Federal Courts Act

Subsection 13(2)


Stephens Estate v. The Queen, 82 DTC 6132, [1982] CTC 138 (FCA)

A county sheriff who is made, in effect, an officer of the Federal Court by virtue of s. 13(2), is not thereby made a servant of the Crown in right of Canada for the purpose of s. 17(4)(b) of the Federal Court.

Subsection 17(1)


Royal Bank of Canada v. Saskatchewan Power Corp., 90 DTC 6330 (Sask QB)

The Saskatchewan Court of Queen's Bench had no jurisdiction to make a determination as to who had the right to funds already paid to Revenue Canada pursuant to s. 224 demand.

Section 18


MNR v. Devor, 93 DTC 5098 (FCA)

The Federal Court had no jurisdiction to declare that waivers, which allegedly had been extracted from the taxpayer under compulsion and duress, were void. "[T]here is no reason which grounds for invalidity cannot be given full effect and proceedings appealing the reassessments."

McCaffrey v. The Queen and the Minister of National Revenue, 93 DTC 5009 (FCTD)

The Court had jurisdiction to entertain an application seeking to prohibit the Minister from performing further audits of the taxpayer for the taxation years in question and from continuing his practice of issuing two employer remittance forms.

It was not proper for the Queen to be a defendant.

Silbernagel v. The Queen, 93 DTC 5007 (FCA)

The decision of the Minister of Communications to revoke a certification of a certified production previously given under Regulation 1104(2) could not be reviewed under section 18 of the Federal Court Act.

Hart v. The Queen, 86 DTC 6335, [1986] 2 CTC 63 (FCTD)

The applicant, who was a judgment creditor of a company ("Polar"), had no standing to quash assessment and enforcement proceedings by the Minister on the ground that the Minister had made the assessments without jurisdiction. Walsh, J. stated that in order to decide that the applicant had a proprietary interest in the funds which had been seized, and accordingly had a sufficient interest to acquire standing, "would involve a decision that the seizure by the Minister was unlawful and applicant Hart cannot acquire standing on the basis of an assumption that the Minister's action in making the seizure was unlawful."

Re F.K. Clayton Group Ltd., 86 DTC 6214 (FCTD)

A motion pursuant to s. 18 of the Federal Court Act to quash an application by a Departmental employee pursuant to s. 231(2) for the retention of documents did not constitute a collateral attack on the order of Judge Street made pursuant to that application.

Lavers v. Minister of Finance (B.C.), 85 DTC 5218, [1985] 2 CTC 19 (BCSC)

The provincial superior courts have at least coordinate jurisdiction with the Federal Court in Charter matters, and should not defer to the Federal Court in Charter matters.

Subsection 18(12)


9027-4218 Québec Inc. v. Canada (National Revenue), 2019 FC 785

determination not to reassess was a reviewable decision that started the 30-day period

Two co-owners paid a portion of the expropriation proceeds received for one of their properties to their affiliated tenant of that property. However, when CRA treated that receipt in the tenant’s hands as a s. 9 receipt, rather than as a s. 12(1)(x) receipt that was eligible for the s. 13(7.4) election, the two co-owners and the tenant requested CRA (within the normal reassessment period) to amend their returns for the year of expropriation to treat the amount that had been paid to the tenant not as income to the tenant but instead as capital gains realized by the co-owners. CRA essentially refused this request. The taxpayers considered it to be unfair that CRA had not issued any reassessment that they could appeal, and applied for an order of mandamus compelling CRA to reassess in some manner.

Walker J found that the refusal of CRA to reassess was a decision that could be subject to judicial review (e.g., if the decision was unreasonable) – although, of course, the substantive question of whether the requested adjustment was correct could not be reviewed by her. However, this decision was not before her because their application had not been brought on a timely basis and the criteria for extending the 30-day period for bringing such an application had not been made out.

In any event, CRA had no legal obligation to issue a reassessment notice following the taxpayer request – that was a decision that was within its discretion (s. 152(4) used the word “may”).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) a determination of CRA not to reassess a taxpayer is a reviewable decision 499

Section 18.1

Subsection 18.1(2)


Iris Technologies Inc. v. Canada (National Revenue), 2020 FCA 117

CRA’s assessing does not oust Federal Court jurisdiction to review exercises of CRA discretion

During an audit of the appellant (Iris), CRA refused Iris’ requests for immediate payment of its refund claims, suspecting that Iris was participating in a “carousel” scheme (i.e., under which GST/HST is never remitted at the other end of the chain). Iris considered that the requirement in ETA s. 229(1) that net refund claims be paid “with all due dispatch” meant that it should be paid right away rather than awaiting the conclusion of the audit, and appealed the dismissal of its motion in the Federal Court, for an interim mandatory injunction to compel the payment of $62.3 million in GST/HST refunds, to the Court of Appeal.

Rennie JA endorsed the findings in Express Gold that “the obligation to pay a refund with all due dispatch did not displace the Minister’s obligation to verify that the refund is in fact payable under the ETA” (para.41) and that “’a reasonable interpretation of subsection 299(1) is that the Minister may choose to audit a claim for a net tax refund, in order to determine whether the amount is properly claimed’” (para. 42).

Rennie JA further stated (at paras. 49, 51):

… I do not wish to be taken as endorsing the Minister’s arguments that the issuing of the notices of assessment deprives the Federal Court of jurisdiction to consider the Minister’s exercise of discretion under the ETA.

