If, through lack of vigilance, blindly and imprudently you let your accountant defraud you by keeping your money instead of sending it to CRA, but you weren’t secretly or expressly involved in or benefiting from his stratagems, are you liable for gross negligence penalties for his failures to accurately report and pay your taxes? No. (Paras. 74 and 82)
Though an experienced business man and a human resources specialist, Mr. Vachon trusted a shady accountant to file his tax returns and remit the money due. At first Vachon made cheques payable directly to CRA or Revenue Quebec, but later, he just made the cheques to the former H&R Block accountant, Simard. Simard kept the money. Mr. Vachon had to pay the amounts still owing for tax that Simard stole, but he didn’t have to pay the penalties. (In effect, he already had been penalized by the fraud.)