The idea is that you are not taxable because you are an agent for yourself. (The argument's more involved but, as Justice Woods said, it's "pure nonsense".)
Ms. McLeod "was employed by Edmonton Public Schools." She earned employment income of about $43,000. In 2009, she claimed a net business loss of $157,196.40. It was totally false -- she had no business; she had no expense; she had no loss. CRA assessed her a penalty of $24,184.93. Justice Woods said the penalty was good.
The TCC is hostile to these false claims and has no sympathy for the taxpayers who get involved. As Woods J said:
" I am not persuaded by an argument based on sympathy. I accept that the penalty is higher in this case than it would be in others, but the participation of Ms. McLeod in this scheme is reprehensible. The victims in this case are Canadian taxpayers – not Ms. McLeod."
For similar decisions, see: Chénard v. The Queen, 2012 TCC (Bedard), Bhatti v. The Queen, 2013 TCC (C. Miller), and Janovsky v. The Queen, 2013 TCC (V. A. Miller).
See McLeod v. The Queen, 2013 TCC (Woods)