Failure To File Tax Returns: Canadian Tax Lawyer Guidance

• Published date: 21 June 2021
• Law Firm: Rotfleisch & Samulovitch P.C.
• Author: Mr David Rotfleisch

Merrill v R - tax guidance from an experienced Canadian tax lawyer with respect to failure to file tax returns

In 2019, the Canada Revenue Agency (CRA) served Mr. Merrill with Notices of Requirement to file his personal income tax returns for the 2014 to 2017 taxation years by April 30, 2019. However, Mr. Merrill believed he was not required to accept or respond to the Notices of Requirements. Most of his complaints and the defences he advanced were "organized pseudo-legal commercial arguments" ("OPCAs") as described and explained in Meads v. Meads, 2012 ABQB 571. British Columbia courts have repeatedly rejected these arguments. He didn't comply with the request until January 2020. Therefore, the CRA took the position that he was guilty of the strict liability offence in s.238(1) of the Income Tax Act due to failure to file or make a return as and when required by or under the Income Tax Act. After the trial judge ruled in favor of the CRA, Mr. Merrill decided to self-represent instead of retaining an experienced Canadian tax litigation lawyer and appealed to the BC Superior Court which upheld the trial judge's decision.

Failure to comply with the Notices of Requirement is a strict liability offence

The Notices of Requirement were issued pursuant to s.231.2(1) of the Income Tax Act and failure to comply is a strict liability offense according to s.238(1). A strict liability offence exists when a defendant is liable for committing an action regardless of what his/her intent or mental state was when committing the action. The only elements the CRA must prove beyond a reasonable doubt are 1) service of the notices and 2) the accused's failure to comply with them. To defend the case, Mr. Merrill may seek to establish 1) due diligence, 2) that the time provided to comply with the notices were unreasonable, or 3) that the demand was not made for purposes related to the administration or enforcement of the Income Tax Act.

Issues on appeal

There were mainly three issues on appeal:

1. Whether the trial judge erred by rejecting the defence advanced by Mr. Merrill that he was not required to accept or respond to the Notices of Requirement until he received a copy of the Oath of the CRA officer who served them.
2. Whether the trial judge erred by not permitting Mr. Merrill to call the CRA collector's supervisor as a defence witness.
3. Whether the trial judgement erred by rejecting the defence that Mr. Merrill ultimately filed his tax returns for the relevant taxation years...