Table of Contents


A useful summary of estoppel as it may be applied in tax matters was provided by Bowman TCJ in Goldstein:

"Estoppels come in various forms - estoppel in pais, estoppel by record and estoppel by deed. In some cases reference is made to a concept of "equitable estoppel", a phrase which may or may not be accurate: Canadian Pacific Railway Co. v. The King [1931] AC 414 at 429. Cf. Central London Property Trust Ltd. v. High Trees House Ltd. (1946) [1947] 1 KB 130. It is sufficient to say that the only type of estoppel with which we are concerned here is estoppel in pais. In Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co. Ltd. [1970] S.C.R. 932 at 939-940 Martland, J. set out the factors giving rise to an estoppel as follows: The essential factors giving rise to an estoppel are I think:

  1. A representation of conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made.
  2. An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made.
  3. Detriment to such person as a consequence of the act or omission.

Estoppel is no longer merely a rule of evidence. It is a rule of substantive law: Halsbury's Laws of England, 4th Ed. Vol. 16, p. 840, paragraph 951. Lord Denning calls it "a principle of justice and of equity: orgate Mercantile Co. Ltd. v. Twitchings [1976] 1 QB 225 at 241. It is sometimes said that estoppel does not lie against the Crown. The statement is not accurate and seems to stem from a misapplication of the term estoppel. The principle of estoppel binds the Crown, as do other principles of law. Estoppel in pais, as it applies to the Crown, involves representations of fact made by officials of the Crown and relied and acted on by the subject to his or her detriment: Robertson v. Minister of Pensions [1949] 1 KB 227; The Queen v. Langille, 77 DTC 5086. The earlier cases are fully reviewed by Cameron J. in Woon v. MNR; 50 DTC 871. The doctrine has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved, because estoppels cannot override the law: Maritime Electric Co. v. General Dairies Ltd. [1937] AC 610; MNR v. Inland Industries Ltd., 72 DTC 6013; Stickel v. MNR, 72 DTC 6178; Granger v. C.E.I.C. [1986] 3 FC 70."

Most practitioners have received incensed comments of clients that an auditor is now proposing to reassess a practice that was unchallenged in a previous taxation year. As noted by Bowman TCJ, the Agency cannot be estopped from applying the Act to a taxpayer notwithstanding that it may have failed to do so on some other occasion or even (it would appear) where it had previously represented that it would not do so in this particular instance (Jasper, Metropolitan, Brown). However, there is some suggestion in the English jurisprudence (e.g., MFK) that once the Crown has exercised its determination as to how the taxing statute should be applied to a particular set of facts, it may be precluded from doing so a second time and in a different manner. (There may be a hint of this sort of thinking in the Ludmer case. See also Optical Recording.)

Where a taxpayer has made a misrepresentation of fact upon which the Agency has detrimentally relied, the taxpayer will be precluded from resiling therefrom. Examples include representing in a return that a partnership does (or does not) exist (Hnatiuk, Desrochers)or failing to disclose an item of income. There is not considered to be detrimental reliance by the Agency where there is a subsequent disclosure of facts that would permit it to reassess within a statute-barred period (Cornforth). Estoppel also does not apply where the alleged misrepresentation relates to an issue of legal interpretation whose presence should have been apparent to the Agency (e.g., capital gains versus income treatment - Stremler).


Kufsky v. Canada, 2022 FCA 66

a taxpayer received dividends for s. 160 purposes where she was estopped from arguing otherwise or because the corporate insolvency did not matter

A shareholder loan balance that was owing by the taxpayer was eliminated through dividend declarations backdated to the three preceding years and paid by way of set-off. CRA accepted amendments to the taxpayers’ returns to those years to add the dividend amounts, so that she thereby avoided income inclusions (and higher interest assessments) pursuant to s. 15(2).

Webb JA found that the taxpayer was estopped from now arguing that the amounts that she had treated as dividends in fact were not dividends (so that s. 160 did not apply to their payment) - because the appropriate procedures for the declaration and payment of the amounts as dividends were not followed and because s. 38(3) of the OBCA prohibited the payment of a dividend by an insolvent corporation – on the basis of the application of the principle (based on Wolofsky, 2001 FCA 119) that:

[A] taxpayer who has benefited from having an amount included in his or her income as a dividend in a particular taxation year (and who has not objected to the assessment of tax based on having received this dividend) is estopped from claiming in any subsequent appeal related to the application of section 160 of the Act, that the previous filing position was wrong. (para. 62)

In her minority concurring reasons, Monaghan JA was “not certain” that estoppel applied to preclude the taxpayer from arguing that she had not received dividends, and instead found that s. 160 applied on the basis that the taxpayer had not made out a prima facie case that the dividends had not been paid - and noted (at para. 82) that “[w]hile a breach of the solvency test may be unwise, and have consequences for the directors, shareholders or corporation, that does not mean a dividend was not declared and paid.”

