Stover – Federal Court requires CRA to think about waiving interest that accrued during a three-year delay in dealing with a late-filed Objection

The taxpayer, who had not filed a Notice of Objection within the normal 90-day period for doing so, filed his Notice of Objection barely within the one-year period under s. 166.1(7)(a) for applying to the Minister for an extension of that deadline. CRA apparently did not recognize that, under the jurisprudence, the late-filed Notice of Objection was to be treated as an implicit s. 166.1 request for an extension. It essentially did nothing until the Tax Court issued an order three years later declaring the Notice of Objection to be valid - notwithstanding that s. 166.1(5) required it to consider an extension application “with all due dispatch.” The taxpayer ultimately discontinued his Tax Court appeal (due, he claimed, to his lawyer’s mistake), but applied to CRA for interest relief under s. 220(3.1).

Favel J considered it to be unreasonable for the CRA delegate not to take the three-year delay of CRA in responding to the Objection into account in considering the interest-relief request, so that the matter was “remitted to another Delegate for redetermination of the Applicant’s entitlement to relief from interest accrued due only to delays caused by the CRA.”

Neal Armstrong. Summaries of Stover v. Canada (National Revenue), 2019 FC 1599 under s. 220(3.1) and s. 166.1(5).