Principal Issues: Whether the word "answer" in s. 163(2) would include a verbal reply.
Position: No; "answer" refers to a written reply.
Reasons: The enumerated list in subsection 163(2) implies that the word "answer" refers to written documents. Furthermore, the terms in the list are referred to as "returns", which suggests that the terms relate to written documents. Therefore, the noscitur a sociis rule (associated words rule) applies, whereby a word takes its meaning from the words with which it is associated. Accordingly, "answer" refers to a written reply.
XXXXXXXXXX 2011-042115 Lindsay Frank Attention: XXXXXXXXXX
October 3, 2011
Dear XXXXXXXXXX :
Re: Meaning of "Answer" in Subsection 163(2)
This is in reply to your inquiry regarding the meaning of "answer" in subsection 163(2) of the Income Tax Act. At issue is whether "answer" would include a verbal reply by a taxpayer to a question posed by an auditor.
For subsection 163(2) to apply, a taxpayer must have knowingly, or in circumstances amounting to gross negligence, made or participated in, assented to or acquiesced in the making of a false statement in a return filed or made in respect of a taxation year. For the purposes of this provision, a return includes a form, certificate, statement, or answer.
A reading of the enumerated list in subsection 163(2) implies that the word "answer" refers to written documents and not verbal answers. The fact that the Act provides that, for the purposes of subsection 163(2), the terms shall be referred to as "returns" further suggests that the terms relate to written documents. This conclusion is supported by the noscitur a sociis rule (associated words rule) of statutory interpretation, whereby a word takes its meaning from the words with which it is associated. Accordingly, "answer" in subsection 163(2) relates to written documents.
Should you have any questions or require additional information, please do not hesitate to contact Lindsay Frank at the number provided at the outset of this letter.
B.J. Skulski
Manager
Insolvency and Administrative Law Section
Income Tax Rulings Directorate