In June 2019, the applicant filed an application under the voluntary disclosure program (VDP) for its 2008 to 2017 taxation years, which related to income generated from the investment of the proceeds of the sale of cumulative eligible capital (know-how) to clients in Europe in 2007.
After requesting further information and authorizations, on January 15, 2020, CRA indicated that the application was accepted as of January 9, 2020, for the purposes of reviewing whether the five conditions for a VDP had been satisfied.
On October 5, 2022, CRA requested the applicant's authorized representative, Mr. Leibovich, to provide documentation regarding the 2007 sale, including an amended 2007 T2 return. Some of this information but not, for instance, the amended 2007 return, was then so provided.
After various follow-up requests from CRA, Mr. Leibovich, on May 11, 2023, indicated that the applicant was attempting to retrieve the requested documentation relating to the 2007 sale before he left on vacation, without providing it or further communication.
On August 1, 2023, CRA left a voicemail message (which Mr. Leibovich apparently missed) indicating that if the requested information was not provided, the VDP application would be closed as incomplete. No further communication came from Mr. Leibovich or the applicant, and on September 13, 2023, the VDP officer concluded that the disclosure was incomplete since the amended 2007 T2 had not been provided. On October 10, 2023, CRA rendered its decision denying the applicant's VDP application.
In denying the request of the applicant for review of the October 2023 decision, Régimbald J indicated:
- The VDP program required that all inaccurate or unreported information be disclosed, even if that information related to taxation years that were more than 10 years prior and for which no applicant could receive relief.
- The applicant itself effectively raised the importance of the 2007 transaction in its VDP application which related to the use of proceeds of that transaction. Accordingly, its argument that the VDP application should be limited to the taxation years 2008 to 2017, because those were the only taxation years for which CRA could grant relief under the VDP program given the 10-year limitation in s. 220(3.2)(b), was without merit.
- No evidence was adduced to demonstrate that the information on the 2007 taxation year was impossible to obtain, and no request was made by the applicant to the CRA to accept that such information could not be legitimately obtained.
- Given (per Williams, 2011 FC 766 at para. 26, quoted at para. 64) that “the obligation of fairness in reaching a decision under the VDP program is minimal” and that “the Minister is under no obligation to dispense taxpayers from adverse impacts relating to their failures to comply with the Act” (para. 65), the applicant had no legitimate expectation that CRA would provide yet a further (and “final”) extension in writing on August 1, 2023, before making a final decision.
- No contractual relationship was created by mere reliance of the applicant on the Information Circular respecting the VDP program.