In finding that the taxpayer had established a due diligence defence for failure to file T1134 forms for some but not all the taxation years under review, Visser J stated (at para. 63) that “[p]enalties under paragraphs 162(7)(a) and 162(10.1)(f) are subject to a due diligence defence” and quoted with approval the application in Chiang of an SCC statement that under such defence “[a] defendant can also avoid liability by showing that he or she took all reasonable steps to avoid the particular event...” and then stated (at para. 64):
Mr. Goldhar has established that he took all reasonable steps and was not negligent in filing his tax returns, including form T1134 in each of his 2008-2011 taxation years. With the assistance of Ms. Goldhar, he provided all requested information to his accountants each year and made reasonable efforts to ensure that his tax returns were filed accurately. In my view, any deficiency in his T1134 filings was not due to a lack of reasonable efforts he undertook, with the assistance of Ms. Goldhar and his professional accountants. For example, he did file a T1134 form in 2008 in respect of Beanteek, albeit with a deficiency he was not aware of until so advised by the CRA on June 8, 2009. With the assistance of Ms. Goldhar, he undertook to resolve this deficiency promptly with respect to 2008 and going forward, going so far as to switch professional accounting firms. While Mr. Pelchovitz [Goldhar’s accountant], in his testimony did not know why T1134 forms were not filed for Beanteek in 2009 and 2010 Ltd. in 2009 and 2010, I note that his firm did properly file T1134 forms for both corporations in 2011 and it is clear that his firm was aware of the existence of both corporations and the necessity to file the T1134 forms. Due to complexity of his financial affairs, and his lack of tax background, it is my view that Mr. Goldhar reasonably relied on his accountants to properly file his tax returns in each of his 2008 to 2011 taxation years.