INCOME TAX |
Penalties |
Roy v. Canada
A-660-97
Noël J.A.
3/11/00
5 pp.
Appeal from T.C.C. decision dismissing in part taxpayer's appeal in respect of 1985 to 1989 taxation years inclusive--Appellant argued Archambault J. erred in calculating penalty by refusing to deduct in calculation thereof capital cost allowance to which entitled--Assessed first by "net worth" method--Archambault J. dismissed appeal regarding calculation of penalty, noting evidence showed Mr. Roy reported part but not whole of rental income--Concluded penalty must be computed on unreported income calculated before deducting capital cost allowance--This reasoning meant if appellant had concealed all his rental income, would be entitled to deduct capital cost allowance in calculating penalty--Fact he reported part of income does not mean loses right to deduction--As purpose of penalty to encourage taxpayers to report their income and deterrent effect will usually increase with extent of unreported income, result seems absurd--Fact implementation of legislation leads to absurdity does not authorize courts to ignore its effects when Parliament has spoken clearly and without ambiguity--Since capital cost allowance deduction not entirely applicable to unreported income, appellant cannot require allowance be deducted in calculating penalty--Appeal dismissed--Cross-appeal dismissed.