…[T]he Federal Court retains jurisdiction to consider the application of administrative law principles and obligations to the exercise of discretion by the Minister in the application of the ETA. Examples of this include allegations of acting for an ulterior purpose or in bad faith, abuse of his or her powers or not proceeding in a reasonable time frame.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 229 - Subsection 229(1) "with all due dispatch" entailed awaiting completion of 10-month audit 480
Tax Topics - Excise Tax Act - Section 299 - Subsection 299(1) s. 299(1) consistent with auditing before paying net refund required to be made "with all due dispatch" 190

KIK Custom Products Inc v. Canada (Border Services Agency), 2020 FC 462

follow-up correspondence of the taxpayer’s accounting firm resulted in the transformation of a reversible CBSA decision into a reasonable one

Vavilov confirmed that administrative decisions must satisfy requirements of justification, transparency and intelligibility. An adverse CBSA decision on the taxpayer’s request for a ruling that it was entitled to duty drawbacks on its imports did not meet this standard. However, the taxpayer’s accounting firm immediately contacted the officer involved by email for an explanation and made submissions, and as part of further email exchanges the officer clarified why the items were not considered to satisfy the conditions for the drawback. In finding that this email correspondence was effectively part of the decision under judicial review, Norris J stated (at para. 69):

The officer’s responses to the inquiries and further submissions from the applicant’s representatives are part and parcel of the justification for the decision that was given to the applicant. … The officer was not responding to an application for judicial review of the decision, something that had not yet been commenced at the time of the exchanges.

As the decision in this broader context was now rendered reasonable, Norris J declined to reverse it.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Customs Tariff Act - Section 89 - Subsection 89(1) - Paragraph 89(1)(a) imported containers were materially changed rather than having the same condition when they were filled with lotion 536

Canada (Attorney General) v. Valero Energy Inc., 2020 FCA 68

CRA determination to issue a requirement for information was a “decision” rather than “matter”

The respondent (Valero) had requested an order setting aside the requirement for information issued under 231.2(1). The Federal Court found that the requirement for information was a "matter” rather than a “decision” and that, therefore, the 30-day time limitation in s. 18.1(2) did not apply.

In reversing this finding, Rivoalen JA stated (at para. 32):

I would characterize the requirement for information at issue more properly as a decision.

However, she went on to find (at para. 34):

… I need not address the Crown’s … argument that the Application should be struck because it is out of time. If that were the only issue before us, the Application would likely not be struck without the Court having provided Valero the opportunity to file affidavit evidence to explain the reasons for the delay.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.2 - Subsection 231.2(1) requested judicial review of CRA’s requiring audit information collaterally attacked CRA’s assessing responsibility 323

Canada (Attorney General) v. Honey Fashions Ltd., 2020 FCA 64

CBSA required to revisit an adverse decision due to its failure to explain a departure from past practices

In a specialized customs tariff remission context, De Montigny JA agreed with Zinn J of the Federal Court that a decision of the CBSA - to deny a request of a clothing manufacturer (Honey Fashion) to have the name of the importer of record changed from the actual importer to that of Honey Fashion (in order that Honey Fashion could generate remission claims for the importations in question) – should be reversed given that the CBSA decision did not give any explanation as to why it was not following its practice in previous such claims of allowing such a name change. In applying Vavilov, De Montigny JA stated (at para. 46):

A decision maker cannot deviate from earlier decisions or from a longstanding past practice, especially when it is too late for those affected by these decisions to adjust their behaviour accordingly, without providing a reasonable explanation for that departure.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Customs Act - Section 7.1 CBSA failure to explain reason for departing from past practice of allowing a change of the importer-of-record name to that of purchaser 411

Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65

correctness appellate standard for questions of law not generally applicable to s. 18.1 reviews

The respondent was born in Toronto of parents who, unknown to him were Russian spies and who, in 2010, were arrested in the U.S., charged with espionage, pled guilty and returned to Russia. In 2013, he was issued a certificate of Canadian citizenship. Then, in 2014, the Canadian Registrar of Citizenship cancelled his certificate on the basis of her interpretation of s. 3(2)(a) of the Citizenship Act, which exempted children of “a diplomatic or consular officer or other representative or employee in Canada of a foreign government” from the general rule that individuals born in Canada acquire Canadian citizenship by birth. The Registrar concluded that because the respondent’s parents were employees or representatives of Russia at the time of his birth, the exception in s. 3(2)(a) applied, so that he had never been entitled to citizenship. After the respondent’s application for judicial review of the Registrar’s decision was dismissed by the Federal Court, the Court of Appeal allowed his appeal and quashed the Registrar’s decision because it was unreasonable.

The appeal of the Minister was dismissed. The Registrar’s decision was unreasonable. She failed to justify her interpretation of s. 3(2) (a) in light of the constraints imposed by s. 3 considered as a whole, by international treaties that inform its purpose, by the jurisprudence on the interpretation of s. 3(2) (a), and by the potential consequences of her interpretation.

Before so concluding, the Court set out a revised framework for the standard of review of an administrative decision. The revised standard begins with a presumption that reasonableness is the applicable standard in all cases. As a result, it is no longer necessary for courts to engage in order to identify the appropriate standard.

The presumption of reasonableness review can be rebutted in two types of situations. The first is where the legislature has indicated a different standard, for example, where it has provided a statutory appeal mechanism (entailing application of a standard of correctness to questions of law, including on statutory interpretation and the scope of a decision maker’s authority) and application of a standard of palpable and overriding error for questions of fact or questions of mixed fact and law. However, some provisions, such as ss. 18 to 18.2, 18.4 and 28 of the Federal Courts Act “simply recognize that all administrative decisions are subject to judicial review and address procedural or other similar aspects of judicial review in a particular context … [and] do not authorize the application of appellate standards” (para. 51).

The second situation is where the rule of law requires that the standard of correctness be applied, which will be the case for certain categories of legal questions, namely constitutional questions, general questions of law of central importance to the legal system as a whole (e.g., questions of res judicata and abuse of process, or of solicitor-client privilege) and questions related to the jurisdictional boundaries between two or more administrative bodies.