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) per majority, taxpayer estopped from arguing that she had not received a dividend when she had already pocketed at tax benefit from submitting the contrary 552
Tax Topics - General Concepts - Fair Market Value - Other property transfer amount not determined net of income taxes 76
Tax Topics - General Concepts - Onus prima facie case requires a balance of probabilities 237
Tax Topics - General Concepts - Payment & Receipt dividend was paid by way of retroactive set-off against shareholder loan account 174
Tax Topics - General Concepts - Illegality dividend declared and paid by insolvent corporation would be valid 301

Tuccaro v. Canada, 2014 DTC 5103 [at 7210], 2014 FCA 184

prior finding about meaning of aboriginal treaty did not estop new litigant

The taxpayer's tax appeal was based on an alleged exemption, in an aboriginal treaty ("Treaty 8"), from all taxation. The motions judge found that he was bound by the legal finding in Benoit that there was no such exemption in Treaty 8, and granted the Minister's motion to strike references to Treaty 8 from the taxpayer's pleadings.

Webb JA reversed the motion judge's decision. Benoit made a factual conclusion, on whether "the Aboriginal signatories understood that they would be exempted from taxation for any reason," finding that there was "insufficient evidence" to support this view - therefore, the question was not whether stare decisis applied on the findings of law in Benoit, but rather whether issue estoppel applied on the findings of fact (para. 21).

Issue estoppel did not apply. Although the issue was the same, there was no evidence that any litigant in Benoit was the present taxpayer or his privy.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis prior finding about the meaning of an aboriginal treaty was a finding of fact, not of law 164
Tax Topics - Other Legislation/Constitution - Federal - Indian Act - Section 87 prior decision on treaty was finding of fact, not law 164

Ludmer v. The Queen, 95 DTC 5311, [1996] 3 CTC 74 (FCA)

The taxpayers sought to show that the Minister's decision to allow an interest deduction for their taxation years prior to 1981 constituted an admission that was binding respecting the subsequent taxation years, and that in reliance on this initial approach of the Minister the taxpayers organized their affairs so as to continue to benefit from the interest deduction. The Court of Appeal affirmed the finding of the trial judge that evidence of these facts was not admissible on the ground that they did not disclose a reasonable cause of action. Chevalier D.J. noted (at p. 5314) that "the situation here is not one in which before doing something, namely obtaining an interest-bearing loan, the appellant sought and obtained from the Department a formal assurance that they would benefit from deductibility of that interest".

Duthie Estate v. The Queen, 95 DTC 5376, [1995] 2 CTC 157 (FCTD)

The taxpayer was not estopped from taking the position, for the first time, in his 1984 return that personal-use real estate had been converted into real estate inventory in 1981 (with the result that the taxpayer was able to deduct subsequently incurred expenses and a loss attributable to a decline in the property's value between the 1981 and 1984) given that at the time of filing the taxpayer's 1984 return, the Minister still had 14 months in which to consider the taxpayer's position and reassess 1981 if he choose to do so.

The Queen v. Jasper, 94 DTC 6519, [1994] 2 CTC 309 (FCTD)

After noting that no argument had been raised concerning possible estoppel against the Crown arising from a letter provided by the Winnipeg Taxation Centre of Revenue Canada in respect of a prior taxation year of the taxpayer, MacKay J. stated (p. 6524):

"It is clear that no estoppel arises in relation to the discharge of statutory responsibilities, and even where an officer of the department concerned has given advice in writing, that may not be relied upon as the basis for a claim of estoppel. Particularly is this so in regard to income tax assessments, for the Act itself provides for assessment and later variations by the Minister by reassessments."

