Limitation period in Crown Liability and Proceedings Act overridden by limitation period set out in Income Tax Act

Federal court | Tax | Income tax | Administration and enforcement

Taxpayer had income tax debt arising for taxation years from 1994 to 1996. There was history of collection action taken by Canada Revenue Agency (CRA), including application to tax refunds to that debt. In 2005, taxpayer was advised by CRA that it would not legally collect arrears but letter also advised that credits due to taxpayer from Federal Government would be applied to those arrears. Taxpayer was ill from 2010 to 2017 and was on long term disability, was eligible to claim Federal Disability Tax Credit for 2010 until 2018 taxation year, but he did not claim credits, because he opined he would have been denied benefit due to his tax debt. Taxpayer brought action for order for declaration that debt of taxpayer was statute barred from collection. Action dismissed. Taxpayer’s argument, that limitation argument exists and that tax debt was time-barred, because it arose prior to enactment of s. 222(4) of Income Tax Act, could not succeed. According to s. 222(1) of Act, action to collect tax debt included application of refund due from Federal Government, or, sometimes, from Provincial Government, to outstanding tax debt. Section 164 of Act allowed Minister to apply any tax overpayments and any refunds due from Federal Government to taxpayer’s tax debt. Combined effect of provisions meant that taxpayer’s tax debt was not time-barred and taxpayer could not claim benefit of limitation period set in Crown Liability and Proceedings Act, supra, since that provision was overridden by limitation period set out in Act. There was no genuine issue for trial with respect to taxpayer’s request for extinguishing tax debt.

Glazer v. Canada (Attorney General) (2019), 2019 CarswellNat 1058, 2019 CarswellNat 1337, 2019 FC 436, 2019 CF 436, E. Heneghan J. (F.C.).

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