Federal Court


Income tax

Administration and enforcement

Analysis was inadequate for failure to consider whether exception to limitation period applied

Taxpayer received government grants on behalf of its owner R Inc., which were incorrectly reported in taxpayer’s taxable income instead of being reported by R Inc., such that taxpayer over-reported its annual income by about $9 million for number of years. Taxpayer advised CRA of situation but, due to passage of normal period of time for requesting reassessment and for filing waivers that would allow adjustment, they could not agree on solution for taxation years 2009 and 2010 . Taxpayer asked Minister to reassess its taxes under s. 152(4)(a)(i) of Income Tax Act, arguing that exception to limitation period applied as misrepresentation was due to negligence. Minister refused on basis that she did not have discretion to reassess under that provision where taxpayer’s negligence led to over-reported income. Taxpayer applied for judicial review. Application granted. Decision did not contain textual, contextual, or purposive analysis of provision to support view that it could not be relied upon to taxpayer’s benefit. Argument that Minister had no duty to release reasons to taxpayer did not answer concern for existence of justification, transparency and intelligibility within decision-making process. Minister’s exercise of discretion was not isolated from judicial review, but only source of reasons in record was internal opinion letter that lacked any real analysis of whether Minister had legal authority to reassess statute-barred years. Analysis was inadequate for its failure to consider whether exception to limitation period applied or to explain conclusory statement that reassessing taxpayer’s tax years would render ss. 152(3.1) and (4)(a)(ii) of Act meaningless. Nothing in record indicated any other reasons to support conclusion that Minister conducted analysis required when performing legislative interpretation and so Minister failed to reach reasonable decision . This was not appropriate case for court to provide interpretation for Minister and so matter would be returned for redetermination.

Revera Long Term Care Inc. v. Minister of National Revenue (2019), 2019 CarswellNat 1236, 2019 CarswellNat 522, 2019 FC 239, 2019 CF 239, Shirzad Ahmed J. (F.C.).

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