Optical Recording Corp. v. The Queen, 86 DTC 6465, [1986] 2 CTC 325 (FCTD), aff'd 87 DTC 5248, [1987] 1 CTC 417

Revenue Canada illegally told the taxpayer that collection of the amount payable by the taxpayer pursuant to s. 195(2) would not be attempted provided that the taxpayer was able to satisfy Revenue Canada that its liability would be eliminated at the end of the year by virtue of making eligible expenditures. Later, while the taxpayer was demonstrating to Revenue Canada that it had fulfilled this requirement, the Crown commenced collection proceedings without warning. It was held that "the respondents, by illegal abuse of authority and false inducements, [were] clearly estopped from taking any benefit from their sudden garnishments of the applicant's accounts".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) notice of assessment that did not assess tax that was yet due was a nullity 187
Tax Topics - Income Tax Act - Section 195 - Subsection 195(2) 31

The Queen v. Metropolitan Properties Co. Ltd., 85 DTC 5128, [1985] 1 CTC 169 (FCTD)

The fact that prior to the 1974 taxation year, the Department had permitted the taxpayer's predecessor corporations to deduct certain types of development expenses did not establish that this was normal commercial and business practice, nor did it estop the Department from adopting a different position for the 1974 taxation year.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 10 - Subsection 10(1) cost of municipal services included in accordance with GAAP in cost of residential home development inventory 102
Tax Topics - Income Tax Act - Section 9 - Accounting Principles 79

384238 Ontario Limited v. The Queen, 84 DTC 6101, [1984] CTC 523 (FCA)

The appellant and its shareholder, by continuing to indicate to the public at large that the shareholder rather than the appellant was the owner of horses, were later estopped from suing for damages for wrongful seizure of those horses by the Department of National Revenue which honestly but mistakenly believed, in reliance on those public representations, that the horses were owned by the shareholder and other judgment debtors of the Crown and were thus available for seizure.

Cornforth v. The Queen, 82 DTC 6058, [1982] CTC 45 (FCTD)

Although the taxpayer represented in his returns that no partnership existed between him and his wife, the Minister in assessing on the basis that no partnership existed, did not rely on that representation. The taxpayer accordingly was not estopped from contending that a partnership existed.

Wilchar Construction Ltd. v. The Queen, 81 DTC 5318, [1981] CTC 415 (FCA)

The taxpayer was estopped from changing its method of accounting for holdbacks and uncertified progress claims after the taxation year in question had become statute-barred. The principle that estoppel cannot override a statutory provision, did not apply because both accounting methods were permitted by the Act.

Brown v. The Queen, 79 DTC 5421, [1979] CTC 476 (FCTD)

A trustee gave evidence that he was assured by Departmental "officials that if the estate did not deduct from its income [pursuant to s. 104(6)] the amount paid to the beneficiary then the beneficiary would not be liable therefor and that he acted upon that advice and assurance." It was noted that "estoppel was not pleaded but in any event it is not open to the plaintiff to set up an estoppel to prevent the operation of a statute."

The Queen v. Moulds, 78 DTC 6068, [1978] CTC 146 (FCA)

The taxpayer, in 1966, agreed to withdraw his notice of objection in relation to his 1964 taxation year provided that the Minister reduce the portion of 1964 sales proceeds of $70,500 allocated to building from $46,625 to $44,625. The taxpayer was not estopped with respect to later taxation years from taking the position for capital cost allowance and terminal loss purposes that the full $70,500 purchase price should have been allocated to the land. It had not been proven that the taxpayer had made any representations of fact to the Minister, and the Minister had not acted to his detriment as a result of the alleged representations of the taxpayer.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 68 100

Hnatiuk v. The Queen, 76 DTC 6376, [1976] CTC 632 (FCTD)

The partnership in which the taxpayer was a partner terminated on May 31, 1969, but in his 1970 return he reported income from the partnership on the basis that it had continued. Mahoney, J. held:

"This is a text book example of estoppel by representation. The Plaintiff having represented that the partnership income was distributed in a certain way, the Minister of National Revenue having acted on that representation and, by so doing, is now finding himself statute barred from taxing the partnership income as the Plaintiff now says it was distributed, the Plaintiff cannot deny the truth of his original representation."

See Also

Pastuch v. The Queen, 2022 TCC 36

issue estoppel precluded reviewing compellability of documents from a Saskatchewan regulatory authority

The taxpayer, who had appealed reassessments of three of her taxation years for which CRA had added approximately $2.8M in shareholder benefits to her income, brought a motion pursuant to Rule 86 to compel the Financial and Consumer Affairs Authority of Saskatchewan (“FCAA”) to turn over certain documents that she considered to be relevant to her appeal.

