[2021] 4 F.C.R. D-18
Income Tax
Assessment and Reassessment
Penalties — Appeal from Tax Court of Canada (T.C.C.) decision (2020 TCC 87) dismissing appellant’s appeal of reassessments of his 2011, 2012 taxation years made following audit of returns for those years — Canada Revenue Agency (CRA) conducted bank deposit analysis, identified unexplained revenues — Reassessments imposed penalties under Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 163(2) — Appellant uncertain whether 2011 unreported amounts had quality of income, did not report them — Claimed to have reported net income only for 2012 — T.C.C. concluded that 2011 unreported amounts either commissions for services rendered or entirely unexplained — As to 2012, T.C.C. not persuaded that appellant incurred any expenses beyond those allowed by CRA — T.C.C. concluded that respondent had established that appellant’s tax returns contained false statements or omissions made in circumstances amounting to gross negligence — Appellant arguing T.C.C. erred in applying law with respect to liability for s. 163(2) penalties — Relying on Deyab v. Canada, 2020 FCA 222 to further argue that penalties under s. 163(2) may be imposed only when evidence of intentional acting present — Appellant misread Deyab — Phrase “tantamount to intentional acting” quoted therein conveying something broader than intentional acting — That phrase encompassing “an indifference as to whether the law is complied with” or wilful blindness — Court cautioned in Deyab not to interpret Lacroix v. Canada, 2008 FCA 241 as requiring that taxpayer in all circumstances identify source of unreported income, show it is not taxable in order to set aside penalty under s. 163(2) — In Deyab, taxpayer’s explanation consistently maintained, consistent with evidence — In contrast, appellant failed to provide viable, reasonable explanation for large amounts of unreported income — Appellant having no other credible evidence consistent with explanations he offered — T.C.C. correctly identified that respondent bore onus of establishing that conditions for s. 163(2) penalty met — Applied relevant principles from case law — Clear appellant made misrepresentation or omission in circumstances amounting to gross negligence — Appeal dismissed.
Wood v. Canada (A-219-20, 2022 FCA 60, Monaghan J.A., reasons for judgment dated April 7, 2022, 13 pp.)