The taxpayer reported $269,338 of income in his 2008 return, $169,420 of which was dividend income, and $184,537 in 2009, none of which was dividend income. He was assessed penalties under s. 163(1) for unreported dividend income of $31,250 in 2008 and $130,500 in 2009. The taxpayer argued that he had a due diligence defence because his returns were prepared by an accountant, who was a different accountant than the one for the two corporations that had paid the dividends, and who had failed to prepare the appropriate paperwork. Woods J. stated (at para. 15):
In my view, Mr. Tacilauskas did not take sufficient care in either the 2008 or 2009 tax returns to prevent the omissions from income. The dividends were large amounts, and Mr. Tacilauskas had a responsibility to take appropriate steps to ensure that they were reported. It was not enough to assume that an accountant would take care of it.