Graham J found that, with one minor exception, issue estoppel applied to preclude the taxpayer from again seeking to have such documents produced by the FCAA given that in a number of proceedings before a panel to consider allegations that she had breached a number of provisions of the Securities Act (Saskatchewan) the panel had concluded that the FCAA no longer had such documents in its possession.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 86 issue estoppel to precluded reviewing compellability of 3rd-party documents - and witness notes not established to be relevant 248

Carvest Properties Limited v. The Queen, 2021 TCC 21, aff'd 2022 FCA 124

CRA not estopped from applying a different valuation method from that used in previous audits

The appellant (“Carvest”), which was in the business of developing, owning and renting out apartment buildings in southern Ontario, had self-assessed under s. 191(3) regarding a 12-storey apartment building containing 137 units and located in London, Ontario (the “Richmond property”), which was ready for occupancy at the end of 2008. It valued the Richmond property for such purposes by applying the “cost plus 6%” method that had been agreed to seven years’ previously with a CRA auditor (Mr. Shannon) regarding two other apartment buildings (and any other buildings that were nearing completion at the time), i.e., adding the costs of construction to an estimate of the market value of the land, and adding 6% to reflect a notional builder’s profit margin, and then allocating the resulting global amount to the 137 units. In finding that CRA was not bound to apply this method to the Richmond property, St-Hilaire J stated (at paras. 45-46):

I find that there was no “representation intended to induce a course of conduct,” related to the Richmond property. On the contrary, the Shannon letter expressly limits the application of the cost plus 6% approach to the two properties that are the subject of dispute at the time and to projects under or nearing construction. The Appellant knew that those projects did not include the Richmond property. …

Estoppel cannot override the law. … It is an established principle that the Minister has a duty to assess tax on the facts as she finds them in accordance with her understanding and interpretation of the law. …

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 191 - Subsection 191(1) condo registration of a rental apartment building meant that the rental units were HST self-supplied based on comparable condo sales 406
Tax Topics - General Concepts - Fair Market Value - Land rental apartment building units that were registered as condo units for municipal tax purposes were to be valued based on comparable condo sales 220

Landbouwbedrijf Backx B.V. v. The Queen, 2021 TCC 2

Minister not precluded from reassessing contrary to initial acceptance of non-residency in returns as filed

Smith J rejected the Appellant’s argument that because the Minister had accepted its 1998 to 2008 returns in which it had reported itself as a non-resident of Canada, she was now estopped from treating the Appellant as having been a Canadian resident in those years. He stated (at para. 54):

Jarvis confirms that the Minister may subsequently reassess or make an additional assessment of a taxpayer’s liability. Furthermore, a reading of Goldstein and Jarvis, both suggest that the Minister is not estopped from so doing, subject to the limitation period set out in subsection 152(4).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(1) - Paragraph 128.1(1)(c) no application because taxpayer became a Canadian resident prior to the property's acquisition 246
Tax Topics - Treaties - Income Tax Conventions - Article 4 Dutch legal expert testimony was required in order to establish dual corporate residency - and failure to engage competent authorities 632
Tax Topics - General Concepts - Evidence need to adduce expert legal evidence as to tax residency in foreign jurisdiction 88

International Hi Tech Industries Inc. v. The Queen, 2018 TCC 107 (Informal Procedure)

errant advice of a CRA official does not change Act’s application

A corporation (“Garmeco”) had made timely claims for input tax credits for GST on legal invoices (based on alleged advice of a CRA official that it was the right person to make the claims), but was found by the Tax Court of Canada not to be entitled to them. A subsidiary of Garmeco (“IHI”) then claimed the ITCs on the basis that the Tax Court judgment had found that it was the right party to make the claims.

The Tax Court then found that IHI also was precluded from claiming the ITCs because it had made the claims beyond the four-year period set out in s. 225(4)(b). Russell J stated (at para. 13):

[T]he assertion (unchallenged by the Respondent) that a CRA officer several years ago advised IHI and Garmeco that the subject ITCs should be claimed by Garmeco (as was in fact done, as discussed), does not assist IHI in this appeal. Jurisprudence has well established that estoppel cannot override the law. “The doctrine [of estoppel in pais] had no application where a particular interpretation of a statute had been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government.” (Goldstein v. Her Majesty, 96 DTC 1029 (TCC) at 1034.) Thus, a taxpayer claiming reliance on errant advice by a CRA official does not help IHI. The law must be applied, notwithstanding that an official responsible for administering the law misinterpreted it in communicating to a taxpayer.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 225 - Subsection 225(4) - Paragraph 225(4)(b) timely but invalid claiming of ITCs by parent did not now permit sub to claim them after 4 years 217

