Date: 20030617
Docket: T-1485-01
Citation: 2003 FCT 750
BETWEEN:
KELLY E. ERICKSON
Applicant
- and -
CANADA CUSTOMS and REVENUE AGENCY
Respondent
[1] In this judicial review proceeding, Kelly Erickson, (the "applicant"), acting on her own behalf, seeks to set aside the July 20, 2001 decision made by Massimo Testa who, on an administrative review, upheld a decision made on September 8, 2001, by Ms. K. Plouffe of the Canada Customs and Revenue Agency (the "Agency"), denying the applicant's request, pursuant to subsection 220(3.1) of the Income Tax Act (the "Act"), for a waiver of interest in the amount of $1,546.37 which had accrued on a total tax debt of $4,468.73 in respect of her 1986 to 1996 taxation years.
[2] Subsection 220(3.1) of the Act reads:
| (3.1) The Minister may at any time waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership and, notwithstanding subsections 152(4) to 152(5), such assessment of the interest and penalties payable by the taxpayer or partnership shall be made as is necessary to take into account the cancellation of the penalty or interest.
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(3.1) Le ministre peut, à tout moment, renoncer à tout ou partie de quelque pénalité ou intérêt payable par ailleurs par un contribuable ou une société de personnes en application de la présente loi, ou l'annuler en tout ou en partie. Malgré les paragraphes 152(4) à (5), le ministre établit les cotisations voulues concernant les intérêts et pénalités payables par le contribuable ou la société de personnes pour tenir compte de pareille annulation. |
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[3] This particular subsection has been described as one of the fairness provisions of the Act because it enables the Minister to cancel or waive penalties and interest in circumstances outlined in the Guidelines set out in Information Circular 92-2. For example, penalties and interest may be waived or cancelled where they result in circumstances beyond a taxpayer's control or where they arose primarily because of actions of the Agency such as processing delays, errors in processing, materials made available by the Agency to the public which contained errors or delays by the Agency in providing information.
[4] Section 10 of the Guidelines lists the following factors which will be considered when determining whether or not the Agency will cancel or waive interest or penalties:
(a) whether or not the taxpayer has a history of compliance with tax obligations;
(b) whether or not the taxpayer has knowingly allowed a balance to exist upon which arrears interest has accrued;
(c) whether or not the taxpayer has exercised a reasonable amount of care and has not been negligent or careless in conducting his affairs under the self assessment system;
(d) whether or not the taxpayer has acted quickly to remedy any delay or omission.
[5] It is clear in law a decision to waive or not accrued interest is a discretionary decision in respect of which Justice Pratte stated on behalf of the Federal Court of Appeal in Barron v. Minister of National Revenue (1997), 209 N.R. 392, the following at paragraph 5:
¶ 5 . . . and that, when an application for judicial review is directed against a decision made in the exercise of a discretion, the reviewing court is not called upon to exercise the discretion conferred on the person who made the decision. The court may intervene and set aside the discretionary decision under review only if that decision was made in bad faith, if its author clearly ignored some relevant facts or took into consideration irrelevant facts or if the decision is contrary to law.
[6] Justice Rouleau in Kaiser v. Canada (Minister of National Revenue), [1995] F.C.J. No. 349 (F.C.T.D.), applied as a standard of review in such a decision, the principles enunciated by Justice McIntyre in Maple Lodge Farms Ltd. v. The Government of Canada, [1982] 2 S.C.R. 2, as follows:
Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere.
[7] When she responded to the applicant's request dated February 7, 2000, for a waiver of interest, K. Plouffe specifically discussed and explained certain issues the applicant had raised to justify her request.
[8] By reference to a July 25, 1997 letter which the Agency sent to the applicant, she explained the reassessment of the applicant's 1984 taxes which created a debt of $569.14 in October 1986, was not based on an error as the applicant alleged but rather was driven partly by unreported income from her employer and mainly by the inclusion of unemployment insurance received.
[9] Ms. Plouffe explained to the applicant her 1991 and 1992 reassessments which came about after the applicant filed her income tax returns (the initial assessment having been made by Revenue Canada on information in its possession and under the authority of the Act when the applicant ignored requests that she file her income tax returns). She stated these reassessments generated credits which were applied in January 1995 to reduce her outstanding tax balance.
