Third Party Penalties Under The Income Tax Act Survive Constitutional Challenge

On July 31, 2015 the Supreme Court of Canada ("SCC") released its much anticipated decision in the Guindon¹ case confirming the constitutionality of the penalty regime contained in section 163.2 of the Income Tax Act (the "ITA") for third-parties who make, or participate in the making of, false statements for use by taxpayers to reduce their tax liability under the ITA. The regime provides for, potentially, very significant penalties for third parties who make such false statements in circumstances amounting to culpable conduct.

Background

Ms. Guindon (the "Appellant") was a lawyer who provided a legal opinion on a tax-motivated donation program called the Global Trust Charitable Donation Program (the "Program"). Under the Program, participants would acquire timeshare units of and would donate those units to a charity at a fair market value greater than their cash payment for the timeshare units. The legal opinion was based on a precedent provided by the