This Québec Superior Court applies some reasoning similar to the Ontario Court of Appeal in Schnier. (See esp. para. 121. The Court specifically refers to Schnier at para. 123, FN72.)
Essentially, the Court concluded that Revenue Québec (acting for itself and for CRA) could not set-off (under ETA s. 318) a disputed ITC reassessment (for over $313 million) from the pre-CCAA period against valid ITCs (and QC ITRs) for the post-CCAA time period. (This was notwithstanding that the basis for RQ’s claim was that Kitco’s ITCs were fraudulently claimed in a gold metal recycler scheme.)
[6] The Court concludes that the Agencies cannot apply set-off between undisputed credits and a disputed tax debt. [My translation from the French.]
The Court specifically addressed the statutory presumption that assessments are valid and binding (ETA s. 299(3), (4)), saying that it did not apply under the CCAA. (Para. 9)
See, though, paragraph 76 which, noting that the common law rule of equitable set off does not apply in Québec, may signal a weakness in applying this decision elsewhere in Canada. Nonetheless, the general proposition that CRA may not set-off pre-insolvency tax debts against post-insolvency tax credits makes sense. (At FN64, the Court refers to Re Jones, (2004) 2003 CanLII 21196 (ON CA), 45 C.B.R. (4th) 263, par. 19 in support.)
Métaux Kitco inc. (Syndic de), 2016 QCCS 444