[10] Ms. Plouffe also discussed various authorized credit transfers from her husband's tax account to reduce the applicant's outstanding tax debt to the Agency. In that connection, she identified the applicant's spouse's 1991 tax return was reassessed in 1999 to yield a positive credit. The Court was informed of the applicant's spouse's late filing of this and other returns but the Court did not receive any firm information from the applicant as to when the late filings occurred. From the information received during the hearing, it would appear the 1999 reassessment came about when the applicant's husband filed appropriate documentation to substantiate disallowed claims.
[11] Ms. Plouffe also informed the applicant that, with the exception of 1987 and 1993 tax returns, all her tax returns for 1984 to 1996 were filed beyond the deadline date prescribed in the Act. She also noted, apart from the transfer of her husband's refunds to her account, no payment had been made by her towards her tax liability since the date of the reassessment of her 1984 return.
[12] Ms. Plouffe noted the applicant did not have a favourable history of compliance with her tax obligations, had knowingly allowed a balance to exist upon which arrears interest had accrued and had not acted quickly to remedy any delay or omission. She found the applicant did not meet the qualifying requirements of the fairness legislation and the Agency would not be justified in complying with her request.
[13] As noted, the applicant asked for an administrative review on November 15, 2000. Mr. Testa, as had K. Plouffe, in his responding letter, discussed the items which the applicant had identified.
[14] Mr. Testa analysed a concern which the applicant had raised concerning the credits transferred to her account from her spouse's favourable tax balance. He pointed out disparities between her figures and the figures maintained by the Agency in an accounting which had been sent to her at least as of October 14, 1998, as requested.
[15] He, again by reference to the Agency's letter of July 25, 1997, explained the amounts for her 1984, 1991 and 1992 reassessments and how any credit generated was applied to her outstanding tax balance. He discussed her 1996 taxation year where the credit she claimed was a liability balance on the Agency's books.
[16] Mr. Testa also noted her calculations did not include arrears interest charged and late filing penalty assessed.
[17] In argument before me, the applicant suggested she was entitled to the waiver of interest because, at heart, the Agency was at fault particularly in the untimely authorized transfers of credits from her spouse's account to her account and the delays in responding to her concerns.
[18] My review of the record does not support the applicant's position. I note in both of her letters justifying her waiver, the applicant drew a table where she purports to give a summary of tax returns as filed for both herself and her husband which, on her calculations, would yield tax credits to her husband's account which are approximately double the size of her running tax liability to the Agency.
[19] As I see it, the applicant's accounting does not take into account disparities between the returns as filed and as assessed, does not take into account penalties for late filing and interest arrears and ignores the fact both her and her husband's tax returns were consistently filed late and, when filed, were bunched, i.e. were filed for several years, which disrupted any synchronization between debits and credits in both of their tax accounts.
[20] The applicant has not been able to identify to me any misapprehension of fact or law which would justify my intervention. The record substantiates the Agency properly applied the Guidelines to the facts at hand.
[21] For all of these reasons, this judicial review application is dismissed.
"François Lemieux"
J U D G E
OTTAWA, ONTARIO
JUNE 17, 2003
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-1485-01
STYLE OF CAUSE: KELLY E. ERICKSON
Applicant
- and -
CANADA CUSTOMS AND REVENUE AGENCY
Respondent
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: TUESDAY, JUNE 10, 2003
REASONS FOR ORDER BY: LEMIEUX J.
APPEARANCES BY: Ms. Kelly E. Erickson
On her own behalf
Ms. Surksha Nayar
For the Respondent
SOLICITORS OF RECORD: Ms. Kelly E. Erickson
Barrie, Ontario
On her own behalf
Morris Rosenberg
Deputy Attorney General of Canada
For the Respondent
FEDERAL COURT OF CANADA
Date:20030610
Docket: T-1485-01
BETWEEN:
KELLY E. ERICKSON
Applicant
- and -
CANADA CUSTOMS AND REVENUE AGENCY
Respondent
REASONS FOR ORDER