News from Tax Court: Crown appeals Guindon

The Crown has appealed a recent Tax Court of Canada (TCC) decision that ruled penalties were criminal in nature, not civil. If the ruling is upheld, advisors will come under increased scrutiny.

In the decision, Guindon v The Queen (2012) (Knowledge Bureau Report, Oct. 31), the TCC noted that the penalties imposed on tax advisor Julie Guindon pursuant to section 163.2 of the Income Tax Act were not civil in nature, but rather criminal.

The criminal classification attracts extra safeguards for an accused, most notably that guilt has to be proven beyond a reasonable doubt, and that the Charter of Rights and Freedoms applies throughout the entire process, guaranteeing all legal rights within. But it also means the TCC can’t impose penalties, because it lacks jurisdiction in criminal matters.

The Crown has appealed the finding of the TCC that the phrase “culpable conduct” is different than “gross negligence.” Guindon had been found guilty of culpable conduct but the TCC was unable to impose a penalty. Guindon has yet to file a cross-appeal.

This decision will affect tax advisors greatly. Knowledge Bureau Report will be following this important decision closely.