The Court also made various comments on application of the reasonableness standard, including (at paras. 96, 102, 121):

Where, even if the reasons given by an administrative decision maker for a decision are read with sensitivity to the institutional setting and in light of the record, they contain a fundamental gap or reveal that the decision is based on an unreasonable chain of analysis, it is not ordinarily appropriate for the reviewing court to fashion its own reasons in order to buttress the administrative decision. …

[T]he reviewing court must be able to trace the decision maker’s reasoning without encountering any fatal flaws in its overarching logic, and it must be satisfied that “there is [a] line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived” … . Reasons that “simply repeat statutory language, summarize arguments made, and then state a peremptory conclusion” will rarely assist a reviewing court in understanding the rationale underlying a decision and “are no substitute for statements of fact, analysis, inference and judgment” … .

The administrative decision maker’s task is to interpret the contested provision in a manner consistent with the text, context and purpose, applying its particular insight into the statutory scheme at issue. It cannot adopt an interpretation it knows to be inferior — albeit plausible — merely because the interpretation in question appears to be available and is expedient. The decision maker’s responsibility is to discern meaning and legislative intent, not to “reverse-engineer” a desired outcome. ...

Although the concurring reasons of Abella and Karakatsanis JJ agreed in the result, they disagreed with the majority’s adoption of a revised standard of review, stating (at para. 199):

Presented with an opportunity to steady the ship, the majority instead dramatically reverses course — away from this generation’s deferential approach and back towards a prior generation’s more intrusive one. Rather than confirming a meaningful presumption of deference for administrative decision-makers … the majority’s reasons strip away deference from hundreds of administrative actors subject to statutory rights of appeal; rather than following the consistent path of this Court’s jurisprudence in understanding legislative intent as being the intention to leave legal questions within their mandate to specialized decision-makers with expertise, the majority removes expertise from the equation entirely and reformulates legislative intent as an overriding intention to provide — or not provide — appeal routes; and rather than clarifying the role of reasons and how to review them, the majority revives the kind of search for errors that dominated the pre-C.U.P.E. era. In other words, instead of reforming this generation’s evolutionary approach to administrative law, the majority reverses it, taking it back to the formalistic judge-centred approach this Court has spent decades dismantling.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) correctness standard applied to questions of law of central importance, reasonableness standard applicable to most reviews 515
Tax Topics - General Concepts - Stare Decisis prior decisions can be departed from where this will reduce uncertainty 176
Tax Topics - Statutory Interpretation - Consistency presumption of consistent expression 132
Tax Topics - Statutory Interpretation - Ordinary Meaning administrative decisions must have regard to the provision’s text, context and purpose 214

Glatt v. Canada (National Revenue), 2019 FC 738

extension granted where the taxpayer had continually pursued relief

Following his assessment for a $2,890,050 penalty in 2012 under s. 163.2, the Applicant paid $1,000,000 to the Minister so as to offset interest which would be borne by him if the assessment were upheld. After the assessment was vacated pursuant to a consent judgment, the Minister issued a Notice of Reassessment on December 7, 2016 showing the cancellation of the penalty and a refund of the $1M, but which did not provide for any payment of interest on the $1M. On February 28, 2017, Crown counsel indicated that there was no statutory authority to pay interest, because the relevant provisions of the Act require a taxation year to be specified in order for interest to be paid. On September 20, 2017, following the failure of Crown counsel to provide a written explanation of the failure to pay interest, the Applicant filed this application for judicial review.

Diner J found (at para. 24):

Considering the lack of a right to appeal the Reassessment to the Tax Court, it is difficult to conclude that the Reassessment was anything but a final decision.

However, in granting an extension of the 30-day period, he stated (at paras. 44-45):

To grant an extension of time, there must be (i) a continuing intention to pursue the application, (ii) some merit to the application, (iii) no prejudice to the Respondent, and (iv) a reasonable explanation for the delay (Canada (AG) v Hennelly (1999), 244 NR 399 (FCA) … . The interests of justice can override an applicant’s failure to meet the Hennelly test … .

Here, the Applicant has met the Hennelly test. This is demonstrated by the Applicant’s repeated attempts to recoup interest on the Principal Amount. These attempts began as early as January 9, 2017, less than one month after receiving the Reassessment. Furthermore, the parties continued to discuss the issue of interest after the Reassessment was issued, including the Respondent’s correspondence on February 17, 2017 inviting submissions on the issue of whether interest repayment was required, and the Applicant’s legal submissions in reply. The Respondent’s counsel, less than a month before this application was commenced, advised Applicant’s counsel that a response would be forthcoming, which did not occur. Even though a formal reconsideration process did not take place, this is not a situation where the delay has prejudiced the Respondent. Furthermore, dismissing this judicial review for lateness would, in my view, undermine the interests of justice.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 164 - Subsection 164(3) naming of a taxation year respecting a reassessment cancelling a s. 163.2 penalty was not an “error” that precluded the payment of refund interest 537
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) CRA could not treat its statement of a taxation year in its Notice of Reassessment as an error 367
Tax Topics - General Concepts - Onus onus on Minister to establish that her refund of a s. 163.2 penalty did not relate to any particular taxation year] 270

R & S Industries Inc. v. Canada (National Revenue), 2016 FC 275

extension not granted due to unexplained lengthy delay and lack of substantive merit

