Jason Stober

The appellant appealed a reassessment imposing gross negligence penalties under subsection 163(2) of the Income Tax Act for claiming fictitious business losses in his 2009 taxation year.

The appellant had used the services of Fiscal Arbitrators to claim nearly $400,000 in losses despite never operating a business.

The Tax Court of Canada dismissed the appeal, finding that the appellant was wilfully blind to the blatant false statements in his return and failed to make proper inquiries despite his education and experience.

The appellant appealed a gross negligence penalty imposed under subsection 163(2) of the Income Tax Act for claiming $320,000 in fictitious business losses in his 2009 income tax return.

The losses were claimed through the Fiscal Arbitrator tax preparation scheme.

Applying the Torres framework, the Tax Court of Canada found the appellant was wilfully blind to the blatant false statements and the magnitude of the resulting tax refund.

The appeal was dismissed with costs.

The Respondent brought a motion to amend its amended reply to the notice of appeal to advance an alternative argument under subsection 152(9) of the Income Tax Act.

The proposed amendment argued that in disallowing the Appellant's capital cost allowance deduction, the Minister upheld the Appellant's deduction for cost of goods sold, and the Appellant cannot deduct both for the same property.

The Tax Court of Canada granted the motion, finding that the proposed amendments would help ensure clarity and certainty at the hearing without causing prejudice to the Appellant.