6 September 1989 Income Tax Severed Letter ACC8566 - Remission Request

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

C. Gouin-Toussaint                      Technical Interpretation
Director, Bilingual Services              Division
  and Resources Industries Division     R.E. Thompson
                                        957-9227

Subject: Remission Request 19(1)

As requested in your memorandum of August 31, we confirm that it has been the practice of the Department not to remit interest payable on taxes assessed except for interest related to an amount of tax that was remitted.

The basis for this position is as follows:

          (1)  The Financial Administration Act revers only to
          the remission of "tax, fee or penalty" in section 23.

          (2)  Based on an informal legal opinion obtained some
          15 years ago, it was indicated that there was legal
          support for the view that interest could properly be
          considered as a "tax" for purposes of section 17 (now
          23) of the F.A.A.

          (3)  Since in economic terms interest charges can be
          considered to be compensation payable by the taxpayer
          to the government for use of funds that are rightfully
          the government's once a tax debt becomes due,
          collection of interest charges was not considered an
          unfair burden to a taxpayer in cases where it was
          accepted that the tax debt upon which it was based was
          legitimate.

Although this practice will continue to be applied, it was drawn to our attention in a letter dated August 3, 1979 from the Director of the Toronto District Office that we have in fact remitted unrelated interest as recently as 1983. At the present time this whole matter is under review and will probably involve a formal request for a legal opinion on the subject. It should be noted that the 1983 case referred to was an extreme hardship case and other cases cited may also be in the same category.

In view of the review in progress, you may wish to delay finalization of the request for remission. If a delay is not appropriate we would suggest that the third item cited above be given as support for denial of the request.

For Director, Technical Interpretations Division Legislative and Intergovernmental Affairs Branch