A taxpayer cannot rely blindly on his/her advisers, and has a duty to examine his/her own returns for accuracy

2011 DTC 1088 Nadyne Brochu (Appellant) v. Her Majesty the Queen (Respondent)

Nadyne Brochu (Appellant) v. Her Majesty the Queen (Respondent)

2011 DTC 1088

 

Neutral Citation: 2011 CCI 75

Tax Court of Canada

Date: February 10, 2011

Court File No. 2009-3400(IT)I (Informal Procedure)

English translation provided by the Court at 2011 DTC 1149.

Federal income tax — Deductions — Business expenses — Child care expenses — Married person tax credits — Reassessments beyond normal reassessment period — Penalties — Whether Minister justified in disallowing business expense, child care expense, and tax credit deductions claimed, and imposing penalties for gross negligence — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), ss. 63(1)118(1)(a)152(3.1)(b)152(4)(a)152(4.2)163(2)163(3).

Facts: The Minister reassessed the taxpayer for 2001, 2004, and 2006. The reassessments for 2001 and 2004 were made beyond the normal reassessment period. The Minister disallowed business loss deductions claimed for 2001 and 2006, disallowed a married person tax credit claimed for 2001, disallowed child care expense deductions claimed for 2004, and imposed penalties for gross negligence for 2001 and 2006. On appeal to the Tax Court of Canada, the taxpayer admitted to having no business, having no spouse during 2001, and having a common-law spouse during 2004 with an income less than hers. She also alleged that she had relied completely on her accountant in preparing her returns, and was therefore not responsible for the misrepresentations contained in them.

Held: The taxpayer’s appeal was dismissed. A taxpayer cannot rely blindly on his/her advisers, and has a duty to examine his/her own returns for accuracy. In this case, the taxpayer’s conduct failed to meet this standard. In light of the taxpayer’s admissions at trial, and taking into account her blind reliance on her accountant when signing her returns, the Minister’s reassessments were justified and affirmed accordingly.

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