Szymczyk – Tax Court of Canada finds that CRA is entitled to apply provisions with “latitude” rather than strictly

General Motors of Canada received an authorization from the Revenue Canada Collections Division in 1982 to use a simplified rule-of-thumb method for computing the employment benefit arising from the provision of new vehicles for personal and business use of management employees and its payment of the operating expenses.  This helped address the difficulty of accounting for the benefits based on the large number of participating employees, the rapid turnover of vehicles (they got a replacement vehicle every 5,000 kilometers) and pooled business use of the vehicles (they could use each other’s vehicle).

Woods J found that the Minister was not estopped in reassessing the returns of the taxpayer (one of the employees) for 2008 and 2009 contrary to the 1982 authorization as the circumstances had materially changed (i.e., the 1993 enactment of s. 6(1)(k), and slower turnover of the vehicles).  However, her reasons may imply that she would have accepted the taxpayer’s argument that "estoppel by convention" would have applied if there instead had been no material change in circumstances.  This of course may imply that rulings are binding on CRA if the material facts are correctly stated and there is no change in law (see also Preston and MFK).  Her comments also imply that the Cohen and Galway doctrine does not preclude the application by CRA of provisions of the Act using a rule-of-thumb approach, or otherwise applying them to complex or murky facts with "latitude."

Neal Armstrong.  Summaries of Szymczyk v. The Queen, 2014 TCC 380 under General Concepts – Estoppel, s. 6(2), s. 6(1)(k), and General Concepts – Onus.