St-Pierre v. The Queen, 2017 TCC 69, rev'd 2018 FCA 144

limited estoppel remedies in Quebec/no abusive conduct by CRA
rev'd on other grounds 2018 CAF 144

A private corporation that sold eligible capital property in 2008 declared a capital dividend in the year in an amount which included the untaxed portion of this sale receipt. This was a mistake, as the addition to the capital dividend account for this amount does not occur until the beginning of the following year. When CRA discovered this mistake a number of years later, it indicated that it would not assess the corporation for Part III tax provided that the mistake was rectified through an order of the Quebec Superior Court.

CRA might have contemplated a court order that merely changed the dividend due dates. Only a small portion of the dividend made payable in 2008 was actually paid in 2008, so that the CDA addition from the sale was not needed to cover that dividend payment. Accordingly, all that was necessary to remedy the problem for the Superior Court to declare the payable date for most of the dividend to be on or after January 1, 2009.

What the corporation instead sought and obtained was a Court order dated January 6, 2014 that retroactively annulled the dividend and ordered the individual shareholder to repay the dividend, which he then did, and with a fresh capital dividend then being declared and paid. The corporation’s counsel sought this nullification order notwithstanding that CRA, on being apprised of this nullification plan, had a number of months previously assessed the individual under s. 15(2).

Favreau J upheld the s. 15(2) assessment, on the basis that he considered that the dividend payments gave rise to indebtedness of the individual to the corporation under the unjust enrichment principle.

In rejecting an argument that the Minister was estopped from relying on s. 15(2), Favreau stated (at paras 68, 70 and 71, TaxInterpretations translation):

The CRA informed counsel for the appellant as of March 1, 2013 that it intended to reassess the appellant and offered him the opportunity to delay the assessment to a date subsequent to the judgment of the Court and to be able to discuss the findings of the judgment. The appellant declined the offer … .

I am not satisfied that the CRA acted in bad faith, misled the Appellant, trapped or abused procedures that were unjustified in the circumstances. …

The concept of estoppel is a common law concept that has no equivalent in Quebec civil law. The only type of estoppel that would be of interest to us in this case, if this concept were applicable in Quebec, would be estoppel because of the conduct of the parties, specifically that of the CRA. Given the findings in the preceding paragraph, I do not see how estoppel in the conduct of the CRA could apply in the circumstances.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(2) judicial nullification rather rectification of a premature capital dividend declaration gave rise to a s. 15(2) income inclusion 501
Tax Topics - General Concepts - Unjust Enrichment taxpayer was unjustly enriched when he received capital dividends that subsequently were declared to not have been validly paid as dividends 85

Dundurn Street Lofts Inc. v. The Queen, 2010 TCC 553

Estoppel should apply to appeal in respect of prior criminal tax evasion conviction as quantum requirements were met

The appellants and Mr. Adam Stelmaszynski were convicted on two counts of fraud and two counts of attempted fraud for claiming false ITCs in GST returns, thereby committing offences contrary to paragraph 327(1)(d) of the ETA. Mr Stelmaszynski’s appeal of his conviction to the Ontario Court of Appeal was dismissed.

Favreau J. found that the doctrine of issue estoppel should apply to the appellants and to Mr. Stelmaszynski in respect of the improper claims for ITCs. He noted (at para. 20) that in Golden, [2008] 5 C.T.C. 2440 Boyle J. commented:

[25] The doctrine of issue estoppel should only be applied in a tax appeal in this Court in respect of a prior criminal tax evasion conviction in clear cases. It should not be applied indiscriminately once the preconditions are met. The Court should be satisfied that the issue of quantum in each particular taxation year was decided in the criminal proceedings.

Favreau J. found that as the trial jury’s verdict indicated it was satisfied that amounts alleged in indictment had been proven by the Crown, that quantum requirements had therefore been met. The real purpose of these appeals appeared to be relitigation of the criminal case, and failure to apply issue estoppel would violate principles of judicial economy, consistency and finality and integrity of administration of justice.

