Docket: T-997-16
Citation:
2017 FC 538
Ottawa, Ontario, June 1, 2017
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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ROSS MATTHEW
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Applicant
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and
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ATTORNEY
GENERAL OF CANADA
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Respondent
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JUDGMENT AND REASONS
[1]
The is an application for judicial review of a
decision dated June 1, 2016, of the Assistant Commissioner of the Legislative
Policy and Regulatory Affairs Branch of Canada Revenue Agency [CRA], denying
Mr. Matthew’s request for remission of his outstanding tax debt.
[2]
The application named “Minister of National
Revenue/Canada Revenue Agency” as the Respondent; however, pursuant to Rule 303
of the Federal Courts Rules, SOR/98-106, the Attorney General of Canada
is the proper Respondent, and an Order will be issued amending the style of cause
accordingly.
[3]
Mr. Matthew filed for bankruptcy in June 1990,
at which time his total tax debt was $210,693. In June 2008, his trustee in
bankruptcy was discharged; however, Mr. Matthew was not. As of June 17, 2008,
his tax debt for the pre-1991 taxation years was $130,555. While he has not
been discharged from his legal obligation to pay his pre-bankruptcy debt, CRA
is prevented from taking measures to collect on this debt because of the
ten-year limitation bar under s 222(4) of the Income Tax Act, RSC 1985,
c 1. As at April 7, 2016, Mr. Matthew’s tax debt for the years 1995, 1996 and
1998, including interest, stood at $282,183. CRA is not taking action to
collect this amount other than withholding credits and refunds as they may
become payable.
[4]
On May 20, 2014, Mr. Matthew made a request for
remission. At that time, he was 74 years old and widowed. His request is a
one page letter with no attachments, providing details of his circumstances.
In his request, he makes several assertions to the effect that CRA is
responsible for the debt he now faces. He states that (i) CRA caused him to
file for bankruptcy in June 1990; (ii) his trustee in bankruptcy obtained his
RRSPs and pensions and, as he understood, also paid substantial income tax to
CRA (although he is unsure whether the trustee in bankruptcy actually paid any
money to the CRA); (iii) the legal fees he and his wife paid were significant (in
one Tax Court of Canada decision his wife’s legal fees exceeded $40,000); (iv) they
were unable to appeal a decision and his wife paid CRA and court costs; (v) his
wife died in 2004 largely because of the stress and financial problems caused
by CRA; (vii) since his wife died, he has had to receive the guaranteed income
supplement; (viii) he too became ill and unable to work in the 1990s because of
actions of the CRA against him and his wife; (ix) he was fired from his job in
1990 and has since been unable to find work; (x) he was recently required to
visit by ambulance the emergency room, is at the end of his life, cannot afford
a lawyer and is unable due to his medical condition to appeal any of the court
decisions; and (xi) he has extremely high blood pressure and he lives alone on
an Indian reserve (although is not Native).
[5]
A remission order is an extraordinary remedy
that allows the government of Canada to provide full or partial relief from
tax, interest, penalty or other debts under certain circumstances when such
relief is not otherwise available under the existing laws. Remission orders
are governed by subsections 23(2) and (2.1) of the Financial Administration
Act, RSC 1985, c F-11. They are granted by the Governor-in-Council, on
recommendation of the Minister of National Revenue [Minister]. The Minister
has delegated this authority to the Commissioner of Revenue [Commissioner], the
head of CRA, who in turn has delegated the authority to the Assistant
Commissioner.
[6]
Upon receipt of a written request for remission,
the Remissions and Delegations Section [RDS] may request that the CRA field
office with responsibility for the applicant’s file conduct an initial review
of the case and prepare a field report. RDS officials will review any field
reports together with the remainder of the file. Upon a review of the request,
RDS officials prepare a recommendation report that is presented to the
Headquarters Remission Committee [the Committee]. The Committee is responsible
for reviewing the case and making a recommendation. The Assistant Commissioner
reviews the Committee’s recommendation and related information and decides
whether or not to forward a positive recommendation to the Minister. If the
Assistant Commissioner agrees with the Committee’s recommendation to deny a
request, the Assistant Commissioner must notify the applicant or his or her
authorized representative in writing, providing reasons for the denial. If the
Committee recommends approving a request, a draft remission order will be
approved by the Department of Justice, the Assistant Commissioner, the
Commissioner and the Minister. Once approved, the remission order is forwarded
to the Governor-in-Council and it has the final discretion on whether to grant
remission.
