Electrocan Systems Ltd. v. Minister of National Revenue, (1986) 2 F.T.R. 38 (TD)

• Judge: Dube, J.
• Court: Federal Court (Canada)
• Case Date: January 14, 1986
• Jurisdiction: Canada (Federal)
• Citations: (1986), 2 F.T.R. 38 (TD)

Electrocan Systems Ltd. v. MNR (1986), 2 F.T.R. 38 (TD)

MLB headnote and full text

Electrocan Systems Ltd. v. Minister of National Revenue

(No. T-1373-84)

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

Federal Court of Canada

Trial Division

Dube, J.

January 17, 1986.

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 with 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.

Income Tax - Topic 7822

Returns, assessments and appeals - Penalties - Failure to remit or pay tax - Income Tax Act, S.C. 1970-71-72, 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 Canada, Trial Division, affirmed that the taxpayer was liable for the penalty, because liability arose immediately upon the breach of s. 108(1).

Cases Noticed:

Minister of National Revenue v. Weeks, 71 D.T.C. 6001, refd to. [para. 7].

Minister of National Revenue v. Simard Beaudry Inc., 71 D.T.C. 5511, refd to. [para. 9].

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:

Appearances: D. Birnie, for the plaintiff;

I. Lloyd, for the defendant.

Solicitors of Record:

Birnie, Sturrock and Bowden, Vancouver, B.C., for the plaintiff;

F. Iacobucci, Deputy Attorney General for Canada, Ottawa, Ontario, for the defendant.

This action was heard on January 14, 1986, at Vancouver, B.C., before Dubé, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on January 17, 1986.