On September 1, 2005, the appellant (“R & S”) transferred its assets to a limited partnership (“BELP”) which was controlled by its controlling shareholder. Article 4.1(a) of the Transfer Agreement specified that the elected amounts in a joint s. 97(2) election, and the respective portions of the Purchase Price allocated to the transferred assets, would be the minimum agreed amounts permitted under the Act, “provided …that in respect of the Goodwill, the elected amount shall, unless otherwise agreed be equal to $2,502,600.” On November 12, 2010 R & S filed a Notice of Objection asserting that a reassessment of its return for the taxation year of the transfer was based on amounts mistakenly provided on the previously-filed s. 97(2) election form. (CRA may have treated the non-equity consideration (“boot”) allocated to the non-goodwill assets as being in excess of their cost amounts, although the description of Diner J is unclear.) In early 2013, R & S submitted a revised election form in which it made adjustments that are not coherently described by Diner J, but which might have entailed adjusting downwards the boot allocated to the non-goodwill assets and allocating the balance of the boot to the transferred goodwill (but so as not to increase the required agreed amount therefor to above $2,502,600). On a CRA review, it identified that the boot identified on the revised election form understated the actual boot by $572,146, and on October 4, 2013, R & S requested CRA to increase the amount of the transferred goodwill [i.e., the amount of boot allocated to the goodwill?] by that amount.

On January 31, 2014, CRA rejected the amended T2059 election form on the basis that “there does not appear to be any provision in the [Transfer] Agreement that would require the reallocation provided” and the proposed reallocations instead were “in contravention of the specific terms of the Agreement.” On August 8, 2014, CRA confirmed the reassessment, to which R & S filed a Notice of Objection. It filed this application for judicial review of the January 31, 2014 decision on May 19, 2015. CRA asked that the application be dismissed for late filing and failure to meet the Court’s criteria for an extension of time.

Diner J found that the January 31, 2014 letter was sufficiently communicative of the CRA d decision to start the 30-day period in s. 18.1(2) of the Federal Court Act running, so that the application was late. Furthermore, in finding that R & S did not satisfy the criteria in Exeter v Canada (Attorney General), 2011 FCA 253 for granting an extension, he noted that the 15-month delay “was punctuated by long periods of silence” (para. 44), “CRA decisions, like many other decisions by government entities, must retain a degree of finality and certainty” (para. 45), there was no reasonable explanation for the delay and the application lacked substantive merit.

Respecting that last point, Diner J. stated (at paras. 54, 55):

[I]t was entirely open to [CRA] to conclude that if the goodwill was not going to remain at $2,502,600, there needed to be agreement from the other parties. …[T]he words “provided however” in article 4(1)(a) provide a plain and clear meaning.

[T]here appears nothing unreasonable in the Respondent’s conclusions, which found that (1) the Transfer Agreement requires that goodwill be fixed at a certain amount unless the parties agree otherwise; (2) the New T2059 does not fix the goodwill at that amount; and (3) therefore, it is in contravention of the Transfer Agreement and should not be accepted.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) drop-down agreement interpreted as preventing a re-allocation of boot to avoid gain 388

Subsection 18.1(3)


Prince v. Canada (National Revenue), 2020 FCA 32

a CRA proposal letter is not a judicially-reviewable decision or order

Two weeks after the completion of an audit and being informed of proposed reassessments for his 2005 to 2014 taxation years, the taxpayer filed an application under the voluntary disclosure program (VDP). The Minister took the position that the disclosure was not voluntary and dismissed his VDP application. On August 20, 2018, prior to a decision on the second-level VDP review, CRA informed the taxpayer of its intention to commence a second audit, this time for the 2007 to 2016 taxation years. The taxpayer objected on the basis that the second audit and the request for additional information were premature given the pending decision on the second-level VDP review. A letter dated December 17, 2018 detailed the proposed reassessment; the taxpayer applied for judicial review of that “decision,” with a view to quashing it along with seeking an interlocutory injunction to prevent the Minister from issuing the proposed reassessments. The Minister subsequently reassessed all the years up to 2016.

In confirming the decision of the Federal Court to the same effect, Rennie JA stated (at para. 21):

The [latter] proposal letter … is not a reviewable decision or order. … [I]t did not determine any of the taxpayer’s rights, substantive or procedural… .

Before so concluding, he stated (at paras 13, 17):

The Notices of Reassessment having been issued, the question whether an injunction could have issued restraining their issuance pending determination of the second-level VDP application is moot. … [T]he reassessments are valid and binding until set aside by the Tax Court… .

[T]o accede to the appellant’s argument would, effectively nullify or over-ride the power granted to the Minister under subsection 152(4) of the Income Tax Act to reassess “at any time”.

He also noted that in reassessing, the Minister had the discretion under s. 220(3.1) to waive or cancel all or any portion of penalties or interest, with the exercise of the Minister’s discretion being “subject to public law scrutiny and remedies in the Federal Court” (para. 16).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) reassessment could not be questioned by judicial review 120

Prince v. Canada (National Revenue), 2019 FC 348, aff'd 2020 FCA 32

30-day letter was not a judicially-reviewable “decision”

The taxpayer’s counsel filed a no-name application under the CRA’s voluntary disclosure program (VDP), which CRA subsequently rejected on the basis (disputed by the taxpayer) that an audit of the taxpayer (which initially had been respecting his 2005 to 2014 taxation years) was still ongoing. Second-level VDP review was still pending on the date of the motion. On August 20, 2018, CRA then informed the taxpayer that he had been selected for a second audit respecting his 2007 to 2016 taxation years, and in a letter dated December 17, 2018 detailing the proposed reassessment, granted him 30 days to provide additional information and representations. The taxpayer alleged that the proposed reassessments were based in part on information provided by him under his voluntary disclosure. The taxpayer applied for judicial review of the December 17, 2018 “decision,” with a view to quashing it and enjoining the Minister implement proposed reassessments for those years.

Before going on to dismiss the application, Annis J stated (at paras. 23-24):

…I am not in a position to conclude that the letter of December 17, 2018 was representative of a decision within the meaning of the FCA when it indicated on the face of its wording that it would consider the Applicant’s further submissions and provided time to the Applicant to do so. Moreover, it has still not reassessed … Mr. Prince.