[7]
In this matter, the Vancouver Tax Services
Office conducted a review of Mr. Matthew’s case and prepared a field report
with a recommendation that the remission be denied. Subsequently, a Policy
Analyst at RDS prepared a memorandum to the Committee, recommending that the
request for remission be denied. On April 14, 2016, the Committee held a
meeting and agreed with that recommendation.
[8]
The Respondent provided an affidavit by the
Assistant Commissioner who rendered the decision under review. In that
affidavit, it is confirmed that he was provided with a draft decision letter
reflecting the Committee’s recommendation, the remission request, and the
background materials. The Assistant Commissioner stated that while it is his
standard practice to consult with RDS officials if he requires clarification or
further information regarding the file or changes to be made to the decision letter,
in this case he did not deem it necessary to do so.
[9]
By letter dated June 1, 2016, the Assistant
Commissioner made the final decision not to recommend remission and that
decision is now the subject of this application for judicial review.
[10]
The letter outlined the process undertaken by
CRA to review the request and also noted some of the circumstances that would
typically support remission. It went on to summarize the basis upon which the
request was being denied.
[11]
In that regard, the letter noted that particular
consideration was given to Mr. Matthew’s assertion that he did not have the
financial resources to hire a lawyer and that due to his health condition he
could not appeal the unfavourable Tax Court of Canada decisions. His
allegation that he has suffered significant losses due to actions by CRA was
also considered. The letter concluded that Mr. Matthew’s personal financial
difficulties did not constitute extreme hardship.
[12]
The letter acknowledged that while the payment
of the outstanding tax debt would constitute a financial setback, it found
there to be no extenuating circumstances that would warrant remission.
Further, it noted that Mr. Matthew had not substantiated that there were
circumstances beyond his control that would have prevented him from providing
appropriate supporting documentation for claims made on his tax returns, from
addressing his tax affairs in a timely manner or from making payment on his tax
debt to mitigate the accruing interest.
[13]
The Respondent has raised the reasonableness of
the decision as the singular issue on this application. In my view,
considering Mr. Matthew’s affidavit, written argument and the decision as a
whole, this application could be said to raise the following three issues,
although I agree that the reasonableness of the decision is the central issue:
1.
Is the Assistant Commissioner’s decision
reasonable?
2.
Did the Assistant Commissioner fetter his
discretion?
3.
Was procedural fairness denied?
[14]
Mr. Matthew’s submissions are to the effect that
the decision is unreasonable because it does not reflect the totality of his
unfortunate circumstances, which according to him were also created by actions
of the CRA.
[15]
In his affidavit, Mr. Matthew essentially
reiterates the points made in his remission request. He also identifies
several other factors for this Court to consider. Notably, Mr. Matthew
takes issue with the amount of his tax debt. In that regard, he states that he
does not know how CRA calculated the amounts owed. Further, he alleges that
the income amounts shown for him by CRA are incorrect as he was mostly
unemployed after 1990.
[16]
I agree with the Respondent that the correctness
of the tax assessments that caused the tax debt is beyond the jurisdiction of
this Court. The Tax Court of Canada has exclusive jurisdiction to review the
correctness of an assessment: Canada (National Revenue) v JP Morgan Asset
Management (Canada) Inc, 2013 FCA 250 at para 82. Further, unless varied
or vacated on an objection or an appeal, the assessment of tax is deemed to be
valid and binding. Accordingly, the argument raised in that regard cannot be
considered by this Court.
[17]
I also agree with the Respondent that portions
of the affidavit of Mr. Matthew contains statements and provides information
that was not before the Assistant Commissioner, and therefore it cannot be
considered: Association of Universities and Colleges of Canada v Canadian
Copyright Licensing Agency (Access Copyright), 2012 FCA 22 at para 19.
[18]
Specifically, the information in paragraph 11 of
the affidavit about Mr. Matthew’s health was not before the decision-maker and
could also not have been anticipated by him and is therefore not admissible on
this application.
