The taxpayer provided a legal opinion to the participants in a charitable donation "scheme [which] was a scam" (para. 10) on the tax consequences to them, in which she falsely represented that she had reviewed the relevant documentation. In her capacity of president of a registered charity which was involved in the scheme, she signed tax receipts. The Minister assessed the taxpayer for penalties of $546,747 under s. 163.2(5), calculated as 50% of the purported federal tax savings of all 134 participants in this program.
The Tax Court had found that s. 163.2 created an offence - so that the taxpayer's assessment should be vacated as she had not been given the rights guaranteed by s. 11 of the Charter. The Tax Court lacked jurisdiction to make this finding as the taxpayer had not served notice of this constitutional question on the federal and provincial Attorneys General.
Stratas JA rejected an alternative submission that the taxpayer could assert those s. 11 rights (such as proof beyond a reasonable doubt) which did not override the wording of s. 163.2 ("section 11 is not a buffet table" (para. 35)) - and went on to note that, in any event, s. 163.2 did not create an offence: the penalties under s. 163.2 are "not about condemning morally blameworthy conduct," but rather for "ensuring that this discrete regulatory and administrative field of endeavour [i.e. taxation] works properly" (para. 41); and "sometimes administrative penalties must be large in order to deter conduct detrimental to the administrative scheme and policies [being] furthered" (para. 46).