The CRA believes that a tax adviser should takes steps to ensure their clients correct past errors (I01-1R2 (February 17, 2026), paras. 116-117), but neither the Income Tax Act nor the Excise Tax Act impose such a duty. Other statutes…
Negligence for not reviewing return
In 994552 N.W.T. Ltd. v R, 2025 TCC 55, Mr Justice Bocock considered whether the taxpayer corporation was liable to be reassessed beyond the normal reassessment period for two taxation years and for gross negligence penalties for overclaimed capital cost…
Swiss bank account trouble
In Azmayesh-Fard v R, 2025 TCC 20, the Court considered whether the CRA had properly reassessed a taxpayer beyond the normal reassessment period and imposed gross negligence penalties for unreported income from a Swiss bank account and for failing to…
Preparer penalties
I have become aware of a case where the CRA has imposed preparer penalties on an accountant who filed tax returns for corporations and their shareholders where the shareholders did not report income in respect of shareholder loan debit balances…
Reviewing your tax return
The court upheld gross negligence penalties in Fransen v R, 2023 TCC 107, a Fiscal Arbitrators case, because the taxpayer had been wilfully blind (the test for which is discussed at paras 9ff) and because he had not bothered to…
Penalties for false statements
The Court confirmed the imposition of gross negligence penalties in O’Hagan v R, 2023 TCC 52 (informal procedure) (a Fiscal Arbitrators case), after finding that the taxpayer had been “willfully blind” (among other things). The taxpayer submitted a return for…
Due diligence
What is due diligence for the purposes of a penalties that apply “automatically” such as under subsection 167(2)? Due diligence depends on whether the person believed on reasonable grounds in a non-existent state of facts which, if it had existed,…
Wilful Blindness
For the purposes of GST gross negligence penalties, a taxpayer will be treated as having made a misrepresentation ‘knowingly’ if the taxpayer was wilfully blind: if the taxpayer had reason to know that he or she should be making inquiries…
Avoiding late-filing penalties
The Court in Chen v Canada (Attorney General), 2019 FC 1435, seemed to accept that a taxpayer, to avoid late-filing penalties, could have filed a T1135 with estimates in it before the deadline and then filed an amended return later.…
Penalties and deeming rules
In Semenov v R, 2018 TCC 58, the CRA found unexplained deposits in the individual taxpayer’s personal bank account. The CRA applied a “deeming” rule to treat the amounts as unreported income subject to gross negligence penalties. The CRA applied…