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Docket: 2002-3661(IT)I |
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BETWEEN: |
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RICK M. MARUSYK,
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Appellant, |
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and |
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HER MAJESTY THE QUEEN,
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Respondent. |
____________________________________________________________________
Appeals heard on June 24, 2003 at Vancouver, British Columbia
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Before: The Honourable Mr. Justice 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: |
Raj Grewal |
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JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 1994, 1995, 1996 taxation years are allowed, without costs, and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the terms of the attached Reasons for Judgment.
The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is allowed, without costs, to permit the Appellant to claim an equivalent-to-spouse claim in the amount of $5,380.00. In all other respects the appeal filed for the 1998 taxation year is dismissed.
The appeal from the assessment made under the Income Tax Act for the 1999 taxation year is dismissed.
Signed at Vancouver, Canada, this 5th day of August 2003.
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"L.M. Little" |
Little, J.
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Citation: 2003TCC453 |
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Date: 20030805 |
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Docket: 2002-3661(IT)I |
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BETWEEN: |
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RICK M. MARUSYK, |
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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.
A. FACTS
[1] The Appellant was married to Cynthia Maureen Murphy ("Cynthia"). A daughter, Tess Olivia Murphy Marusyk ("Tess"), was born on the 12th day of February 1994.
[2] In late 1994 the Appellant and Cynthia separated. A lengthy and bitter legal dispute occurred between the Appellant and Cynthia. The legal dispute involved custody of Tess, division of property and the ownership of the family home.
[3] The Appellant said that after the separation he was obliged to leave the family home.
[4] The Appellant maintains that he was unable to obtain the records and documents that he required to prepare his income tax returns for the 1994, 1995, 1996 and 1998 taxation years because the records and documents were either in files at the family home or were in the computer that was located in the family home.
[5] The Appellant testified that he made numerous requests to Cynthia to obtain the records and documents that he required to prepare his income tax returns and that she refused his numerous requests.
[6] The Appellant said that as a result of the refusal by Cynthia to provide him access to his records and documents and access to his computer he was unable to prepare and file his income tax returns within the time limits specified in the Income Tax Act (the "Act") for the 1994, 1995, 1996 and 1998 taxation years.
[7] The Appellant said that in the 1993, 1994, 1995 and 1996 taxation years he was operating several businesses and that he had a number of clients. The Appellant said that from 1997 to 1999 he was the Mayor of the Municipality of Port Moody and from 1997 to 1999 he spent the majority of his time serving as the Mayor and he did not continue to have an active consulting practice during this period.
[8] The Appellant stated that after repeated requests made by him to Cynthia personally and requests made to Cynthia by his lawyer for records and documents he finally obtained some of his records and documents from Cynthia in September 2000. The Appellant stated that he prepared and filed his income tax returns for the 1994, 1995 and 1996 taxation years on September 21, 2000.
[9] The Appellant said that after many requests for the records and documents made to Cynthia, both by him personally and by his lawyer, he finally obtained the relevant documents for the 1998 and 1999 taxation years in February-March 2000.
[10] The Appellant said that he filed his income tax return for the 1998 taxation year on March 10, 2000 and that he filed his income tax return for the 1999 taxation year within the time specified in the Act.
[11] The Minister of National Revenue ("the Minister") imposed late filing penalties and arrears interest for the 1994, 1995, 1996 and 1998 taxation years.
B. ISSUES
[12] The issues before the Court are:
(a) Is the Appellant entitled to claim equivalent-to-spouse credits in the 1998 and 1999 taxation years?
During the hearing the parties agreed that the Appellant was allowed to an equivalent-to-spouse claim in the amount of $5,380.00 in determining his income for the 1998 taxation year.
The Appellant advised the Court that he was withdrawing his claim for an equivalent-to-spouse claim of $5,718.00 in determining his income for the 1999 taxation year.
(b) Is the Appellant entitled to deduct any amount in respect of support payments in determining his income for the 1998 and 1999 taxation years?
During the hearing the Appellant withdrew his claim to deduct support payments in determining his income for the 1998 and 1999 taxation years.
(c) Is the Appellant liable for the late filing penalties and the revised late filing penalty and arrears interest as calculated by the Minister for the relevant years?
C. ANALYSIS
[13] From an analysis of the relevant facts and the testimony of the Appellant, I have concluded that the Appellant was unable to prepare and file his income tax returns for the 1994, 1995 and 1996 taxation years because he was involved in a bitter and acrimonious custody and divorce action with Cynthia. The Appellant testified under oath that he made many requests to Cynthia to obtain the relevant records and documents required to complete his tax returns but Cynthia refused to give him access to the records and documents or access the computer data. I accept the Appellant's sworn testimony.
[14] The Tax Court has frequently been asked to determine if a penalty should be imposed under section 162 of the Act.
[15] In Bennett v. The Queen, 96 DTC 1630 Madam Justice Lamarre Proulx said at paragraph 25:
[25] In my view, the wording of subsection 162(2) of the Act does not have the clarity necessary to make it an absolute liability provision.
Accordingly a defence of due diligence exists and Madam Justice Lamarre Proulx mentioned at paragraph 27:
[27] I am of the view however that, in order for this Act to accomplish its public purpose, the taxpayer should be expected to comply with the requirements of the Act with a high degree of diligence.
[16] I have concluded that in these very difficult, unusual and emotional circumstances, where the Appellant was unable to obtain access to the records and documents, the Appellant should not be subject to the late filing penalties and the revised late filing penalty that were imposed for the 1994, 1995 and 1996 taxation years.
[17] In the 1998 taxation year the Appellant was Mayor of Port Moody and most of his income (with the exception of $600.00) was paid to him by the Municipality of Port Moody. I am therefore not satisfied that the Appellant was precluded from filing his income tax return for the 1998 taxation year. The late filing penalty for the 1998 taxation year should not be deleted.
[18] Information Circular IC-92-2 was published by Canada Customs and Revenue Agency on March 18, 1992 (see Tab 12 of exhibit A-1). Paragraph 5 reads as follows:
5. Penalties and interest may be waived or cancelled in whole or in part where they result in circumstances beyond a taxpayer's or employer's control. For example, one of the following extraordinary circumstances may have prevented a taxpayer, a taxpayer's agent, the executor of an estate, or an employer from making a payment when due, or otherwise complying with the Income Tax Act:
(a) natural or human-made disasters such as, flood or fire;
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[19] From the evidence that was presented I have concluded that the Appellant was prevented from complying with the Act in the 1994, 1995 and 1996 taxation years because of the extraordinary circumstances "beyond his control". I make this comment with respect to the late filing penalties that were imposed for the 1994, 1995 and 1996 taxation years.
[20] I do not have the authority to waive the interest that has been imposed. However, because of the extraordinary circumstances as outlined above it would appear to me that the Minister should exercise the discretion imposed on him in the Fairness Legislation in the Act and waive the arrears interest that has been imposed for the 1994, 1995 and 1996 taxation years up to September 21, 2000 (i.e. the date that the income tax returns were filed by the Appellant).
[21] The appeals are to be allowed to eliminate the late filing penalties that were imposed for the 1994, 1995 and 1996 taxation years. The appeal filed for the 1998 taxation year is allowed to permit the Appellant to claim an equivalent-to-spouse claim in the amount of $5,380.00. The appeal filed for the 1999 taxation year is dismissed.
Signed at Vancouver, Canada, this 5th day of August 2003.
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"L.M. Little" |
Little, J.
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CITATION: |
2003TCC453 |
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COURT FILE NO.: |
2002-3661(IT)I |
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STYLE OF CAUSE: |
Rick M. Marusyk and Her Majesty the Queen |
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PLACE OF HEARING: |
Vancouver, British Columbia |
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DATE OF HEARING: |
June 24, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Mr. Justice L.M. Little |
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DATE OF JUDGMENT: |
August 5, 2003 |
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APPEARANCES: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Raj Grewal |
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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 |