Charky v. Canada (Attorney General), 2010 FC 1327

• Judge: Boivin, J.
• Court: Federal Court (Canada)
• Case Date: December 13, 2010
• Jurisdiction: Canada (Federal)
• Citations: 2010 FC 1327;(2010), 382 F.T.R. 73 (FC)

Charky v. Can. (A.G.) (2010), 382 F.T.R. 73 (FC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2011] F.T.R. TBEd. JA.007

Gabriel Charky (demandeur) v. Procureur général du Canada (defendeur)

(T-193-10; 2010 CF 1327; 2010 FC 1327)

Indexed As: Charky v. Canada (Attorney General)

Federal Court

Boivin, J.

December 23, 2010.

Summary:

The Assistant Director of Enforcement of the Montréal Tax Services Office of the Canada Revenue Agency denied the voluntary disclosure request made by Charky. Charky applied for judicial review.

The Federal Court dismissed the application.

Income Tax - Topic 3905.2

Interpretation - General - Departmental policy or guidelines - [See Income Tax - Topic 9381 ].

Income Tax - Topic 9381

Enforcement - Voluntary disclosure - General - The Assistant Director of Enforcement of the Montréal Tax Services Office of the Canada Revenue Agency denied the voluntary disclosure request made by Charky - The Assistant Director concluded that the disclosure was not voluntary because enforcement action that was likely to have uncovered the information that Charky wanted to disclose had already been initiated against the company of which he was president - Charky applied for judicial review - Charky attempted to show the apparent contradiction between paragraph 34 of circular IC00-1R2, and s. 3.2.4 of the "Voluntary Disclosures Program Guidelines" published by the Agency - The Federal Court rejected Charky's arguments - The guidelines were not interpretive tools in themselves and did not create law - The Income Tax Act, and more specifically s. 220(3.1), granted the Minister discretion and the guidelines could not fetter that discretion - In addition, the wording of the sections of the guidelines did not tend to limit the discretion set out in the enabling statute - A careful reading of the wording of the circular and the wording of the guidelines confirmed that they contained the same essential elements from which it could be concluded whether a disclosure was voluntary - See paragraphs 32 to 35.

Income Tax - Topic 9382

Enforcement - Voluntary disclosure - What constitutes - During the 2005 to 2007 taxation years, Charky was the president of Allianz Madvac Inc. - In Allianz's tax returns filed for those years, it deducted certain expenses from its business income that were personal expenses of Charky - In April 2007, a person at the Canada Revenue Agency contacted Jagger in Allianz's accounting department to inform him that there would be a general audit - In June 2007, members of the Agency extracted data from the company's accounting system - In July 2007, the Agency received a request for voluntary disclosure from Charky - The Assistant Director of Enforcement of the Montréal Tax Services Office denied Charky's voluntary disclosure request - The Assistant Director concluded that the disclosure was not voluntary because the enforcement action that was likely to have uncovered the information that Charky wanted to disclose had already been initiated against the company of which he was president - Charky applied for judicial review - The Federal Court dismissed the application - It was not unreasonable to conclude that there was a close connection between the Agency's contact with Jagger, an Allianz employee, and the voluntary disclosure request made by Charky - It was also not unreasonable to conclude that when the Agency extracted the computerized data from Allianz's accounting system it would have been able to uncover the information to which the disclosure request made by Charky would relate - It was reasonable for the Agency to deny Charky's voluntary disclosure request - See paragraphs 36 to 43.

Income Tax - Topic 9389

Enforcement - Voluntary disclosure - Judicial review or appeals - [See Income Tax - Topic 9382 ].

Cases Noticed:

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 20].

334156 Alberta Ltd. v. Minister of National Revenue (2006), 300 F.T.R. 74; 2006 FC 1133, refd to. [para. 21].

McCracken v. Canada, [2009] F.T.R. Uned. 756; 2009 FC 1189, refd to. [para. 21].

Spence v. Canada Revenue Agency (2010), 382 F.T.R. 1; 2010 FC 52, refd to. [para. 21].

Telfer v. Canada Revenue Agency (2009), 386 N.R. 212; 2009 FCA 23, refd to. [para. 21].

Maple Lodge Farms v. Canada (Minister of Economic Development), [1982] 2 S.C.R. 2; 44 N.R. 354, refd to. [para. 33].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 220(3.1) [para. 17].

Counsel:

Alain Ménard, for the applicant;

Ian Demers, for the respondent.

Solicitors of Record:

Cain Lamarre Casgrain Wells, Montreal, Quebec, for the applicant;

Myles J. Kirvan, Deputy Attorney General of Canada, for the respondent.

This application was heard on December 13, 2010, at Montreal, Quebec, before Boivin, J., of the Federal Court, who delivered the following judgment on December 23, 2010.