Income Tax – Administration and enforcement
Taxpayer took advantage of employer-sponsored share purchase plan to acquire shares of employer’s US parent corporation. Taxpayer realized he should have started filing T1135 Specified Foreign Property form previous year when aggregate cost of shares first exceeded $100,000. Taxpayer wrote to CRA informing them of this and filled out T1135 forms for previous and current years. Canada Revenue Agency (CRA) assessed $1,500 penalty for late filing of first year. Taxpayer appealed. Appeal allowed. Most reasonable Canadian taxpayers would not necessarily find more information on foreign property under part of Taxpayer’s Guide headed “Foreign Income”. Taxpayers could not be expected to know that T1135 late filing penalties would only be waived by CRA if they formally applied under its Voluntary Disclosure Program since these information forms did not involve fraud or non-disclosure of income. Taxpayer may have voluntarily disclosed to CRA his late filing, but was unaware that he had to do it under formal Voluntary Disclosure Program to avoid court. Taxpayer was not cavalier about his income tax obligations and properly reported dividend income. This was appropriate case to apply due diligence defence.
Moore v. The Queen (2019), 2019 CarswellNat 3028, 2019 CarswellNat 3158, 2019 TCC 141, 2019 CCI 141, Patrick Boyle J. (T.C.C. [Informal Procedure]).
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