Hillcore – FC finds CRA’s verbal “courtesy response,” rejecting refunding of a GST credit which it had already set-off, years before, against an ITA debt, instead was a reviewable decision

After issuing GST reassessments of the applicant (“Hillcore”) in August 2017, CRA garnished funds totalling approximately $0.9 million (the “seized funds”) on account of the total GST debt of $1.7 million . However, in July 2020, CRA vacated the reassessments. Instead of returning the seized funds to Hillcore, along with the balance of over $1.7 million credited to its GST account, CRA applied the full ($1.7 million plus) against Hillcore's larger income tax debt. Hillcore was informed of this action through notices of reassessment showing those GST credits being transferred to its income tax account.

In October 2023, Hillcore sent a letter to CRA Collections requesting the return of the seized funds. Hillcore essentially made what Ferron J characterized as “a strong argument that the Minister could not exercise its discretion under the ITA to issue a set-off of the Seized Funds because, as per the ETA, the Minister had the obligation to return the Seized funds.”. A CRA collections officer refused Hillcore's request by phone conversation. The officer did not identify or provide a copy of the policies consulted, and refused to provide written reasons. Hillcore filed an application for judicial review of this “decision” (which the Attorney General instead characterized as a mere “courtesy response”) within 30 days under s. 18.1(2) of the Federal Courts Act.

Ferron J indicated that Hillcore could have challenged the set-off decision made in July 2020 either by filing an application for judicial review or by filing a notice of objection. That said, the October 2023 letter specifically requested a refund of the seized funds on the above novel basis and did not challenge the entirety of the 2020 set-off decision. As such, the letter addressed a different issue than the 2020 set-off decision (as was recognized by the collections officer) and, thus, the officer’s rejection response was a fresh exercise of discretion which could now be judicially reviewed.

As this fresh verbal “Decision … provided minimal reasoning and no supporting details” and “was clearly not justified, transparent nor intelligible,” it was unreasonable. The matter was referred back to the Minister for redetermination.

Neal Armstrong. Hillcore Financial Corp. v. A.G. (Canada), 2025 FC 2009 under Federal Courts Act, s. 18.1(2).