Ifi – Federal Court finds that CRA unreasonably refused to cancel tax under s. 207.06(1) on the basis of a “repeated” mistake that in fact was new

In 2009, the taxpayer (Ms. Ifi) made a small over-contribution to her TFSA regarding which CRA assessed her a small amount of over-contribution tax. For quite a number of years thereafter, she made further contributions (including a substantial one for 2014) which would not have been over-contributions but for her having become a non-resident. She discovered the error herself in 2018, whereupon she promptly closed out the TFSA.

Pallotta J found that essentially the sole stated basis of CRA for denying waiver of the over-contribution tax “was that Ms. Ifi repeated a previous mistake after being warned by the CRA.” In granting Ms. Ifi’s application for judicial review on the basis that this decision “was unreasonable, as it lacked the requisite transparency, intelligibility and justification,” she stated:

The Delegate failed to recognize that Ms. Ifi’s excess contribution in 2009 and her subsequent excess contributions resulted from different errors. Ms. Ifi did not repeat a previous mistake—the one the CRA warned her about—when she made an excess contribution in 2014. The excess contribution in 2014 … was tied to Ms. Ifi’s status as a non-resident.

Neal Armstrong. Summary of Ifi v. Attorney General of Canada, 2020 FC 1150 under s. 207.06(1).