Forbes Painting – Federal Court finds that CRA is required to consider financial hardship in s. 221.2 credit transfer requests
The taxpayer (Forbes) did not file its corporate income tax returns for its 2006 and 2007 years, showing a refund position, until well beyond the three-year limitation under s. 164(1) for claiming those refunds. CRA’s delegate denied the Forbes’ request that the statute-barred credits (SBCs) be reappropriated under s. 221.2(2) to its outstanding payroll account balance on the basis that there were no extraordinary circumstances that had prevented Forbes from filing its returns within the three-year period and that Forbes had not demonstrated that it took any action to resolve non-compliance within a reasonable time.
Before returning the matter for redetermination by another delegate, Boswell J stated:
The ability of a corporate taxpayer to continue as a going concern … is a factor that should be weighed … .
…When assessing a request for the re-apportionment of an SBC, the Minister should also have regard to whether denial of the request might possibly result in the Minister’s inability to collect outstanding tax arrears from a taxpayer. …
[T]he decision [is] unreasonable because it is not apparent or transparent that Forbes’ financial hardship was a factor in the decision-making process.
Neal Armstrong. Summary of Forbes Painting and Decorating Ltd. v. Canada (Attorney General), 2019 FC 160 under s. 221.2(2).