The taxpayer is a corporation. It didn’t withhold CPP from payments to its sole shareholder and officer, as CRA had told it to do. Finally, CRA charged it $9,000 in interest and penalties. The corporation asked CRA to waive these charges; CRA disagreed; the taxpayer asked again (as you are allowed to do); CRA refused again and the taxpayer asked the Federal Court to get involved (“judicial review”). The Court agreed with CRA.
It’s rarely worthwhile to ask the Federal Court for judicial review. Even if the judge agrees, he can only send the file back to CRA to look again. In this case, the evidence showed “that the applicant had “a history of non-compliance with tax obligations” (para. 10). So, the judge said that the shareholder and his corporation “are authors of their own misfortune.”
In this case, the taxpayer tried an argument that has helped others: saying that the CRA “fettered its discretion by only considering whether the taxpayer’s situation fell under ‘extraordinary circumstances’.” Courts have said that, when deciding to waive interest, CRA must not restrict its decision to its own Guidelines or in any other way. But in this case, the judge said that CRA hadn’t restricted itself; the taxpayer “chose to indicate that relief was warranted for ‘extraordinary circumstances,’ only.” (Para. 13) CRA considered the application on that basis and the Court saw that restriction as proper.
So, when filing a relief request, you should be careful in how you describe your view of the reason CRA should waive interest and penalty. But even then, if CRA imposed a penalty for a good reason, you usually can’t get it waived.