James Rhodes, in a recent post on the Canadian Tax Professionals group on LinkedIn, drew our attention to McIntrye v R, 2014 TCC 111, in which Justice Diane Campbell, among other things, found that the CRA was not bound by an agreed statement of facts (ASF) arrived at as part of a plea bargain and that the CRA, in assessing the taxpayers, was not required to make assumptions that were consistent with the ASF.
Justice Campbell followed a number of decided cases in finding that
prior convictions in criminal proceedings resulting from plea bargains, although a factor that may go to weight in a civil tax proceeding, are not determinative of the relevant facts and issues in a subsequent tax appeal.
In addition, Justice Campbell pointed out that, because of different evidentiary rules and burdens of proof
[g]enerally, courts have been reluctant to apply issue estoppel or abuse of process to relieve taxpayers from having to prove facts allegedly determined in a prior criminal proceeding.
Finally, she pointed out that
amounts dealt with in criminal proceedings are minimum amounts with respect to the civil proceedings. Therefore, the Minister is able to reassess amounts for income tax purposes in excess of the quantum of tax evaded and in respect of issues not determined in the criminal proceedings.
The bottom line for taxpayers? As James put it, a guilty plea is a floor, not a ceiling, for any related civil reassessments.
