The taxpayer provided grossly negligent opinions on a charitable donation scheme (which unbeknownst to her was a scam) and signed charitable donation receipts in connection therewith. The Minister assessed her 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.
After finding that the s. 163.2 assessment was valid, Stratas JA noted that, although s. 163.2 penalties were imposed on a mechanical basis, the Minister was required on any application for relief under s. 220(3.1) to take the "fairness purpose" (para. 58) of that provision into account (although here, no application for such relief had been made, per. para. 61). He further stated (at para. 59):
[T]he Federal Court may quash unreasonable exercises of discretion by the Minister – i.e., exercises of discretion that fall outside the range of the acceptable and defensible on the facts and the law: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190. Depending on the circumstances, the range available to the Minister can be quite narrow: Canada (Attorney General) v. Abraham, 2012 FCA 266 at paragraphs 37-50; and in a different context, see Canada (Attorney General) v. Canadian Human Rights Commission, 2013 FCA 75 at paragraphs 13 and 14.