Supreme Court of Canada: Advisor penalty Does not Imply a Criminal Offence

By Robert Robillard - 4 août 2015

This blogpost originally appeared on

In Guindon v. Canada, 2015 SCC 41, the Court stated:

[1] Income tax law is notoriously complex and many taxpayers rely on tax advisors to help them comply.  Given the important role played by tax advisors and other individuals involved in transactions affected by income tax considerations, Parliament enacted s. 163.2  of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .) (ITA ), which imposes monetary penalties on every person who makes a false statement that could be used by another person for the purpose of the Act.

[2] [J.G], the appellant, was assessed penalties under s. 163.2(4) totalling $546,747 in respect of false statements made by her in donation receipts issued by her on behalf of a charity which, it is alleged, she knew or would reasonably be expected to have known could be used by taxpayers to claim an unwarranted tax credit.

[3] [G] says that the penalty imposed under s. 163.2(4) is criminal and that she is therefore a person “charged with an offence” who is entitled to the procedural safeguards provided for in s. 11  of the Canadian Charter of Rights and Freedoms .  Accordingly, she argues that the matter should not have proceeded in the Tax Court of Canada and that the penalty against her should be vacated.

[4] She was successful in the Tax Court of Canada but the Federal Court of Appeal set that decision aside. Her final appeal to this Court raises two issues, one procedural and one substantive. The procedural issue concerns the consequences of [G]’s failure in the courts below to give the required notice of constitutional questions in relation to her claims under s. 11  of the Charter. Proper notice has been given in this Court. The substantive issue is whether 163.2(4) creates a true criminal offence and therefore engages the protections provided for under s. 11 .

[5] In our view, this Court has a well-established discretion, albeit one that is narrow and should be exercised sparingly, to address the merits of the constitutional issue when proper notice of constitutional questions has been given in this Court, even though the issue was not properly raised in the courts below. We would exercise that discretion in this case. However, we would decide the substantive issue in favour of the respondent. In our view, proceedings under s. 163.2  are of an administrative nature.  [G] therefore is not a person “charged with an offence” and accordingly the protections under s. 11  of the Charter  do not apply.  In the result, we would dismiss the appeal »

The complete case is available here.

Guindon v. Canada, 2015 SCC 41

The library on Transfer Pricing in Canada is available here.

Robert Robillard, Ph.D., CPA, CGA, Adm.A., MBA, M.Sc. Econ., M.A.P.
Senior Partner, RBRT Inc.
514-742-8086; robertrobillard « at »

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