The taxpayer failed to report $683 of income for 2008 and $436,890 for 2009. The 2009 income was not subject to a s. 163(1) penalty if the taxpayer established a due diligence defence for 2008. (See summary under s. 163(1).)
Graham J found that the taxpayer prima facie established due diligence for 2008 in showing the steps he took to prepare his return and by demonstrating that the unreported amount was tiny. The taxpayer's 2007 return contained a similar omission to the 2008 return, which might have thrown the diligence for the 2008 return into question. However, although the taxpayer could not recall when he received the 2007 reassessment, his prima facie proof had shifted the onus to the Minister to show that the taxpayer had likely received his 2007 assessment early enough to put him on guard when preparing his 2008 return, which the Minister had not done. It was "not sufficient for the [Minister] to simply speculate what may have occurred and then sit back and wait for Mr. Galachiuk to prove otherwise" (para. 19).