Abdat – Federal Court finds that CRA reasonably refused remission of tax that had been agreed to be paid pursuant to a settlement agreement

After having reached a settlement with CRA on favourable terms of his Tax Court appeal of net worth assessments, Abdat brought an action against CRA for damages (which later was dismissed). In that context, a retired CRA collections agent - who had been assigned to the file after the initial objection of Abdat to his reassessments, to determine if there was a collection risk - stated on an examination under oath that he had no doubt that the reassessments were ill-founded.

Abdat then brought this application for judicial review of CRA’s refusal to recommend remission, under s. 23 of the Financial Administration Act, of the taxes owing by Abdat from reassessments pursuant to the settlement offer.

In finding that CRA’s decision was intelligible and reasonable (and did not reflect any fettering of the CRA decision-maker’s discretion), so that the application should be dismissed, Grammond J noted that the decision-maker could reasonably rely on the settlement agreement having taken into account concerns expressed by the CRA collections agent, which concerns were already known to Abdat. Grammond J further stated:

It stands to reason that a remission order should not normally be used as an alternative avenue of appeal for a taxpayer who has failed to pursue the remedies available under the Income Tax Act, let alone as a means of overriding a settlement to which the taxpayer has agreed. …

Internal disagreement alone does not prove the outcome of the objection and appeal process to be wrong … .

Neal Armstrong. Summary of Abdat v. Canada (Attorney General), 2022 CF 1316 under Financial Administration Act, s. 23.