Belchetz - Federal Court of Appeal confirms that CRA’s decision to waive “only” 15 out of over 30 years of interest was reasonable
Taxpayers who were the “innocent dupes” of a tax fraud, i.e., purported partnerships giving rise to large reported losses in the mid-1980s where, in fact, the partnerships were non-existent, ultimately had their Tax Court actions decided against them in 2014. A large part of the delay (including CRA not assessing the taxpayers’ returns for quite some time) was attributable to CRA and Justice wanting to bring a criminal prosecution against the promoters before dealing with the taxpayers. In the meantime (in 2004, i.e., before the 10-year limitation on interest relief in s. 220(3.1) was introduced) the taxpayers sought interest relief.
After three levels of review, CRA cancelled approximately 15 years of accrued interest. The Federal Court dismissed the taxpayers’ application for judicial review. In dismissing their appeal of that decision, Mactavish JA noted that the “Minister’s discretion must … be genuinely exercised, and must not be fettered or dictated by policy statements such as … IC 07-1R1” – but found that no such fettering had occurred here – the Minister’s delegate had “clearly turned his mind to the question of whether additional interest relief was warranted” and had “conducted a holistic review of the processing delays that had occurred,” and his “decision was transparent, intelligible and justified.”
Neal Armstrong. Summary of Belchetz v. Canada (National Revenue), 2020 FCA 225 under s. 220(3.1).