Hunt – Federal Court of Appeal indicates that it would be prepared to consider whether any broad discretion of CRA to waive tax was unconstitutional
The taxpayer, who had been assessed TFSA advantage tax under s. 207.05, and was unhappy with the amount of the tax that the Minister had ultimately offered to waive under s. 207.06, brought a Rule 58(1) application to the Tax Court, which asked whether s. 207.05 offends s. 53 of the Constitution Act, 1867 – with counsel arguing that in light of the potential waiver under s. 207.06 “the Minister sets the rate of tax, not Parliament, and this offends section 53.”
Stratas JA effectively noted that the question, as posed, was defective, because it only referred to s. 207.05 itself, which clearly imposed a tax and delegated nothing to the Minister.
He considered, as did the Tax Court below, that the Court could exercise its discretion to go beyond the question posed and review the combined effect of ss. 207.05 and 207.06. However, he found that the Court should not so exercise this discretion given a “lack [of] adequate submissions[,] and fully developed reasons from the Tax Court.” In describing where assistance was needed, he stated:
[A]fter a full examination of the text in light of its context and purpose, the Court might conclude that Parliament’s provision, in its authentic meaning, satisfactorily constrains the Minister’s discretion and defines what she can do and how she should do it. …
But in other cases, the Court might conclude that Parliament’s provision, in its authentic meaning, gives the Minister an unconstrained, undefined discretion without criteria. The Minister, not Parliament, would be creating and imposing the tax or coming up with the tax rate on her own. She would be a law unto herself.
Under that scenario, any measure adopted by the Canada Revenue Agency to guide the improperly wide discretion Parliament has given the Minister, such as policies, practices or interpretation bulletins, would be irrelevant. They would not fix the fatal problem: Parliament’s over-delegation of taxation power in the first place contrary to section 53 … .
The above passage might be regarded as an invitation to raise this constitutional issue again in another proceeding, subject to the hurdle of identifying a provision that “gives the Minister an unconstrained, undefined discretion” to waive tax.
Neal Armstrong. Summary of Hunt v. Canada, 2020 FCA 118 under Constitution Act, 1867, s. 53.