The taxpayer purchased a lot and built a house on it. Over a period of less than two years, he moved in with his family, rented the property out, and finally sold it. The Minister sought to reassess the taxpayer beyond the normal reassessment period for profit realized on the sale, on the basis that the taxpayer had misrepresented the sale as being a sale of principal residence.
After finding that the sale fell into the "grey zone" of tax law, Hogan J. found that the Minister had not met the test in s. 152(4)(a)(i). Given that the taxpayer's position was not, on the balance of probabilities, unreasonable, he was free to report his income in a manner that would lead to a favourable tax treatment. Therefore, even assuming the taxpayer had made a misrepresentation, it did not amount to neglect, carelessness, or willful default. Hogan J. stated (at para. 26):
[A]dopting a thoughtfully considered position that contradicts the Minister's position does not in itself mean the taxpayer made a misrepresentation that would allow the Minister to assess outside the normal period.