On December 1, 2016, the Tax Court of Canada released Amoako-Boatey v. R., a decision in which the Court upheld an earlier decision by the Minister of National Revenue (the “Minister”) to apply gross negligence penalties against a husband and wife who had made misrepresentations on their tax returns.
For the taxation years 2003 to 2006, Mr. Amoako-Boatey made claims for several thousands of dollars in charitable donations on his tax returns. Likewise, in 2004, Mrs. Amoako-Boatey claimed that she made a significant charitable donation, amongst other things. The Minister denied all of the claims on the basis that they were not made by Mr. or Mrs. Amoako-Boatey and applied gross negligence penalties to the resulting adjustments made to each of their incomes. Mr. and Mrs. Amoako-Boatey then appealed the decisions to the Tax Court of Canada. Ultimately, the Court upheld the Minister’s decisions, in part, including the decision to apply gross negligence penalties to the adjustments.
The Court noted that Mrs. Amoako-Boatey’s 2004 tax return, along with Mr. Amoako-Boatey’s 2003 to 2005 tax returns, were statute-barred. However, despite this, the Court found that the Minister had satisfied the onus imposed on her to show misrepresentation in order to be able to reassess these taxation years. As a result, it was the Court’s view that the Minister could deny the donations claimed by the couple on their respective returns.
In support of this finding, the Court indicated, among other things, that the couple were not credible, no donation receipts or supporting bank records were produced, no witnesses were called, and no other evidence to support their position was ever put forward. These findings by the Court, coupled with the fact that the couple had had their tax returns prepared by a man who had been convicted of fraud for claiming false charitable donations involving the very same charities to which Mr. and Mrs. Amoako-Boatey apparently donated, was enough to satisfy the Court on a balance of probabilities that the couple had knowingly made misrepresentations on their tax returns. Accordingly, because the Court had concluded that Mr. and Mrs. Amoako-Boatey had knowingly submitted false donations, the Court then indicated that it had “no difficulty concluding that the gross negligence penalties assessed against them should be upheld.”