In finding that the portion of penalties assessed against the taxpayer that were based on related company expenses should be reversed, Woods, J. stated (at para. 42) that:
It is quite possible that these errors were a matter of sloppy bookkeeping. If so, it would constitute negligence but it would not elevate to the level of knowledge or gross negligence as required by s. 163(2).
However, the claiming of personal expenditures as "repairs and maintenance" and "travel" was admittedly falsely made, and gave rise to the penalty.