Minister failing to consider CRA’s knowledge of ongoing CCA process and taxpayer’s intention

Federal court | Tax | Income tax | Administration and enforcement

After taxpayer filed waiver allowing 2001 taxation year to remain open for reassessment, Minister reassessed it for taxation years 2001-2003 by increasing income attributed for sales to related U.S. company and disallowing deductions for payment of royalties to related Irish company. Taxpayer objected, requesting that objections be held in abeyance pending resolution of its two requests for assistance from Canadian Competent Authority (CAA). CCA decided to reverse income adjustment with respect to taxpayer’s sales to U.S. company and Minister issued second reassessments to implement such reversal. CCA issued second decision, deciding to reverse adjustments with respect to royalty payments but CRA took position that reassessments to implement decision were statute-barred since second reassessments had closed taxpayer’s objections by operation of Income Tax Act. Minister denied taxpayer’s request for reassessments to give effect to favourable decision of CCA. Taxpayer applied for judicial review. Application granted. Taxpayer expressed clear intention that taxation years be reassessed in accordance with both of CCA decisions and waiver was implicit in its requests for abeyance. Reasons provided in decision were inadequate. Minister’s decision was unreasonable as she relied primarily on absence of explicit waiver request and on discharge of objections by second reassessments without considering substance of taxpayer’s requests for abeyance and CRA’s knowledge of ongoing CCA process and taxpayer’s intention. Conclusion that taxpayer did not provide either express or implied waiver did not fall within range of possible outcomes.

Kerry (Canada) Inc. v. Canada (Attorney General) (2019), 2019 CarswellNat 875, 2019 FC 377, Elizabeth Walker J. (F.C.).

Free newsletter

Our daily newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please complete the form below and click on subscribe for daily newsletters from Law Times.

Recent articles & video

Open schedule at Competition Tribunal presents opportunity for commissioner, lawyer says

Students raise alarm on future of university legal clinics

CICB to cease accepting applications on Oct. 1

Stikeman Elliott, Rubin Thomlinson, McCarthy Tétrault win HR awards

Insurance lawyers reveal their referral philosophies

Court of Appeal rules auto insurer not liable for parental negligence claim stemming from accident

Most Read Articles

New equality measure approved by Law Society of Ontario as the statement of principles gets repealed

Judges call out lack of support for legal aid, pro bono amid MAG presence

Chasm in opinions remains after statement of principles repeal

Law students, paralegals can continue working on the same summary conviction matters