In Gauthier, 2017 FC 1173, the taxpayer made a voluntary disclosure for 2005-2014 for income earned from funds he had transferred offshore in 1978. The CRA accepted the VD, waived penalties and cancelled interest for those years but then reassessed for 1980 to 2004 to impose tax, interest and penalties (for failing to file a T1135).
The taxpayer’s application for judicial review was dismissed.
The FC disagreed with the taxpayer because there was no evidence suggesting that the CRA had agreed not to undertake reassessments for earlier taxation years. Furthermore, judicial review focuses on the reasonableness of the CRrA’s decision and grants relief when there are procedural defects. Because there was no evidence of unreasonableness or procedural defects, the [Court] found no merit in preventing the Minister from exercising her discretion to reassess. The [Court] also pointed out that the orderly application of the law takes precedence over the financial and other inconveniences a taxpayer may be facing.
Priscila Padilla, “Voluntary Disclosures: Penalties Applied for Prior Years” Canadian Tax Focus 4:4 (May 2018).