Elmer T. Carlson (Plaintiff)
v.
The Queen (Defendant)
and
Gordon E. Carlson (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Bastin D.J.—Saskatoon, Sas-
katchewan, March 23, 1973.
Income tax—Late filing penalties—Unsigned documents
partially completed filed as "temporary returns'—Whether
"returns"—Income Tax Act, s. 44.
Two brothers, who farmed in partnership in Saskatche-
wan, employed an accountant to prepare their tax returns
for 19701. On their failure to supply him the necessary
information the accountant on April 30, 1971, filed returns
marked "temporary returns" which were unsigned and did
not contain all the prescribed information. Duly completed
returns were filed by the brothers some days later. They
were assessed to penalties for late filing, and appealed.
Held, affirming the Tax Appeal Board, the penalties were
properly assessed. The documents filed by the accountant
on April 30, 1971, were not income tax returns within the
meaning of section 44 of the Income Tax Act.
Hart Electronics Ltd. v. The Queen (Man. C.A.) 59 DTC
1192, distinguished.
INCOME tax appeal.
COUNSEL:
K. E. Barton for plaintiffs.
L. P. Chambers for defendant.
SOLICITORS:
Estey and Robertson & Co., Saskatoon, for
plaintiffs.
Deputy Attorney General of Canada for
defendant.
BASTIN D.J.—It was agreed that the trial of
the action by Elmer T. Carlson and that of
Gordon E. Carlson should be heard together.
Both actions seek to recover a penalty imposed
by the Minister of National Revenue for late
filing of income tax returns for the year 1970, in
the case of Elmer T. Carlson of $27.12 and in
the case of Gordon E. Carlson of $107.31.
The plaintiffs are brothers who farm in part
nership at Watrous in Saskatchewan. As Elmer
T. Carlson was physically handicapped, his
brother Gordon kept the books of the partner
ship, attended to its business and to the prepara
tion and filing of income tax returns with the
assistance of an accountant in Saskatoon named
Donald G. Clandinin. Gordon E. Carlson was to
deliver to Clandinin the necessary information
to prepare income tax returns for the brothers at
an appointment on April 15th 1971 but on April
1st he informed Clandinin that an urgent busi
ness trip to Calgary would prevent him from
keeping this appointment. Clandinin thereupon
prepared income tax forms for the Carlson's
marking them "temporary returns" and filed
them on April 30th 1971. These forms bore no
signatures and did not contain all the prescribed
information as to the income of the two broth
ers. Subsequently income tax returns containing
all required information were prepared and
signed by the Carlson brothers which were
dated May 5th 1971 and filed on May 18th
1971.
On or about July 30th 1971, the Carlson
brothers each received a notice of assessment
which included the assessed penalties. They
filed notices of objection and on the assessment
of the penalties being confirmed by the Minister
they appealed the decision of the Minister to the
Tax Review Board. By its decision of July 10th
1972 the Tax Review Board dismissed their
appeals. I hold that it has not been proved that it
was impossible for the plaintiffs to complete,
sign and file their income tax returns by April
30th 1971. The plaintiffs argue that on the
authority of Hart Electronics Limited v. The
Queen 59 DTC 1192, the documents delivered
by Clandinin to the Income Tax Department on
April 30th 1971 were income tax returns.
The judgment in question was a decision of
the majority of the Manitoba Court of Appeal
on a case stated by Magistrate D.C.M. Kyle
following his dismissal of a charge of failing to
file an income tax return. The fact which distin
guishes that case from the case at bar is that the
taxpayer in the Hart case enclosed the income
tax return in a letter. I conclude that the learned
judges considered that the income tax form was
sufficiently identified by the letter to become a
binding representation of the taxpayer. In the
case of the Carlson brothers the returns pre
pared by Clandinin and filed on April 30th 1971
would not be binding on the taxpayers. This is a
very important distinction. Obviously for the
penalties for giving wrong information to apply,
the taxpayer must be bound by the representa
tions in the form. Section 44 requires an
individual without notice or demand therefor to
file a return with the Minister on the prescribed
form and containing the prescribed information
by April 30th in each year. The word "pre-
scribed" by section 139(1)(a) means "in the
case of a form or the information to be given on
a form, means prescribed by order of the Minis
ter, and, in any other case, means prescribed by
regulation."
The prescribed information is clearly indicat
ed by the various headings in the income tax
form. The form calls for the certificate as to the
accuracy of the information given by the tax
payer over his signature. Section 44(1)(d)
excuses the filing of the return by the taxpayer
"if he is unable for any reason to file the
return" and the return may then be filed by "his
guardian, curator, tutor, committee or other
legal representative". To enable the plaintiffs to
rely on this provision, they must plead and
prove that they were unable to file the return.
As they have neither pleaded nor proved the
fact, this provision does not avail them so it is
not necessary for me to decide whether Mr.
Clandinin comes within the scope of the words
"other legal representative" as used in this
subsection.
It is admitted that the returns filed by Clandi-
nin did not contain all the prescribed informa
tion as to the income of the Carlson brothers.
The returns which were signed by the Carlson's
and filed on May 18th 1971 did contain all
required information to enable the Department
to make an assessment. It is obvious that the
Carlson brothers intended these later and com
plete returns to be the income tax returns on
which they intended their assessment for
income tax to be based. If so they never intend
ed the forms sent in by Clandinin to be treated
as income tax returns. I know of no principle
which entitles a taxpayer to avoid the penalty
for late filing by sending in a document which is
not intended to be the taxpayer's income tax
return but merely an intimation that a return will
be filed at some later date.
I hold that the penalties were properly
assessed and I dismiss the two actions.
From the evidence of Mr. Clandinin it
appears that the local offices of the Income Tax
Department in Saskatchewan and Alberta have
permitted the practice of accepting temporary
or interim returns to be filed and replaced later
by proper returns without objection or penalty.
In view of this I am not imposing costs on the
plaintiffs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.