The taxpayer was able to make out a due diligence defence for failure to report investment income, which only amounted to 1.06% of her income for 2007. She held the investments through TD Waterhouse, and it was reasonable to assume that she had received from TD Waterhouse all the resulting tax slips (T3 & T5).
A similar failure in the following (2008) taxation year (in which she had no notice of her failure to report amounts in 2007) could not support a finding of due diligence, because the unreported amounts were higher - although only 4.87% of her total income, the missed interest was 15% of her interest income, and the missed dividends were over 41% of her dividend income for 2008. Moreover, as TD Waterhouse had been late in sending the information slips in the previous year, a reasonable person would have taken further steps to ensure that the amounts were accurately reported (para. 27). Nevertheless, she incurred no penalties under s. 163(1) because her failure for 2007 (the first of the two years) had been reasonable.