving rise to a penalty under subsection 163(1) as it applied to the 1989 taxation year is one of strict liability. Otherwise, subsection 163(2) would be superfluous. It follows that where the Minister of National Revenue is called upon under subsection 163(3) to justify the imposition of a penalty under subsection 163(1) he meets that onus by establishing that the taxpayer had failed to report an amount of income in one year and that he or she had failed to report an amount in a return for any of the three preceding taxation years. It is not necessary for me to decide in this appeal whether the amounts which the taxpayer fails to report in two or more taxation years need be similar in nature.
[13] In Slywka v. The Queen, [1996] 2 C.T.C. 2595 Deputy Judge Watson said at paragraph 10:
Considering all the circumstances of this case including the testimony and documentary evidence, I am satisfied that the Appellant did not exercise due diligence in both the 1991 and 1993 taxation years and that he failed to report the income reflected in the T4's issued by his employer and received by him. The penalty of $267.60 for the 1993 taxation year was properly assessed by the Minister.
[14] I do not believe it could be said that the Appellant exercised "due diligence" by signing his 2000 income tax return without reading it.
[15] In this situation the Appellant failed to report income of $14,627.00 in 1998, $914.00 in 1999 and $29,208.00 in 2000.
[16] I have some sympathy for the Appellant because he was obviously suffering from health problems. He said that he found it difficult to keep track of documents due to his health problems and frequent trips away from his home. However, in my view, the words in subsection 163(1) of the Act are clear and I believe that the Appellant is caught by those words. I also wish to add that I do not have the power to amend the words of the Income Tax Act.
[17] The appeal is dismissed, without costs.
Signed at Vancouver, British Columbia, this 25th day of April 2003.
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"L.M. Little" |
J.T.C.C.
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CITATION: |
2003TCC257 |
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COURT FILE NO.: |
2002-4739(IT)I |
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STYLE OF CAUSE: |
Roy Van Oene and Her Majesty the Queen |
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PLACE OF HEARING: |
Vancouver, British Columbia |
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DATE OF HEARING: |
April 9, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Judge L.M. Little |
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DATE OF JUDGMENT: |
April 25, 2003 |
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APPEARANCES: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Johanna Russell |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |