Federal court | Tax | Income tax | Administration and enforcement
Taxpayer was Canadian corporation that owned property in Ghana worth over $100,000 and, as reporting entity, was required to file T1135 returns for 2005-2013 tax years but failed to do so. Taxpayer was subject to penalty of $2,500 per return plus interest and requested relief from penalties and interest under Voluntary Disclosure Program (VDP). Minister’s delegate refused to exercise discretion provided in s. 220(3.1) of Income Tax Act to cancel or waive some or all of penalty or interest on basis that taxpayer’s disclosure did not qualify under VDP as it was not voluntary. Taxpayer requested review and reconsideration of its VDP application which was denied again on grounds that disclosure was not voluntary and taxpayer applied for judicial review of decision. Taxpayer proposed to Department of Justice (DOJ) that judicial review be settled on basis that 2005-2010 T1135 returns were voluntary and would qualify for program, while 2011-2013 T1135 returns would be subject to statutory penalties. On basis of DOJ proposal, taxpayer discontinued its judicial review and decision was sent back for reconsideration, where delegate again concluded that taxpayer’s disclosure was not voluntary. Taxpayer applied for judicial review of decision. Application granted. Delegate’s decision was based on erroneous findings of fact and without regard for material before her. Decision failed to explain why enforcement action was likely to uncover taxpayer’s T1135 filing obligations and failed to address DOJ letter advising same. Delegate’s reasons did not indicate that she considered possibility that 2005-2010 disclosure may have been voluntary even if 2011-2013 disclosure was not. Delegate had not provided adequate reasons to support finding that enforcement action would likely have uncovered taxpayer’s 2005-2010 T1135 filing obligation.
Matthew Boadi Professional Corp. v. Canada (Attorney General) (2018), 2018 CarswellNat 235, 2018 CarswellNat 55, 2018 FC 53, 2018 CF 53, Shirzad Ahmed J. (F.C.).
