Electrocan Systems Ltd. v. MNR, (1988) 95 N.R. 281 (FCA)

• Judge: Heald, Hugessen and Stone, JJ.
• Court: Federal Court of Appeal (Canada)
• Case Date: December 13, 1988
• Jurisdiction: Canada (Federal)
• Citations: (1988), 95 N.R. 281 (FCA)

Electrocan Systems Ltd. v. MNR (1988), 95 N.R. 281 (FCA)

MLB headnote and full text

Electrocan Systems Ltd. (appellant) v. Her Majesty the Queen (respondent)

(No. A-75-86)

Indexed As: Electrocan Systems Ltd. v. Minister of National Revenue

Federal Court of Appeal

Heald, Hugessen and Stone, JJ.

December 13, 1988.

Summary:

A corporate taxpayer properly withheld monies from its employees as required by s. 153 of the Income Tax Act, but failed to remit the monies to the Minister within the time prescribed by s. 108(1) of the Income Tax Regulations. The Minister imposed a penalty of 10% of the amount of the remitted tax as required under s. 227 (9) of the Act. The taxpayer brought an action claiming that s. 227(9) did not apply where the remittance was late, but made before a penalty was assessed.

The Federal Court of Canada, Trial Division, dismissed the action. See 2 F.T.R. 38. The taxpayer appealed.

The Federal Court of Appeal dismissed the appeal.

Income Tax - Topic 7822

Returns, assessments and appeals - Penalties - Failure to remit or pay tax - Income Tax Act, S.C. 1970-7172, c. 63, s. 227(9) - Section 227(9) provided that a person who failed to remit or pay any amount required to be deducted or withheld under the Act or Regulation or any amount of tax he was required to pay was liable to a penalty of 10% of that amount - A corporate taxpayer failed to remit monies withheld from employees within the time prescribed by s. 108(1) of the Income Tax Regulations, but did remit the monies before the penalty was assessed - The Federal Court of Appeal affirmed that the taxpayer was liable for the penalty, because liability arose immediately upon the breach of s. 108(1).

Statutes Noticed:

Income Tax Act, S.C. 1970-71-72, c. 63, sect. 227(9) [para. 1].

Income Tax Act Regulations, sect. 108(1) [para. 3].

Counsel:

David A.G. Birnie, for the appellant;

Ingeborg E. Lloyd, for the respondent.

Solicitors of Record:

Birnie, Sturrock & Bowden, Vancouver, British Columbia, for the appellant;

John C. Tait, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard by Heald, Hugessen and Stone, JJ., of the Federal Court of Appeal, at Vancouver, British Columbia, on December 13, 1988. The decision of the Federal Court of Appeal was delivered from the Bench by Hugessen, J., on December 13, 1988.