Imperial Oil – Federal Court of Appeal finds that the Tax Court cannot consider appeals of refund interest claims

Noël CJ essentially found that a remission of tax under the Financial Administration Act is only a forgiveness of the tax owing under the Act, so that such remission cannot be treated in a similar manner to a tax instalment payment made under the Act. Accordingly, remission amounts (in this case relating to the Syncrude project) could not generate an entitlement to refund interest.

Of somewhat broader interest is a procedural point. One of the two taxpayers did not immediately apply to the Federal Court for judicial review of a denial by CRA of refund interest (claimed as described above), but instead only filed a prompt Notice of Objection. It did not apply for judicial review until seven years later, and argued at that point that CRA’s “refusal to pay refund interest could only be challenged after the objection process had been exhausted.”

In rejecting this approach, Noël CJ affirmed the finding in McMillen that:

the amount of a refund resulting from an overpayment, although often set out on the notice of assessment, is not an assessed amount… . The objection procedure does not apply to a contested refund and the Tax Court is therefore without jurisdiction to hear an appeal pertaining to its computation… .

As only the Federal Court could deal with the refund interest issue, the taxpayer would have failed on procedural grounds - for following the wrong (Notice of Objection) procedure rather than applying immediately to the Federal Court – even if its claim had substantive merit.

Neal Armstrong. Summaries of Imperial Oil Resources Ltd. v. Canada (AG), 2016 FCA 139 under s. 171(1) and s. 164(7).