Tax Court of Canada


Income tax

Administration and enforcement

Issue of whether reference to social insurance number differed depending on context required trial

Taxpayer brought motion under Rule 58 of Tax Court of Canada Rules for determination of issues relating to whether “Social Insurance Number” referred to in s. 237(1) of Income Tax Act was to be distinguished from “social insurance number” found on several CRA forms. It was clear from motion material that questions related directly to whether taxpayer exercised due diligence for purposes of gross negligence penalty assessed. Penalty was one of two issues to be decided as set out in taxpayer’s amended notice of appeal. Amended notice of appeal stated that taxpayer was no longer disputing that approximately $1,000,000 of unreported insurance sales commission related income from his company over four taxation years was properly reassessed. In addition to penalty issue, amended notice of appeal sought to claim approximately $100,000 of expenses incurred to earn insurance sales related to income. Whether taxpayer had or not exercised relevant due diligence sufficient to satisfy penalty provision in issue was dependent upon facts and circumstances including taxpayer’s credibility in satisfying court that it was reasonable for him not to report income because of fact that Act and CRA forms did not consistently capitalize term “Social Insurance Number” but at times used upper case and at times used lower case, and that sometimes acronym “SIN” was used without proper definition. It may require court to go on to decide whether that confusion reasonably caused him to think he should characterize insurance sales commission related income as “public money” as defined in Financial Administration Act. Motion dismissed. Answer to taxpayer’s two questions would not resolve appeal. There would still remain substantive issue of expenses that taxpayer sought to claim as deductions against his unreported income. Amount of penalty would be affected by any expenses allowed. Issues in taxpayer’s two questions could arguably meet requirements of Rule 58, however, issues were best left to trial judge in circumstances. Questions could not be properly decided by judge on motion in any manner that would reduce amount of time to hear and decide motion and remaining appeal. Taxpayer agreed that his initial answers to his questions were wrong. Answers to them were no longer in dispute and did not need to be determined in order to resolve appeal.

Marples v. The Queen (2017), 2017 CarswellNat 3270, 2017 TCC 129, Patrick Boyle J. (T.C.C. [General Procedure]).

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