Harvest Operations Corp v. A.G. (Canada), 2015 DTC 5067 [at 5904], 2015 ABQB 327

taxpayer estoppel when it claimed a tax benefit from its mistake rather than promptly seeking rectification

A debtor transferred assets to an affiliated creditor in order to repay debt of approximately $170 million owing by it. However, the conveyance only included partnership interests worth $158 million and did not include the balance of the debtor's assets of $12 million (the "Other Assets"). CRA assessed on the basis that the debt forgiveness rules applied to the debtor in the amount of $12 million as its debt had been settled in full on the repayment of an inadequate amount.

Dario J declined to issue a rectification order to have the assets transferred retroactively. After finding that rectification would be inappropriate in any event (see summary under General Concepts - Rectification), Dario J stated (at para. 93):

The Applicant had been relying on the non-transfer of the Other Assets to seek a tax benefit, and now seeks the transfer of such assets to obtain a different one. Rectification is a discretionary equitable remedy… . "He who seeks equity must do equity"…[B]y taking advantage of the capital cost allowance of the Other Assets, instead of immediately seeking a rectification order, I find [the debtor] undertook a course of conduct akin to acquiescence, precluding the remedy it now seeks.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Rectification & Rescission requested rectification order to fix bump did not match parties' specific plan at closing 614
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(c) failure to fund debt repayment through increased purchase price 162

Szymczyk v. The Queen, 2014 TCC 380 (Informal Procedure)

Minister's authorization should not be set aside too readily as being contrary to law

The taxpayer's employer, General Motors of Canada Limited, assigned a new vehicle to the taxpayer and about 350 other senior managers or executives no less frequently than every three months for their personal and business use, but on the basis that they would identify shortcomings in the models and promote them to friends and acquaintances. The Director of Accounting and Collections Division of Revenue Canada, Taxation authorized GM in 1982 to use a simplified method for calculating the value of employee benefits, based on the average cost of all GM passenger vehicles sold in Canada and assuming 50% personal use of all vehicles in the pool. The Minister reassessed the taxpayer for 2008 and 2009 on a basis less favourable than the method in the 1982 authorization.

After quoting (at para. 36) a statement in Ryan v. Moore, 2005 SCC 38, that "estoppel by convention operates where the parties have agreed that certain facts are deemed to be true and to form the basis of the transaction," and stating (at para. 37) "that estoppel will not apply if an approval given by a tax authority is contrary to law," Woods J rejected the taxpayer's argument that the Minister was estopped from assessing contrary to the 1982 authorization. She stated (at para. 38):

...[A]n approval should not be set aside by the courts too readily on grounds that it is contrary to law. Latitude should be given to the approval unless it is clearly not supportable by the law. The administration of the tax system would be significantly adversely affected if this were not the case.

The authorization when made in 1982 was not contrary to law, as it "provided a reasonable determination of employee benefits" (para. 41). However, it was clearly invalidated by the enactment of s. 6(1)(k) in 1993 "to provide a specific rule for operating expenses" (para. 47). Furthermore, there had been a material change in factual circumstances (i.e., the turnover of vehicles in 1982 had been more frequent) (para. 49).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus Minister's "partly arbitrary" assumptions did not remove onus from taxpayer 333
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(k) late designation not permitted/rule-of-thumb method invalidated by s. 6(1)(k) 201
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) separate personal use kilometers required for each vehicle used in year 183

Yourkin v. The Queen, 2014 DTC 1071 [at 3032], 2014 TCC 48 (Informal Procedure)

taxpayer's seventh collateral attack on the same consent judgment

The taxpayer argued that he was not bound by a consent judgment divorce settlement because he had not signed the underlying minutes of settlement, nor authorized his counsel to do the same. Masse DJ stated (at paras. 17-18):

This is not the first time Mr. Yourkin has been before this Court on this very same issue. He unsuccessfully challenged his assessments for his 2001, 2002, 2003, 2005, 2006 and 2009 taxation years. In all these prior appeals, the parties were the same, the issues were exactly the same, and the facts relied upon were the same except for the taxation years and perhaps the amount in dispute. ...

