In 2005, the taxpayer filed an amended return for his 2004 that almost doubled his reported income for 2004. This was a mistake, (which he attributed to confusion resulting in part from a debilitating car accident he had suffered years before) and in 2011, he filed a further amendment, seeking to reverse the additional income inclusion, which CRA disallowed.

In 2022, the Tax Court ruled that it had no jurisdiction to require CRA to accept an amended return. In February 2023, the taxpayer again requested the amendment to his 2004 return. Although the request was submitted on the form used to request a waiver of interest, his written explanation indicated that his request was solely for CRA to allow an amendment to his 2004 tax return, as per his 2011 request.

CRA treated this as an application for relief from arrears interest, and denied that request.

The taxpayer “was unrepresented and had relied heavily on artificial intelligence to prepare his case” before Brouer J. Before referring the matter back to CRA for redetermination, Brouer J stated (at para. 21):

… Mr. Rawlings was entitled to a justified, intelligible and transparent decision that responded directly to his request, which he first made in 2011 and has continued to seek ever since. The decision under review does not meet this standard and is therefore unreasonable.

Neal Armstrong. Summary of Rawlings v. Canada (Attorney General), 2026 FC 208 under s. 152(4.2).

CRA ruled on pipeline transactions respecting the preferred shares that the deceased had held in Opco (holding a rental property, portfolio investments and private company shares):

1. Some of the preferred shares of Opco held by the estate are redeemed for notes (Notes 1, 2 and 3), giving rise to an eligible dividend and an s. 164(6) carryback.
2. The estate transfers the balance of its preferred shares to a Newco held by a trust for the surviving children (which also holds the common shares of Opco) in consideration for a promissory note (Note 4) and some preferred shares of Newco.
3. Opco repays Note 1 (to pay the taxes on the deemed dividend arising in 1 above).
4. After the requisite waiting period, Newco amalgamates with Opco.
5. Amalco then gradually repays Notes 2 and 3, and then Note 4.

Neal Armstrong. Summary of 2024 Ruling 2024-1029151R3 F under s. 84(2).

CRA has published the 17 June 2025 STEP Roundtable under its severed letter program. For your convenience, the table below links to the individual items and our summaries prepared in June of last year.

An employer, a restaurant company, which had failed to remit employee source deductions, sold a property and, instead of paying the unremitted source deductions, used the proceeds from the sale to pay an amount owing to an unsecured creditor, namely the TD Bank, with whom it had run up various overdrafts.

In response to a Rule 220 question posed to this effect, Webb J.A. concluded that:

An unsecured creditor can rely on the bona fide purchaser for value defence to defend against a claim by the Crown [under s. 227(4.1)] for the unremitted source deductions of an employer who paid proceeds from the sale of their property to the unsecured creditor.

In this regard, he found that:

• the authorities supported the view that the rules of equity, including the bona fide purchaser defence (including for an unsecured creditor receiving payment of a debt), can apply to a statutory trust such as that under s. 227(4.1).
• the opposite conclusion would imply that, where a tax debtor, rather than paying the proceeds of sale to satisfy the unremitted source deductions, paid such amounts as wages to employees, such amounts would be income to the employees under s. 5(1), without any deduction (by virtue of the prohibition in s. 8) for the requirement under the Crown’s interpretation to repay the wages pursuant to s. 227(4.1).
• the availability of the bona fide purchaser defence to unsecured creditors was not inconsistent with its unavailability under s. 227(4.1) to secured creditors given “that secured creditors are in a better position to manage the risk of being exposed to a claim for unremitted source deductions than unsecured creditors would be”.

Neal Armstrong. Summaries of Toronto-Dominion Bank (TD Canada Trust) v. Canada, 2026 FCA 25 under s. 227(4.1), s. 5(1) and Statutory Interpretation - Presumption of knowledge of legal context.