The appellant appealed an assessment for the 2009 taxation year imposing a gross negligence penalty under subsection 163(2) of the Income Tax Act.
The appellant had used a tax preparer who reported a fictitious net business loss of $333,418 to generate a substantial refund.
The Tax Court of Canada dismissed the appeal, finding that the appellant was wilfully blind and grossly negligent in signing the return without reviewing it, given the blatant red flags including the magnitude of the purported loss and the unusually large refund.
