Burden of establishing facts justifying assessment of penalty was on Minister

Tax - Income Tax - Administration and Enforcement

Taxpayer reported employment income of $81,568 in 2009 and $85,568 in 2010, and also claimed business losses of $235,375 in 2009 and $114,848 in 2010. Minister of National Revenue reassessed taxpayer, denying losses claimed in 2009 and 2010, and imposed penalties under s. 163(2) of Income Tax Act. Taxpayer’s appeal was dismissed. Tax Court of Canada judge found that taxpayer did not carry on any activity in 2009 or 2010 that could be recognized as business for purposes of Act and assessment of penalties was upheld. Taxpayer appealed. Appeal dismissed. At Tax Court, taxpayer limited appeal to only imposition of penalties. Errors that were made were not sufficient to warrant intervention. Burden of establishing facts justifying assessment of penalty was on Minister. Tax Court judge committed error when he told taxpayer that onus was on him to lead evidence to refute alleged facts as set out by Minister in replies once taxpayer stated that issue before Tax Court was limited to imposition of penalties. It did not necessarily follow that taxpayer would be entitled to new hearing. Based on testimony of witnesses, outcome was inevitable. Taxpayer failed to establish that his appeal should be allowed and that he should be granted new hearing or any other remedy based on statements made by Tax Court judge related to who had onus of proof and what role allegations of fact would play in relation to assessment of penalties. Taxpayer’s submissions with respect to Canadian Charter of Rights and Freedoms under s. 11(d) were without any merit and there was no basis for claim for discrimination under s. 15(1) of Charter. No error was made in awarding costs.

Kim v. Canada (2019), 2019 CarswellNat 3530, 2019 FCA 210, Wyman W. Webb J.A., Richard Boivin J.A., and Donald J. Rennie J.A. (F.C.A.); affirmed (2017), 2017 CarswellNat 10306, 2017 CarswellNat 7346, 2017 TCC 246, 2017 CCI 246, Guy R. Smith J. (T.C.C. [General Procedure]).

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