In the alternative, … if the letter of December 17, 2018 was, in effect, a decision that the CRA was reassessing the Applicant, then the Federal Court would be denied jurisdiction by the effect of section 18.5 of the FCA due to the availability of an appeal of the decision. … Either way, I do not have jurisdiction.

He went on to find that even if there were a “decision” for him to review, he would not have exercised his discretion in favour of the taxpayer given that there would be not prejudice to the taxpayer in being reassessed before the completion of the VDP process.

Words and Phrases
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) no prejudice in issuance of reassessment before completion of VDP process 215

Section 18.5


Holland v. Canada (Attorney General), 2019 FC 1433

taxpayer could not challenge a CRA residency determination that had not yet been assessed in the context of a VDP application that had not yet been accepted or declined

The taxpayer, who left Canada for Chad in 2004 (followed by a stint in Iraq) and returned to Canada in January 2010, filed a voluntary disclosure application in July 2015 pursuant to which he filed tax returns for 2004 and 2010 to 2014 – but not for 2005 to 2009, taking the position that for those years he was a non-resident. On March 3, 2016, CRA sent a letter to him stating that it had determined that the taxpayer was a “factual resident following [his] departure from Canada on June 30, 2004.” Following representations by the taxpayer, the Minister confirmed this position by an April 25, 2018 letter.

The taxpayer applied for judicial review of the April 25, 2018 letter on the grounds that the determination was unreasonable and breached the duty of fairness. The Prothonotary had struck the taxpayer’s application on the grounds that it was premature (as the voluntary disclosure application was still outstanding, no determination had been made under s. 220(3.1)), and the Minister’s factual determination of residency could be challenged by filing tax returns for those years (which had not yet been done) and appealing assessments thereof to the Tax Court.

In confirming this decision of the Prothonotary, McVeigh J stated (at paras. 23. 27, 29):

[A]n initial residency letter should not be reviewable. This is because courts should not interfere with “ongoing administrative processes until after they are completed, or until the available, effective remedies are exhausted” absent “exceptional circumstances” (Canada (Border Services Agency) v C.B. Powell Ltd., at para 31). …

[H]e cannot judicially review this particular tax process when there has been no assessment and no discretionary decision. …

Once the assessments are issued by CRA and if the Appellant wishes to file an objection and appeal, then the Tax Court has the exclusive jurisdiction to deal with whether he is a resident of Canada or not.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) taxpayer could not challenge a CRA residency determination that had not yet been assessed 159

Gauthier v. Canada (National Revenue), 2017 FC 1173

taxpayer seeking an injunction prohibiting a reassessment should follow the normal challenge process

The applicant transferred $300,000 to a Bahamas bank account in 1978. In order to put his affairs in order for his heirs, he made a voluntary disclosure for his 2005 to 2014 taxation years (i.e., all the years within the 10-year period permitted by s. 220(3.1)), which was accepted by CRA, so that penalties were waived and interest relief provided for those taxation years. 14 months later, CRA on the basis of the information provided under this voluntary disclosure began a review of the applicant’s 1980 to 2004 taxation years with a view to including of unreported income and assessing penalties for failure to file T1135s for those years.

The taxpayer noted that it was contrary to CRA’s practices to go back before a period covered by a voluntary disclosure where there was insufficient documentation respecting the earlier periods, and sought an injunction prohibiting CRA from reassessing him for the earlier years. In refusing this request, Martineau J indicated that, under ss. 165(3) and 171, the Tax Court had the power to cancel an assessment, and stated:

…The public interest — i.e. the orderly application of the ITA — takes precedence here over the financial and other inconveniences that the applicant may face by having, like all taxpayers, to follow the normal challenge procedure set out in the ITA.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.1) CRA was not precluded from using information received under the VDP to reassess taxation years before the 10-year s. 220(3.1) period 395

Sood v. Canada (National Revenue), 2015 FC 857

requested enforcement of settlement agreement was collateral attack on assessment

The applicant objected to the denial of his claim to the Ontario new housing HST rebate, and he then accepted a CRA offer to refund the difference between his claim and amounts previously credited to him. When CRA tried to implement this settlement agreement, it discovered that the applicant was not entitled to any further rebate as he had purchased the house before the relevant entitlement date (June 18, 2009), and did not further reassess the applicant's return in breach of the agreement. The applicant filed an application under the Federal Court Act for enforcement of the settlement agreement.

In finding that he lacked the jurisdiction to consider the application, Gascon J stated (at para. 22) that "the essential nature and character of Mr. Sood's claim in this judicial review application is a collateral attack on the validity of the tax reassessment made by the Minister."

See summary under ETA s. 296(1).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 296 - Subsection 296(1) settlement agreement not according with law required to be revoked 155
Tax Topics - Income Tax Act - Section 152 - Subsection 152(1) settlement agreement not according with law required to be revoked 155

Canada (National Revenue) v. ConocoPhillips Canada Resources Corp., 2014 FCA 297, rev'g 2013 FC 1192

appeal to Tax Court required for decision of CRA to treat a Notice of Objection as invalid

The taxpayer claimed that it did not learn about a reassessment allegedly mailed on November 7, 2008 until April 14, 2010. When its Notice of Objection dated June 7, 2010 was rejected on grounds of untimeliness, it obtained a decision of the Federal Court (2013 FC 1192) setting aside the decision of the Minister not to consider the objection.

