Murugesu v. The Queen, 2013 DTC 1046 [at at 222], 2013 TCC 21 -- summary under Subsection 163(2)

By services, 28 November, 2015

The Minister assessed the corporate taxpayer for gross negligence penalties for reporting income based on only $285,588 of gross revenue rather than the $458,558 actually received, based chiefly on the magnitude of the reporting failures. D'Arcy J. overturned the penalties based on his findings that:

  • the negligence in this case was mainly attributable to the taxpayers' accountant;
  • the magnitude of the failure to report income was considerably less than alleged, based on the accountant's further failure to report $88,856 of cash wages paid out;
  • it was reasonable for the individual taxpayer to rely on the accountant - given his unfamiliarity with English and with Canadian tax, it was appropriate that he chose an accountant recommended by members of his community who could speak to him in his native language;
  • the taxpayers replaced the accountant once CRA made them aware of the errors; and
  • there was no evidence of dishonesty.
Topics and taglines
Topic
Income Tax Act - s. 163(2)
Tagline
reasonable reliance on accountant and no dishonesty
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
334859
Extra import data
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