CBS – Tax Court of Canada finds that CRA could repudiate a settlement based on factual inaccuracy only where that agreed fact had “no bearing to reality”
The Justice Department entered into a settlement agreement with the taxpayer in which it agreed to permit the taxpayer to carryforward an agreed portion of a $23.4M non-capital loss – and then promptly sought to repudiate the agreement on the basis that CRA had discovered that the non-capital loss in question did not exist, so that implementing the settlement would be contrary to law, which Galway and CIBC said was bad.
Lyons J quoted University Hill (“the Court will only interfere if the agreed‑upon facts clearly have no bearing to reality”) and then found that here “the agreed fact in the Minutes - that the $24,366,301 is available - is grounded in objective reality.” Accordingly, CRA was bound by the settlement agreement.
Neal Armstrong. Summary of CBS Canada Holdings Co. v. The Queen, 2018 TCC 188 under s. 169(3).