[19]
I note that the extent of Mr. Matthew’s
submissions to CRA were limited to his one page remission request. The
materials filed by the Respondent note that during the remission review
process, attempts were made by the remission analyst to contact Mr. Matthew but
these were unsuccessful. In short, he had the opportunity to provide this
information regarding his health but did not do so.
[20]
I conclude that the decision was reasonable and
consistent with guidelines CRA [Guidelines] has prepared to assist those making
remission requests (see CRA Remission Guide for the Remission of Income Tax,
GST/HST, Excise Tax, Excise Duties or FST under the Financial Administration
Act).
[21]
Specifically, and with respect to extreme
hardship, the Guidelines state that extreme hardship is generally considered to
exist if the person’s annual income (including that of his or her spouse) for
the year for which remission is requested and each subsequent year is less than
the low-income cut-offs [LICO]. In this case, the Assistant Commissioner noted
that with the exception of three years, Mr. Matthew’s income since 1987 has
exceeded the LICO.
[22]
The Assistant Commissioner also noted that a
fall 2014 credit report obtained by CRA indicated that he did not have any
difficulties meeting his financial obligations at that time and that he had purchased
a home in 2010 valued at $418,000 without a mortgage. This again confirms that
extreme financial hardship is not apparent.
[23]
Mr. Matthew says in his affidavit that the
purchase price of his home was in effect prepaid rent. This information was
not before the Assistant Commissioner, nothing in the remission request speaks
to it and the Court can’t speculate as to whether and how this factor might have
impacted the outcome.
[24]
The background information notes that the 2014
credit report also showed that Mr. Matthew had a good credit rating, his credit
cards had been paid on time, that he would have had approximately $150,000
remaining in his RRIF after a withdrawal in 2014, and while his 1995, 1996 and
1998 tax years arrears have been classified as recoverable, the CRA is not
taking collection measures.
[25]
In my view, on this evidence, and given the
Guidelines, it was not unreasonable for the Assistant Commissioner to have
concluded that extreme hardship does not exist.
[26]
In his affidavit, at paragraph 12, Mr. Matthew
appears to essentially say that the Assistant Commissioner fettered his
discretion, without quite saying that.
[27]
In my view, there is no evidence in this case
that the Assistant Commissioner applied the Guidelines mechanically and failed
to appreciate the totality of the circumstances. It bears emphasis that the
submissions made by Mr. Matthew to the Assistant Commissioner were very
limited. The Assistant Commissioner considered all of the circumstances he advanced.
In my view, given the limited information that was provided, the Assistant Commissioner
was hardly given an opportunity to fetter his discretion, nor did he.
[28]
There are several assertions in Mr. Matthew’s
affidavit and written argument which appear to properly fall under the rubric
of procedural fairness. He stated in his written argument that he made his
remission request before he became too ill to require medical care and/or
relocation to a health care facility and that he was under the impression that
his request would not be reviewed until a later date when more facts about his
situation were known. In his affidavit, he also faults CRA for not providing
him with certain legislation and court decisions that concern the exercise of
discretion when denying remission requests, and he makes several other
assertions concerning CRA’s disclosure of information in the Certified Tribunal
Record and otherwise.
[29]
The concept of procedural fairness is variable
and its content is to be determined in the specific context of each case and
considering all of the circumstances: Baker v Canada (Minister of
Citizenship and Immigration), [1999] 2 S.C.R. 817 at paras 21-22. In Waycobah
First Nation v Attorney General, 2010 FC 1188 (affirmed in 2011 FCA 191), Justice
de Montigny confirmed that a procedure similar to that followed in the present
case met the requisite duty of fairness. This is sufficient to dispose of the complaints
raised regarding Mr. Matthew’s numerous procedural expectations, none of which
are contemplated by the remission process that is explained in the Guidelines.
It is further noted that the CRA in the present matter did not create any
reasonable expectations that a certain procedure would be followed.
[30]
In conclusion, I find that the decision under
review was reasonable, the decision-maker’s discretion was not fettered, and
that the procedural process and steps followed were fair. This application is
dismissed, with costs payable to the Respondent by Mr. Matthew of $500, all in.
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