Nesbitt v. Canada
T-2319-90
Heald D.J.
5/1/96
11 pp.
Plaintiff's share of capital gain on 1981 sale of shopping centre $711,394.25-Due to accountant's error, plaintiff's share of gain reported on 1981 tax return as $71,139.42- Initial Notice of Assessment in respect of 1981 sent to plaintiff in 1982-In 1986 Revenue Canada requesting waiver in respect of four-year statutory limitation period for reassessment-Plaintiff declining to provide waiver- Revenue Canada subsequently contacting plaintiff's accountants who prepared, signed waiver in plaintiff's name- Plaintiff alleging waiver not signed by him or by person authorized by him-Filing Revocation of Waiver-Defendant arguing waiver obtained as part of ongoing negotiations with plaintiff's accountants; signed with actual, ostensible authority-Minister reassessing in 1987, 1989; plaintiff objecting-Income Tax Act, s. 152(4)(a)(i) permitting Minister to assess, reassess at any time if taxpayer or person filing return making any misrepresentation attributable to neglect, carelessness or wilful default-For s. 152(4)(a)(i) to apply, must show (1) plaintiff making misrepresentation; (2) misrepresentation attributable to neglect, carelessness, wilful default-Onus on Minister to establish requirements-Any incorrect statement "misrepresentation" as term used in s. 152(4)(a)(i)-Mathematical miscalculations, errors established by evidence encompassed by s. 152(4)(a)(i)-Plaintiff not carefully reviewing return before signing it-Asked accountant whether return accurate, but "pretty much" relied on accountant in so far as accuracy of return concerned- Perused return in general-Actions not establishing exercised reasonable care in completion of return-Cannot blame miscalculations or errors on preparer of income tax return-Plaintiff neglectful in respect of preparation, filing of 1981 return-Error relating to calculation of capital gains in magnitude of $300,000 should have been clearly apparent to plaintiff had he taken reasonable care in reviewing return-Defendant establishing plaintiff's tax return containing misrepresentation attributable to plaintiff's neglect, carelessness or wilful default-S. 152(4)(a)(i) applies-Defendant's assessments valid-Income Tax Act, S.C. 197071-72, c. 63, s. 152(4)(a)(i).