A T1135 form was filed late and with missing information, that did not affect the substance of the form. Should penalties be applied under both ss. 162(5) and (7)? CRA responded:
[T]his would constitute two failures: the return was not filed on time and the return was missing information. This would permit (but not require) the Minister to assess a penalty for each of the failures.
… If the[re] is considered to be one failure, the taxpayer would only be liable to a maximum penalty of $100 under subsection 162(5) for failing to provide information. In comparison, a taxpayer that late-filed a complete Form T1135 would be liable to the higher maximum penalty of $2,500 under subsection 162(7) for failing to file a return by its due date. In our view, such an approach would “discourage taxpayers from being diligent and taking reasonable care in the preparation of their returns.” …
[W]e suggest that care be taken to ensure that assessing penalties under subsections 162(5) and (7) is both appropriate based on the relevant facts of a situation and equitable to the tax community as a whole.