Ossai – Federal Court sets aside a CRA decision on the basis that it was unintelligible

Although the facts are more intricate, they essentially involved the taxpayer, in early 2021, promptly withdrawing $29,000 from his TFSA when he discovered (before being so notified by CRA) that he had over-contributed by $20,000 – then shortly thereafter, contributing a further $6,000 to his TFSA, not realizing that under the “excess TFSA amount” definition, such contributions were not offset by his “excess” TFSA withdrawal earlier in the year of $9,000 because it is only a prior, not a current, year’s withdrawals that restore contribution room. He did not withdraw the excess contributions created by these further contributions until a number of months after CRA had assessed him in 2021 for his $20,000 overcontribution. CRA denied his request for relief under s. 207.06(1) on the basis that the removal of the excess contributions did not occur within a reasonable time frame – but provided no explanation as to why the $9,000 excess withdrawal in 2021 did not offset the further 2021 contributions.

Aylen J found that, in the absence of any such explanation, the CRA adverse decision was “unintelligible and lack[ed] justification and transparency.” The decision was set aside and remitted for re-determination by a different CRA officer.

Neal Armstrong. Summary of Ossai v. Canada (Attorney General), 2023 FC 313 under s. 207.06(1).