The Folly of Feeble Tax Appeals

A recent decision of the Tax Court of Canada serves as a caution to taxpayers who appeal their reassessments on feeble or fabricated grounds: parties who do so may face costly consequences.

Subsection 10(2) of the Tax Court or Canada Rules (Informal Procedure) enables the Court to award costs to the Crown if the actions of an appellant unduly delay the prompt and effective resolution of an appeal.

Amyan v. The Queen concerned the deduction of child care expenses of $12,795 and $13,000 in the 2007 and 2008 taxation years respectively. The appellant did not appear at the trial personally because she was taking care of a newly born child, but her husband appeared on her behalf. Mr. Amyan was not very convincing in court, to say the least. He stated that he helped his wife prepare the Notice of Appeal and admitted that several statements made within it were false. Specifically, he stated that the receipts for child care expenses for the years in question were not actually given to their accountant because he never had such receipts, and that he and his wife paid $800 for a letter from someone purporting to be a babysitter to claim $6,500 in childcare expenses from the Canada Revenue Agency. Although the Honourable Justice Miller felt that the couple did incur some childcare costs in the years in issue, no evidence was presented to that effect.

The Crown requested costs of $1,000 against the appellant on the basis that there was an abuse of process because the appellant was dishonest in her pleadings and the hearing was a waste of the Court’s time. Further, argued the Crown, it was not a case of insufficient evidence, but of no evidence at all. Justice Miller was of the opinion that the false statements in the Notice of Appeal constituted an abuse of this Court’s process and ordered that costs of $625 be paid to the Crown for partial costs of the proceeding.

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.