Taxpayers’ comparisons to participants in other tax schemes were neither relevant nor permissible

Tax - Income Tax - Administration and Enforcement

After taxpayers fell victim to company’s marketing of fraudulent tax scheme, CRA held their tax returns claiming credits and deductions promised by company in abeyance as they conducted audit unless they chose to be assessed without company-related deductions and credits. Minister eventually assessed taxpayers, disallowing claimed deductions and credits, and those who did not settle with CRA appealed in 1991. Some taxpayers requested interest relief in 2004, while others made such request after appeals were eventually dismissed in 2014. On first level review, CRA cancelled 14 years of accrued interest for 2004 requesters and 51 months for 2014 requesters and, on second level review, further 12 months of accrued interest was cancelled across both classes. Minister agreed to conduct another independent review, in which taxpayers’ request for further cancellation of interest was denied. Taxpayers applied for judicial review. Application dismissed. Minister’s delegate considered all grounds submitted by taxpayers, and his reasonable reference back to earlier reviews did not mean that he failed to conduct de novo review. Delegate reasonably conducted holistic review of all considerations. Delegate reasonably considered length of delays where sheer quantity of delay did not automatically warrant relief, recognizing that certain periods were not appropriate for interest relief and others had already been accounted for in earlier reviews. There were no circumstances beyond taxpayers’ control which prevented them with complying with obligations to pay tax. If taxpayers had accepted offer for assessment excluding company-related deductions, they could have paid taxes so no interest would accumulate while they pursued objections and appeals claiming retroactive entitlement to credits and deductions that they believed to be valid. Delegate appropriately denied interest relief beyond 10 years for 2014 requesters as there was no discretion to cancel interest beyond that period. Taxpayers’ comparisons to participants in other tax schemes were neither relevant nor permissible.

Brandimarte v. Canada (2019), 2019 CarswellNat 3718, 2019 CarswellNat 4520, 2019 FC 1034, 2019 CF 1034, Keith M. Boswell J. (F.C.).

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