Whether one looks at this situation through the lens of res judicata or issue estoppel, the result is the same. ... The matter has been finally decided.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Res Judicata taxpayer's seventh collateral attack on the same consent judgment 137

Mosher v. The Queen, 2014 DTC 1026 [at 2654], 2013 TCC 378

new assessment related to prior assessment where appeal was abandoned

The taxpayer's husband was reassessed in 2002 to include $500,000 in income, but died intestate in 2007 before his appeal was heard. His estate discontinued the appeal, and the taxpayer was assessed personally in 2011 to give effect to the $500,000 inclusion. One of the taxpayer's grounds for appeal was essentially to challenge the initial $500,000 assessment. The Minister moved to strike those arguments from pleadings, as the appeal of that assessment was abandoned in 2008.

C Miller J declined to strike the pleadings challenging the initial assessment. It was not plain and obvious that they would fail - it was unclear that issue estoppel would apply (stating, at para. 8, that there was "a contentious issue as to whether a discontinuance of a matter, without further judicial determination, meets one of the requirements") and, even if it did, a judge would still have discretion to hear the issue for reasons of justice and fairness (para. 8).

Klundert v. The Queen, 2013 DTC 1166 [at 910], 2013 TCC 208, aff'd 2014 DTC 5087 [at 7098], 2014 FCA 155

taxpayer estopped from raising Charter argument that would essentially overrule a superior court

The taxpayer had been convicted of tax evasion by the Ontario Superior Court. He appealed his assessment of those same taxation years to the Tax Court, arguing on Charter grounds that the evidence against him had been collected in an unconstitutional manner. Pizzitelli J granted the Minister's motion to dismiss the appeal because, among other reasons, issue estoppel applied. Agreeing to hear the Charter arguments would put the Tax Court in the "ridiculous" position of essentially hearing an appeal from the Ontario Superior Court (para. 34).

Kreuz v. The Queen, 2012 DTC 1201 [at 3514], 2012 TCC 238 (Informal Procedure)

The taxpayer had succeeded in an appeal from a prior taxation year, in which the taxpayer's motor vehicle expenses were deductible under s. 8(1)(h.1) in respect of his substitute teaching job. D'Auray J. found that neither the res judicata doctrine nor issue estoppel could block the Minister from denying the taxpayer's s. 8(1)(h.1) deductions in subsequent years. Res judicata cannot apply between appeals involving different taxation years because each taxation year is a different cause of action.

Issue estoppel did not apply because the Minister had new evidence (a witness for the school board). D'Auray J. noted that, "since in income tax appeals we often deal with recurring issues," it would be inappropriate to apply issue estoppel to prevent the Minister (or the taxpayer) from introducing new evidence simply because a deduction was allowed or disallowed previously (para. 80).

741290 Ontario Inc. v. The Queen, 2011 DTC 1089 [at 489], 2011 TCC 91, aff'd 2012 DTC 5025 [at 6665], 2011 FCA 361

In a prior decision, the Tax Court had found that the taxpayer's directors were protected from liability for unremitted source deductions under s. 227.1(1) because they had a due diligence defence under s. 227.1(3). The question in the present case was whether the taxpayer would be liable under s. 227(9)(b). The taxpayer argued that its reassessment should be barred, because the question of source deduction liability on the present facts had already been settled by the prior Tax Court decision.

Bowie J. found that the Minister's reassessment was not barred by issue estoppel. In issue estoppel, the case must involve the same parties and the same issue. The present case engaged a different party (the taxpayer rather than its directors) and a different issue (s. 227(9) liability rather than s. 227.1(1) liability). Neither did the doctrine of res judicata bar the Minister's reassessment - the change in issues and parties meant that the present case could not be construed as a relitigation of the prior decision.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Res Judicata 168

742190 Ontario Inc.(Van Del Manor Nursing Homes) v. Canada (Customs and Revenue Agency), 2010 DTC 5104 [at 6945], 2010 FCA 162

The doctrine of issue estoppel barred the Minister from asserting in the Federal Court that Ministerial review requests made by the taxpayer were filed late, given that the Tax Court had already found that the requests for Ministerial review of assessments were not filed late.

Cranston v. The Queen, 2010 TCC 414, 2010 DTC 1280 at 3948

The taxpayer was convicted by the Ontario Court of Justice under s. 239 for misrepresenting his income. The Minister then reassessed the taxpayer's tax under s. 163(2). The taxpayer brought an appeal against the reassessment.

Lamarre J. granted the Minister's motion to quash the appeal. The taxpayer had introduced no new evidence that would undermine the conclusions reached by the Ontario Court of Justice. Applying Golden, Lamarre J. found that the taxpayer was estopped from relitigating the Ontario court's findings.