In reversing this judgment, Dawson J.A. noted that s. 18.5 of the Federal Courts Act insulates a decision from judicial review if there is an express right of appeal to the Tax Court, and stated (at para. 8):

[C]onocoPhillips' proper recourse was to commence an appeal to the Tax Court under paragraph 169(1)(b) of the Act and to demonstrate in that appeal that its notice of objection was filed on a timely basis. It is within the jurisdiction of the Tax Court to determine whether the notice of reassessment was in fact mailed as the Minister alleges. This it will do on a full evidentiary record with regard to the statutory presumption found in subsection 244(14) of the Act (which presumes a notice of reassessment to have been mailed on its date). See: Walker v. Canada, 2005 FCA 393, 344 N.R. 169, at paragraphs 11 to 13. It is open to ConocoPhillips to request that the question of the timeliness of its notice of objection be determined before the trial pursuant to Rule 58(1)…

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 169 appeal to Tax Court available for decision of CRA to treat a Notice of Objection as invalid 218

ColasCanada Inc. v. Canada (National Revenue), 2014 DTC 5076 [at 6991], 2014 FC 452

no judicial review on matters that can be addressed in a pending assessment

In the course of an audit, the Minister mailed the taxpayer some draft assessments proposing to disallow certain of the taxpayer's claimed deductions in prior years. The taxpayer applied for judicial review of the Minister's "decision" to proceed with the issuance of notices of reassessment.

R Morneau, prothonotary, granted the Minister's motion to strike the taxpayer's application. He stated (at paras. 22-24):

...ColasCanada is challenging draft assements and not formally issued assessments. ... [T]heoretically, the objection and appeal regime under the [ITA] is still not open or available and section 18.5 of the Federal Courts Act ... cannot in theory be raised to preclude the notice of application.

However, and as asked in JP Morgan ... , does this mean that the taxpayer can proceed to Federal Court?

As set out in JP Morgan [at para. 84], the answer to this question is no because later, if and when draft assessments materialize into actual assessments, the TCC's objection and appeal regime will come into play ... :

... A judicial review brought in the face of adequate, effective recourse elsewhere or at another time cannot be entertained [R Morneau's emphasis].

Newcombe v. Canada, 2013 DTC 5160 [at 6393], 2013 FC 955

challenging a T4 slip is a collateral attack on the resulting assessment

The taxpayer settled an employment dispute with the Department of Justice, under which she was entitled to liquidated damages. The Department erroneously issued a T4 slip, and consequently CRA assessed the taxpayer on the basis that the liquidated damages were income from employment. The taxpayer neglected to file a notice of objection, but instead pursued the cancellation of the T4 slip. She applied to the Court for a declaration that the T4 was issued in error, and a writ of mandamus for the Minister to issue an amended T4.

Harrington J found that the taxpayer's application was an impermissible collateral attack on the Tax Court's jurisdiction, and he had no authority to make the requested order. He suggested, however, that it would be right for the Minister to acquiesce, as the T4 was clearly erroneous.

Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2014 DTC 5001 [at 6501], 2013 FCA 250

judicial review of Minister's decision to assess is a "tool of last resort"

The 2002 to 2008 taxation years of the taxpayer were assessed for its failure to withhold Part XIII tax. The taxpayer (in addition to objecting under s. 165) sought to have the assessments for the earlier (2002-2004) years set aside, on an application for judicial review in the Federal Court, on the basis that it was contrary to the Minister's policy to go back more than two years on audit.

Stratas JA found that each of the following grounds was a sufficient basis for dismissing the application:

  • the notice of application failed to state a "cognizable administrative law claim," as "changes in policies or departures from policies...do not constitute an abuse of discretion..." (para. 75, similarly para. 108);
  • the Federal Court was barred from considering the claim by s. 18.5 of the Federal Courts Act, as ITA ss. 165 and 169 "constitute a complete appeal procedure that allows taxpayers to rise in the Tax Court all issues relating to the correctness of the assessments" (para. 82, similarly para. 110); and
  • the Federal Court could not grant the relief sought: "If the 'essential character' of the relief sought is the setting aside of an assessment, it must be struck" (para. 93), as "only the Tax Court can grant this relief: subsection 152(8)" (para. 111).

Stratas JA gave (at para. 98) oversight of political or racial targeting through selective assessments as "examples of judicial reviews that might avoid the three objections to judicial review," and stated (at para. 101) that judicial review "is a tool of last resort."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) judicial review of Minister's decision to assess is a "tool of last resort" 242

Canadian Pacific Railway Company v. Canada, 2013 DTC 5135 [at 6226], 2012 FC 1030

A contract in 1880, backed by the CPR Act in 1881, exempted the taxpayer from virtually all forms of federal, provincial and municipal taxation. CPR applied to the Federal Court to recover fuel tax paid under the ETA and large corporations tax under the ITA, and for declarations that the government had no authority to collect such tax.

The Minister moved to strike the taxpayer's pleadings on the basis that they circumvented the Tax Court's authority. The pleadings were not an appeal from an assessment, but rather engaged broader concerns about the constitutionality of the impugned taxes. This was an appropriate matter for the Federal Court.

Danada Enterprises Ltd. v. Canada (Attorney General), 2012 DTC 5083 [at 6986], 2012 FC 403

Blanchard J. found that the taxpayer was prevented under s. 18.5 of the Federal Courts Act from challenging, before the Federal Court, the legitimacy of the Minister's notice of confirmation under s. 165(3) of the ITA. The legal efficacy of a "key document" to a taxpayer's tax liability is within the exclusive purview of the Tax Court and appeals therefrom (paras. 26-27).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 165 - Subsection 165(3) amended notice of confirmation 170

Greene v. MNR, 95 DTC 5078 (FCTD), aff'd 95 DTC 5684 (FCA)

The taxpayer was successful in obtaining an order of mandamus directing the Minister to carry back a large capital loss it had reported in its 1988 income tax return to its three preceding taxation years. Revenue Canada then advised the taxpayer that it was reassessing those taxation years, but with no change to his taxable income for those years because the 1988 loss had been disallowed.

