Section 225.1


Coombs v. Canada (National Revenue), 2013 DTC 5023 [at 5612], 2012 FC 1499

Manson J. dismissed the taxpayer's application to quash a Requirement To Pay from CRA, as challenges to the validity of a tax assessment are a matter for the Tax Court.


Khashayar Haghgouyan, "Narrowing of the Collection Restrictions - Set-Off Can Occur!", CCH Tax Topics, No. 4 1901, 14 August 2008, p. 1.

Subsection 225.1(2) - No action by Minister


Cybernius Medical Ltd. v. Canada (Attorney General), 2017 FC 226

valid notice of objection was still outstanding: garnishment amount to be returned

The applicant (“Cybernius”) did not file income tax returns for its 2003-2005 taxation years and, in 2006, was assessed by the Minister for those years on the basis that it was liable for taxes, penalties and interest in an amount of $534,365.28 and in 2009 was reassessed for its 2003 taxation year. In December 2009, the Minister garnished $594,447.21 held by an escrow agent of Cybernius pursuant to a Requirement to Pay (RTP). In 2014, Cybernius filed notices of objection, which were initially rejected - but in 2015 the Tax Court of Canada issued a consent judgment that they were valid. In June 2015, the Minister issued notices of reassessment resulting in a $594,855 credit owing to Cybernius. Cybernius also was entitled to a $465,923 SR&ED tax credit. In September 2015, Cybernius requested that the Minister first set-off the $594,855 reassessment credit owed to Cybernius against $800,000.00 payroll source deductions owing by Cybernius, and that the $465,923 in SR&ED credits be applied to the remainder of the source deductions debt. The Minister refused on the basis that Cybernius’ T2 corporate income tax returns for 2013 and 2014 had not been filed – and that the credits also could not be used as Cybernius’ corporate income tax returns had not been filed within three years of the end of each relevant year. Cybernius then submitted a Form RC431 for reappropriation of the credits and, when the Minister refused, Cybernius brought this application, whose central issue was whether the exercise of discretion by the Minister not to re-appropriate $594.447.21 towards Cybernius’ source deduction liability was reasonable.

After noting the 90-day delay in ss. 225.1(1) and (2) for taking collection action, McVeigh J stated (at paras 45- 47):

[I]f it is assumed the assessment dated December 18, 2006, and the reassessment on November 19, 2009, are valid …, the RTP on December 22, 2009, was statute barred since it was within 90 days of the reassessment.

If this analysis is incorrect, the RTP was still statute barred because of objections filed and found to be valid by the Tax Court of Canada, on March 20, 2014. Under section 225.1(2) of the ITA, the Minister cannot take collection action until more than 90 days after the day on which the Minister confirms or varies the assessment if a notice of objection is filed… .

The Minister’s discretion to retain these tax credits is made unreasonable when the basis for this decision is statute barred.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 221.2 - Subsection 221.2(1) Minister ordered to make a taxpayer-requested s. 221.2(1) transfer between two taxpayer accounts 413

Arif (Re), 2011 DTC 5173 [at 6284], 2011 FC 1000

Shore J. granted the Minister's s. 225.1(2) application. The Court was informed that the taxpayer had been involved in cocaine trafficking, for which he was likely to receive a lengthy sentence, he had recently liquidated immovable assets, he transferred the family home to his spouse without consideration and she put the residence up for sale, and he had grossly under-reported his income for several taxation years despite making large purchases and disbursements from his bank accounts.

Subsection 225.1(3) - Idem [No action by Minister]


Cormier v. The Queen, 91 DTC 5159 (FCTD)

S.225.1(3), which was added applicable to "notices of assessment" mailed after 1984, did not apply where a reassessment was issued in 1983, and a notice of confirmation issued in 1984. Because a notice of confirmation does not effect any change to an assessment, it is not itself an assessment.

O'Sullivan v. The Queen, 90 DTC 6278, [1990] 1 CTC 429 (FCTD)

The taxpayer, after filing notices of objection in 1984 to reassessments by Revenue Canada, filed a Notice of Appeal to the Tax Court pursuant to s. 165(7) to reassessments dated December 16, 1985. Collier J. held that filing the Notice of Appeal met the requirement under the transitional rules that the taxpayer had "objected" to the reassessments after 1984, notwithstanding that the Notices of Objection were filed in 1984. "[T]here is nothing in the context of the legislation in this case, which would lead me to find that the word 'object', or objection, is used in a technical sense instead of in its ordinary and grammatical sense." (p.6281)

Administrative Policy

86 C.R. - Q.85

the filing of a bona fide objection does not delay the time for remitting taxes that have been deducted.

Subsection 225.1(4) - Idem [No action by Minister]

Administrative Policy

IC98-1R4 "Tax Collections Policies" 12 June 2013

security for appeal to FCA

We will accept adequate security instead of payment under some circumstances. For example, if the Tax Court of Canada or the Canadian International Trade Tribunal dismisses your appeal and you exercise your right to appeal to a higher court, we will ask you to immediately pay the full amount owing regardless of your further rights to appeal. However, we will accept adequate security instead of payment, such as a bank letter of guarantee, a bank letter of credit, or mortgages.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 224.1 usual policy not to set-off if appeal 71

Subsection 225.1(5) - Idem [No action by Minister]


Doyle v. MNR, 89 DTC 5483, [1989] 2 CTC 270 (FCTD)

A letter of abeyance signed by a tax return preparer as agent for a taxpayer who previously had signed his notice of objection personally, was held to be valid.

The Minister had implied power to delegate his responsibilities under the section notwithstanding the lack of reference to s. 225.1(5) in Regulation 900.

Subsection 225.1(6) - Where ss. (1) to (4) do not apply

Paragraph 225.1(6)(b)

Administrative Policy

30 January 2014 Internal T.I. 2012-0460181I7 - Application of paragraph 225.1(6)(b)

collection limitations apply to NR recipient

A non-resident disposes of a taxable Canadian property and files a T2062 and discloses that Part XIII tax has not been withheld and remitted with respect to rental income. CRA stated:

[W]ith respect to an assessment issued to the non-resident recipient in respect of the amount of Part XIII tax that should have been withheld by the payor, it is our view that paragraph 225.1(6)(b) would not be applicable because the Part XIII tax is not an amount of tax that the non-resident was required to withhold and remit.