Golden v. The Queen, 2008 DTC 3363, 2008 TCC 173

Issue estoppel applied to preclude the taxpayer from litigating before the Tax Court the question whether an amount of $34,000 should have been included in his income. Although the finding of a jury that he had committed tax evasion in respect of this amount did not turn on the particular quantum of the amount that he had failed to report, that quantum was part of the sentencing process made by the judge in that criminal proceeding. Furthermore, given that there had been proof of criminal mens rea beyond a reasonable doubt, this satisfied the onus on the Crown respecting the s. 163(2) gross negligence penalty.

It also would have been an abuse of process for the taxpayer's wife to re-litigate whether a $217,000 shareholder loan should be included in her income given that the only alleged unfairness was that in the criminal proceedings, there had been an agreement that Mr. and Mrs. Golden would be treated as one taxpayer, so that no particular finding was made as to whose income the amount should be included in.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Abuse of Process relitigating an amount determined in criminal sentencing 179
Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) 44

Beauchamp v. The Queen, 2006 DTC 3173, 2004 TCC 371 (Informal Procedure)

Before going on to reject the taxpayer's argument respecting estoppel, Tardif J. found (at p. 3179) that the doctrine of estoppel cannot be applied to cases from Quebec, and that the case before him was to be reviewed instead in light of Article 1457 of the CCQ (which was essentially to the same effect as the doctrine of estoppel in Pais).

Humphrey v. The Queen, 2006 DTC 2730, 2006 TCC 168 (Informal Procedure)

After referring to the principle that no estoppel can arise where representations made are not in accordance with the law, Bowman C.J. found that advice given to the taxpayer by officials in the local office could not bind the Court.

Stremler v. The Queen, 2000 DTC 1757 (TCC)

The Crown was unsuccessful in a submission that the taxpayers were estopped from alleging that properties held by them were inventory rather than being held on capital account as originally characterized in their income tax returns. McArthur TCJ. stated (at p 1760):

"... Appellants' description of the properties as capital is a statement of law and not fact. A representation of law is not grounds for estoppel."

Desrochers v. The Queen, 2000 DTC 962 (TCC)

The taxpayer was estopped from disputing the existence of a partnership between her and her husband, having previously induced the Minister to assess on the basis that such a partnership existed.

Goldstein v. The Queen, 96 DTC 1029, [1995] 2 CTC 2036 (TCC)

The Department was not bound by what was found to be an erroneous interpretation of the definition of "earned income" in s. 146(1)(c). Bowman, TCJ. stated (at p. 1034) that although it was not accurate to say that estoppel does not lie against the Crown and that:

"The question is not whether the Crown is bound by an earlier interpretation upon which a taxpayer has relied. It is more to the point to say that the courts, who have an obligation to decide cases in accordance with the law, are not bound by representations, opinions or admissions on the law expressed or made by the parties."

Taylor v. The Queen, 95 DTC 591, [1995] 2 CTC 2133 (TCC)

The doctrine of promissory estoppel was found to be inapplicable to supposed agreements of the Minister not to assess penalties and interest, as well as to the taxes themselves.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) 65

Byrt v. MNR, 91 DTC 923, [1991] 2 CTC 2174 (TCC)

In reliance upon a letter of the taxpayer stating that he resigned as director of a corporation on August 1, 1985, the Minister did not assess the taxpayer under s. 227.1 until May 6, 1987, i.e., within the two-year period referred to in s. 227.1(4). In finding that the taxpayer was later estopped from amending his pleadings to allege that he had resigned on January 24, 1985, Rip J. stated (pp. 932-933):

"... A representor need only intend that the representee act upon the representation in some way, and not in any particular way, to plant the seeds of estoppel. In addition, a representation need not be given wilfully as long as the representation is of such a character to induce a reasonable and prudent person to believe that it was meant to be acted on or it was made under such circumstances that he should have known that it was both natural and probable that it would be acted on."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 227.1 - Subsection 227.1(3) 94

IRC v. Garvin, [1981] 1 WLR 793 (HL)

In obiter dicta, Lord Russell of Killowen "venture[d] to doubt the ability of the Crown ... having levied a tax on the basis that the transaction was a dealing in capital, then to assert that it can indirectly, by counteraction be treated as giving rise to taxable income."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) presumption against taxation both as capital and income receipt 57


Timothy Fitzsimmons, "Advanced Warning", CA Magazine, August 2008, p. 30

Discussion of Sentinel Hill Decision.