The Court was without jurisdiction to entertain an application by the taxpayer seeking declarations the substance of which would be to require the Minister to reassess the taxpayer for his 1985, 1986 and 1987 taxation years by allowing the deduction of the 1988 loss. Rothstein J., however, noted (at p. 5079) that if it "were an application for contempt, it might well be that the applicant could properly bring its complaint to this Court".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(6) 125


Brent F. Murray, "JP Morgan: Can Taxpayers Use the Judicial Review Process to Challenge Tax Assessments that are Contrary to the CRA's Administrative Policies?", CCH Tax Topics, No. 2178, December 5, 2013, p. 1.

List of discretionary matters subject to judicial review applications (p. 5)

…Judicial review applications in the context of GST/HST matters will generally only be available with respect to discretionary decisions that have been made by CRA officials on such matters as:

(1) waiving or cancelling interest and penalties pursuant to the CRA's fairness guidelines;

(2) making certain designations or determinations, such as designating a person to be a municipality;

(3) extending filing deadlines for elections, returns, and objections;

(4) determining the form and amount of security required by non-resident GST registrants;

(5) relaxing the input tax credit ("ITC") information requirements; and

(6) eliminating a tax liability pursuant to section 23 of the Financial Administration Act.

Other disputes involving GST/HST assessments should generally proceed through the objection and appeal process set out in the ETA.

Carman R. McNary, "A 'New Way to Challenge Decisions of the Minister of National Revenue?", CCH Federal Tax Practice News, 1 June 2009, No. 3, p. 1

Section 19


British Columbia Investment Management Corp. v. Canada (A. G.), 2018 BCCA 47, aff'd 2019 SCC 63

enforcement of a reciprocal taxation agreement was possible pursuant to the Federal Courts Act

bcIMC was a BC Crown agent which was formed to manage and hold investments for the provincial pension plans. The governing Act created a statutory trust under which each pension plan only has an entitlement to units in the investment pools managed by bcIMC and does not have ownership in any investment pool assets. Willcock JA noted (at para 109) that “there is no clear beneficial interest in the pooled funds that is distinct from bcIMC’s legal interest.”

In the absence of an intergovernmental agreement under which the Province agreed that it and its agents would be liable for GST, the federal government would have been precluded by s. 125 of the Constitution Act, 1867 from effectively imposing federal tax on bcIMC by deeming services performed by it in relation to the investment pools to be taxable services.

However, he found that such immunity was taken away by the reciprocal taxation agreement between B.C. and Canada in which the Province committed itself and its agents to pay any tax imposed under the ETA. He stated that “agreements between the federal and provincial governments may be mere political agreements,” but found that the terms of the Agreement here evinced an intention to be legally bound, and stated that “enforcement of the [Agreement] is possible” pursuant to s. 19 of the Federal Court Act (Canada) and s. 1(1)(a) of the Federal Courts Jurisdiction Act (B.C.).

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Constitution Act, 1867 - Section 125 imposition of GST on investment assets held by a provincial Crown agent would have been prohibited by its governmental immunity but for the reciprocal taxation agreement 483
Tax Topics - Excise Tax Act - Section 122 deeming services provided by B.C. Crown agent in managing assets held in trust trenched on B.C. crown immunity 237
Tax Topics - Excise Tax Act - Section 267.1 - Subsection 267.1(5) - Paragraph 267.1(5)(a) services of trustees of managing assets held in trust would not be supply in absence of s. 267.1(5)(a) 164
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) arrangement under which the beneficiaries only had rights to units and no ownership of underlying assets was treated as a trust 164

Subsection 27(2)


Le Bel v. The Queen, 87 DTC 5327 (FCTD)

During the 30 day appeal period the taxpayer asked his counsel for advice as to when the appeal period expired, left town before receiving his answer and did not return and ask for advice as to his prospects of success on an appeal until after the 30 day period. An application was filed on the 34th day to extend the period, which was dismissed since the intention to appeal by Le Bel was formulated only after the appeal period had expired.

The Queen v. Guaranteed Homes Ltd., 79 DTC 5136, [1979] CTC 190 (FCTD)

In order for an extension of time to be granted, the applicant must show that he had a bona fide intention to appeal during the 30-day period.

Section 28


Silbernagel v. The Queen, 93 DTC 5007 (FCA)

The only decision of the Tax Court pursuant to the informal procedure that may be reviewed under section 28 is a decision that disposes in whole or in part of the matters in issue on the appeal or otherwise finally affects an applicant's rights. Accordingly, the applicant could not seek a review of an order of the Tax Court setting down the date on which the applicant's tax appeal would be heard.

Rahey v. MNR, 90 DTC 6494 (FCA)

The Federal Court of Appeal was without jurisdiction to set aside the refusal of the Tax Court on an interlocutory application to vacate summarily on Charter grounds the income tax reassessments made against the taxpayer.

Attorney General of Canada v. S.F. Enterprises Inc., 90 DTC 6195 (FCA)

A decision of a Tax Court judge that two individual taxpayers had standing was merely a preliminary ruling enabling the Court to proceed to consider the substantive issue relating to the appeal against reassessments, and therefore was not reviewable on a section 28 application.

E.W. Bickle Ltd. v. MNR, 79 DTC 5170, [1979] CTC 228 (FCA)

A decision of the Minister as to whether an article is exempt under subsection 29(1) of the Excise Tax Act is an administrative decision that must be exercised on a quasi-judicial basis.

