Az-Zahraa Housing Society – Federal Court finds that CRA had fettered its statutorily-accorded discretion by strictly adhering to its published guidelines

A non-profit society received assistance from a government organization (BC Housing) towards its goal of providing affordable accommodation to lower-income renters by selling some of its condo units to BC Housing, with BC Housing then providing those units to the society on a rent-free basis. The Minister’s delegate denied the society’s application to be designated as a municipality pursuant to s. 259(1) (which would have entitled it to GST rebates under s. 259(4)) on the ground that the above government assistance was not government “funding” as required in the CRA published information sheet as to when it would grant a “municipality” designation.

Before ordering that this denial of designation be remitted to a fresh CRA delegate for redetermination, Grammond J stated:

This is an obvious case of fettering of discretion. Section 259 … simply does not lay out any criteria for the exercise of the Minister’s power to designate an entity as a municipality. By refusing to consider circumstances that fell outside the four corners of the information sheet, the Minister’s delegate essentially treated the latter as if it superseded the broad discretion granted by section 259… .

As the Minister’s delegate fettered her discretion, the decision is unreasonable.

Neal Armstrong. Summary of Az-Zahraa Housing Society v. Canada (National Revenue), 2023 FC 842 under ETA s. 259(1) – municipality.