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Taxpayer Relief & Bankruptcy

Re Rousseau, 2016 ONSC 962 (Ont. Master) – No extra fees or charges by agreement for Consumer Proposal

Richard Killen & Associates Inc. had an agreement with its debtor for extra fees: “​[6] … the Administrator seeks to be paid for legal expenses incurred in the registration and filing, and subsequent removal, of a restrictive covenant in favour of the Administrator against the Debtor’s real property as security for compliance with the terms of the Proposal. The fees were authorized by the Debtor and fully… Read More »Re Rousseau, 2016 ONSC 962 (Ont. Master) – No extra fees or charges by agreement for Consumer Proposal

Conocophillips Canada Resources Corp. c. Canada (National Revenue), 2016 FC 98 (Boswell) — If you miss the deadlines for filing a Notice of Objection, you can still ask CRA to waive the requirement

This decision could dramatically change a taxpayer’s options where it misses the time limit for filing a notice of objection. The general rule is that where a taxpayer misses the deadline for filing the notice of objection (90 days after assessment) plus the additional one year time limit within which to apply for an extension, the taxpayer has no relief.  (See ITA s. 165(1)(b) (90-day limit), 166.1(7)(a)… Read More »Conocophillips Canada Resources Corp. c. Canada (National Revenue), 2016 FC 98 (Boswell) — If you miss the deadlines for filing a Notice of Objection, you can still ask CRA to waive the requirement

Levenson v. Canada (Attorney General), 2016 FC 10 (HS Brown) – taxpayers have a duty to put their best case to CRA, not to the court, when seeking waivers

The taxpayer in this case sought judicial review of the CRA’s refusal to waive penalty tax for RSP over contributions. “[9] … I want to say that taxpayers have a duty to put their best case to a delegate when seeking relief under subsection 204.1(4) of the ITA. They must provide salient facts in their favour. They cannot expect material they fail to file will be… Read More »Levenson v. Canada (Attorney General), 2016 FC 10 (HS Brown) – taxpayers have a duty to put their best case to CRA, not to the court, when seeking waivers

Schnier v. Canada (Attorney General), 2016 ONCA 5 (DM Brown) — if you plan bankruptcy, it’s important to file your Tax Court appeal first 

This decision of the Ontario Court of Appeal suggests that a taxpayer who plans to relieve a tax debt through bankruptcy should file a Tax Court appeal first in order to have CRA’s claim treated as a contingent liability so that the special rules favouring the Crown do not apply. “[6]         The issue, then, on this appeal is a narrow one: In calculating Mr.… Read More »Schnier v. Canada (Attorney General), 2016 ONCA 5 (DM Brown) — if you plan bankruptcy, it’s important to file your Tax Court appeal first 

Girard (Syndic de), 2014 QCCA 1922 — If you declare bankruptcy or make a proposal, CRA may not be able to reassesses you

[44]        Section 69.3 BIA prohibits actions and proceedings “with a view to the recovery of provable claims”. The ordinary meaning of the words conflicts with the [CRA’s] position that the notice of assessment is not a recovery measure. While it is true, as stated above, that the notice does not enable recovery on its own, the fact remains that it is issued with a view to recovering this… Read More »Girard (Syndic de), 2014 QCCA 1922 — If you declare bankruptcy or make a proposal, CRA may not be able to reassesses you

Saber & Sone Group v. Canada (National Revenue), 2014 FC 1119 (Kane) – A decision to revoke E-filer rights must consider the accountants’ compliance history and the impact of the loss of privileges on the accountants. 

In this case, the taxpayers were accountants.  They had had a dispute with their children and had used their CRA authorizations to access information about the children.  The children complained. CRA revoked the accountants’ E-filer status.  The accountants sought administrative review. When the revocation was confirmed, they sought judicial review. The Federal Court usually upholds CRA’s decisions but not in this case.  [30]           The reasonableness… Read More »Saber & Sone Group v. Canada (National Revenue), 2014 FC 1119 (Kane) – A decision to revoke E-filer rights must consider the accountants’ compliance history and the impact of the loss of privileges on the accountants. 

Sailsman v. Canada (National Revenue), 2014 FC (LeBlanc) — Is CRA your adversary?

The taxpayer, having returned to Canada at the end of 2010, presumed that he no longer had to file a 2010 Rental Income Return.  CRA took the view that he had to file the return due under s. 216(4), even though he was no longer a non-resident. Having failed to do so, he had to pay the higher amount due under that subsection. So Mr. Salisman… Read More »Sailsman v. Canada (National Revenue), 2014 FC (LeBlanc) — Is CRA your adversary?

Fung v. Canada (Attorney General), 2014 FC (Mactavish) — If you want taxpayer relief for late filing a T1135 foreign property return you must give CRA proper evidence and you need more than ignorance of the rules for your excuse

Ms. Fung sought judicial review of CRA’s refusal to cancel penalties and interest for her failure to file the T1135 on time.  (The case isn’t clear whether Ms. Fung filed only because she was caught.)  CRA did not accept her excuse that she was affected by the need to care for her premature infant (the facts contradicted her).  She also said she didn’t know she… Read More »Fung v. Canada (Attorney General), 2014 FC (Mactavish) — If you want taxpayer relief for late filing a T1135 foreign property return you must give CRA proper evidence and you need more than ignorance of the rules for your excuse

1057513 Ontario Inc. v. The Queen, 2014 TCC (Bocock) — To get the dividend refund under ITA s. 129(1), you must file your corporate tax return within three years of the due date and claim the refund within the normal reassessment period