Minister of National Revenue v. Coopers and Lybrand, 78 DTC 6528, [1978] CTC 829, [1979] 1 S.C.R. 495

The following criteria were formulated for the purpose of determining whether a decision or order is one required by law to be made on a judicial or quasi-judicial basis: (1) is the holding of a prior hearing impliedly contemplated? (2) does the decision or order directly or indirectly affect the rights and obligations of persons? (3) is the adversary process involved? (4) is there an obligation to apply substantive rules to many individual cases (as opposed to there being a broad policy mandate)?

Herman v. Dep. A.G. of Canada, 78 DTC 6465, [1978] 728 (SCC)

The jurisdiction of the Federal Court of Appeal does not extend to reviewing the decision or order of a federally-appointed provincial judge under s. 232 of the Act.

Section 29


MNR v. Devor, 93 DTC 5098 (FCA)

A statement of claim seeking a declaration that waivers "extracted" from the taxpayer were void and a writ of certiorari quashing the reassessments based thereon, was struck out on the basis that the relief claimed was beyond the jurisdiction of the Court.

Laforme v. The Queen, 91 DTC 5372 (FCTD)

In dealing with the taxpayer's Statement of Claim which appealed from a decision of the Tax Court which, in turn, had quashed the appeal to that Court on the basis that the taxpayer (an Indian) had not filed a Notice of Objection, Giles A.S.P. noted that "it is now plain that any attempt to correct an assessment by use of sections 18 or 28 of the Federal Court Act is prohibited by section 29 of that Act" (p. 5373).

The Queen v. Optical Recording Laboratories Inc., 90 DTC 6647 (FCA)

The Federal Court, Trial Division did not have the jurisdiction to entertain an originating motion brought by a taxpayer under section 18 of the Federal Court Act seeking writs of certiorari quashing decisions of the Minister to issue notices of assessment:

"Since the Act expressly provides for an appeal from assessments made by the Minister, it follows that section 29 of the Federal Court Act precludes not only applications under section 28 of the Act in respect of such assessments but also applications brought pursuant to section 18 ... to challenge not only the assessments per se but the collection proceedings or actions taken in respect of those deemed valid assessments." (p. 6652)

Brydges v. Kinsman, 90 DTC 6463 (FCTD)

The Federal Court lacked the jurisdiction to entertain a motion under s. 18 of the Federal Court Act to set aside a decertification order made by the Minister of Communications of videotaped programs because the question of the legality of the decertification order formed part and parcel of contemporaneous reassessments that have been made by the Minister of National Revenue of the applicants.

Devor v. MNR, 88 DTC 6263 (FCTD)

An application to dismiss the taxpayer's statement of claim, advancing a plea of non est factum in relation to waivers signed by the taxpayer, was dismissed, because there were "allegations of conduct which, if proved, might be found sufficiently venal to require the intervention of this Court."

Danielson v. MNR, 86 DTC 6495 (FCTD)

An application for relief in the nature of certiorari to quash a determination by the Minister to assess a director pursuant to ss.227(1) and 227.1 was dismissed because the case was "on all fours with the Parsons case".

Bechthold Resources Ltd. v. MNR, 86 DTC 6065, [1986] 1 CTC 195 (FCTD)

An assessment can only be reviewed and set aside by way of a regular appeal, and not pursuant to an application under s. 18 of the Federal Court Act, even where it is alleged that the Minister had no authority to make the assessment.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 222 - Subsection 222(1) - Tax debt tax liability arose when designation made and before assessment 125

Rich Colour Prints Ltd. v. D.MNR, [1984] 2 F.C. 246 (C.A.)

"In our opinion, section 29 clearly says that a decision which, under an Act of Parliament [here, the Customs Act], may be appealed to an authority mentioned in the section cannot, to the extent that it may be so appealed, be the subject of a section 28 [of the Federal Court Act] application. It follows that if the right of appeal is not limited, the decision may not be reviewed under section 28."

Subsection 33(1)


Canadian Human Rights Commission v. Canadian Pacific Ltd., 88 DTC 6497 (SCC)

"The combined operation of the Federal Court Act and the Supreme Court Act is such that an application for leave to appeal from a judgment of the Federal Court of Appeal must be brought before that Court or the Supreme Court within 60 days of the pronouncement of the judgment appealed from. The authority to extend this 60-day period rests with a judge of the Federal Court of Appeal and not with the Supreme Court."

Subparagraph 46(1)(a)(v)


Farmer Construction Ltd. v. The Queen, 83 DTC 5215, [1983] CTC 198 (FCTD)

It was held that the plaintiff could call as a witness an officer of the Department of National Revenue and examine him as if he were a hostile witness, since this was an area of practice or evidence as contemplated by s. 46(1)(a)(v) which could be covered by the Federal Court Rules and was not, and which was addressed by an analogous rule of the Supreme Court of British Columbia.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus 64

Subsection 48(4)


Sorenson v. Tax Review Board, 82 DTC 6151 (FCTD)

A proceeding against the Minister of National Revenue and the Tax Review Board is not a proceeding against the Crown.

Paragraph 50(1)(b)


Usarco Ltd. v. A.G. Canada, 80 DTC 6308, [1980] CTC 484 (FCTD)

The power to order a stay should only be exercised sparingly, and the possibility that expenses incurred in a proceeding may turn out to be useless because of a later decision that the Court had no jurisdiction is not sufficient ground to deprive plaintiffs of the advantages of advancing their action.

Subsection 53(2)


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

Evidence to establish the existence of an oral partnership between two Quebec taxpayers was admissible, notwithstanding that establishing the existence of such an oral contract was precluded by the Quebec Civil Code, because such evidence would have been admissible in the common law provinces, and s. 53(2) provides that evidence may be admitted if it would be admissible in any province.

Section 57


The Queen v. Fisher, 96 DTC 6291 (FCA)

The notice required by s. 57 is required even where a constitutional question is raised in an informal procedure in the Tax Court.