Wednesday, January 16, 2013
The first Tax Court of Canada decision of 2013 is out: Jack v. The Queen (2013 TCC 1).
The case deals with the application of a penalty under subsection 163(1) of the Income Tax Act. The taxpayer failed to report income. The penalty is 10% of the unreported income and is on top of whatever taxes are owing on that income. Nothing the taxpayer presented in court swayed the judge to reverse the penalty and the assessment was allowed. Her defence seems to be ignorance with a touch of indifference plus putting blame on her tax return preparer.
The judge writes,
[19] Ms. Jack did not exercise a reasonable degree of due diligence in the filing of her 2009 tax return or of her 2008 tax return. The amount of income that Ms. Jack failed to report, $60,000, was not an insignificant amount that the failure of which, as in Symonds v. R., 2001 TCC 274 (sic), would be innocent.
[20] There is a difference between innocent and careless. I have no doubt Ms. Jack's failure to report $60,000 was not deliberate but it was due to her reckless or careless disregard of her obligation to report all of her income in a tax return for an appropriate year.
[20] There is a difference between innocent and careless. I have no doubt Ms. Jack's failure to report $60,000 was not deliberate but it was due to her reckless or careless disregard of her obligation to report all of her income in a tax return for an appropriate year.
Note the case reference should be 2011 not 2001.
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