Because its shareholders and directors didn’t understand the rules, he corporate taxpayer stood to lose $1,442,760 of dividend refunds, plus about $600,000 of penalties and interest.  It tried to persuade the Court that the refund rule should be interpreted generously to prevent that harsh result.   Here, Justice Bocock gives us a helpful explanation of an important principle of income tax law, “Integration”, and how the… Read More »1057513 Ontario Inc. v. The Queen, 2014 TCC (Bocock) — To get the dividend refund under ITA s. 129(1), you must file your corporate tax return within three years of the due date and claim the refund within the normal reassessment period

Gilbert c. Canada (Revenu National), 2014 CF 890 (St-Louis)–You can’t use CRA Taxpayer Relief & Federal Court judicial review to challenge an assessment

The taxpayer challenged three different CRA assessments, with some success, in the Tax Court of Canada and the Federal Court of Appeal. (There were at least four hearings overall; the SCC refused leave to appeal the FCA decision on the appeal of the s. 160 non-arm’s length transfer assessment.)   He then sought interest relief on the basis that the assessments were invalid and made in… Read More »Gilbert c. Canada (Revenu National), 2014 CF 890 (St-Louis)–You can’t use CRA Taxpayer Relief & Federal Court judicial review to challenge an assessment

Prince v. ACE Aviation Holdings Inc., (2014 ONCA Strathy) — If the US IRS wrongly charges you tax, go to the US Courts first

Suppose Air Canada collects a US travel tax on your plane fare, should you be able to get it back by suing Air Canada in Ontario?   Canadian Courts, as a general rule, won’t enforce US tax laws in Canada.  In this case, Air Canada passengers sued Air Canada for improperly collecting US travel taxes on their plane fares.  The Ontario Court of Appeal put… Read More »Prince v. ACE Aviation Holdings Inc., (2014 ONCA Strathy) — If the US IRS wrongly charges you tax, go to the US Courts first

Higgins v. Canada (Attorney General), (2014 FC Phelan) — Don’t expect interest or penalty relief if you commit tax evasion

Suppose you’re guilty of tax evasion.  Could you get interest and penalty waived from your tax debt on the basis of financial hardship?  You might.  Well, what if you can’t show financial hardship, could you still get interest and penalty waived for “financial hardship”?  No, of course not.   “[3]   In 2009 the Applicant pled guilty to wilfully evading payment of income taxes by failing… Read More »Higgins v. Canada (Attorney General), (2014 FC Phelan) — Don’t expect interest or penalty relief if you commit tax evasion

Persaud v. The Queen, (2013 TCC Woods) — A premature objection can be valid

Suppose CRA sends you a letter saying it will not allow a deduction or credit you claim and, thinking that is a reassessment notice, you file a letter objecting to it.  Four months later, CRA sends you the formal reassessment notice but, having already filed your objecting letter, you don’t send anything more.  Was your earlier letter a valid objection to the formal notice of… Read More »Persaud v. The Queen, (2013 TCC Woods) — A premature objection can be valid

Cogesco Services Limited c. Canada (2013 CF Roy) — CRA must at least address your reasons if it denies you interest or penalty relief

Suppose you didn’t file tax returns because you had no tax payable and, at the time, the Tax Court had said there was no penalty for a non-resident not filing returns if it had no tax payable.  Later, though, in another case, the FCA over-turned the Tax Court views, saying a different penalty rule still applied.  So, CRA assessed you a failure to file penalty. … Read More »Cogesco Services Limited c. Canada (2013 CF Roy) — CRA must at least address your reasons if it denies you interest or penalty relief

Tatiana Baran (Re), (2013 ONSC DM Brown) – If you declare bankruptcy without objecting to a CRA reassessment, your higher tax debts may affect your discharge

If a CRA auditor wrongly assesses you for $850,000 of tax, interest and penalty because the auditor refused to recognize your temporary employment agency’s employee expenses, and, instead of filing an objection with the CRA, you file an assignment in bankruptcy, can you challenge the CRA’s wrong assessment through the bankruptcy process?  No.  The result will be that you will have higher debts than you should… Read More »Tatiana Baran (Re), (2013 ONSC DM Brown) – If you declare bankruptcy without objecting to a CRA reassessment, your higher tax debts may affect your discharge

Kotel v. Canada (Attorney General), 2013 FC (McVeigh)  — Taxpayer relief — CRA won’t waive interest and penalty you owe if you or your spouse can afford to pay where your error arose from bad accounting advice 

Alex Kotel paid CRA $150,000.  He still owed that amount for taxes, interest and penalties, even after CRA cancelled $38,156.75 of interest because it had taken three years to deal with his Notice of Objection.  He asked CRA to cancel more interest and the $13,000 of late filing penalties he owed for not filing his 1999-2002 personal tax returns on time.  It refused, in part because it didn’t think he… Read More »Kotel v. Canada (Attorney General), 2013 FC (McVeigh)  — Taxpayer relief — CRA won’t waive interest and penalty you owe if you or your spouse can afford to pay where your error arose from bad accounting advice 

Radonjic v .Canada Revenue Agency, (2013 FC Russell) — Even if you play poker full time, your winnings may not be taxable

Mr. Radonjic was a poker player.  In 2004, he began winning in online poker and by May, he was so successful, he made poker his full-time job.  He had multiple computer screens (up to 10 monitors) running poker games in his home office.  So, relying on advice from his accountant and on CRA’s discussion of Gambling Profits in its Bulletin IT-334R2 (“Miscellaneous Receipts”), he filed his 2004-2007… Read More »Radonjic v .Canada Revenue Agency, (2013 FC Russell) — Even if you play poker full time, your winnings may not be taxable

1148902 Ontario Limited (2013 FC, Zinn) – CRA can waive interest but will not if you’re at fault

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… Read More »1148902 Ontario Limited (2013 FC, Zinn) – CRA can waive interest but will not if you’re at fault