Subsection 315(3)
See Also
Dickinson & Ors v Revenue and Customs, [2018] EWCA Civ 2798
HMRC agreed under a pre-2014 statutory regime to postpone the collection of disputed taxes until appeals against the related assessments had been determined. Nevertheless, HMRC based on a statutory discretion accorded by it under a revised statutory regime introduced in 2014, issued advance payment notices (APNs) to the claimants requiring immediate payment of the disputed tax. The claimants contended that this amounted to an unlawful abuse of power.
In light inter alia of no exceptionality having been shown beyond the mere fact of the postponement agreements, McCombe LJ found that there was no basis for reversing the High Cout’s findings that although HMRC’s approach in deciding to give the APNs ignored principles of good administration and constituted “conspicuous unfairness” (para. 62), the High Court was entitled to consider other factors and to conclude that there had been no abuse of power.
In this regard, after quoting (at para. 55) an earlier dictum that:
One aspect of the duty of fairness is that, in general, a decision- maker may not fetter his discretion. However, it is well established in public law that a decision- maker may formulate a policy to enable him to exercise a discretion consistently provided that it is not applied so rigidly that it precludes the proper exercise of discretion in each case.
McCombe LJ stated (at para. 56)
The simple rule is, as Arden LJ said, the internal policy must not preclude a proper exercise of the statutory discretion in each case.
Jayco, Inc. v. The Queen, 2018 TCC 239
After its successful appeal of a GST/HST assessment, Jayco sought to include, in the costs recoverable from the Crown, the $1.4 million paid by it to JP Morgan in order to obtain a letter of credit to secure the GST/HST it owed until the assessment was reversed. In rejecting this claim, and after noting that the Minister could have exercised her discretion under s. 315(3) not to require security or payment, D’Auray J stated (at paras 39-41 and 44)::
… On an appeal from an assessment, it is not the role of this Court to sit in review of the Minister’s decisions on how best to effect collection of, or obtain security for, unpaid GST/HST. This is what Jayco is asking the Court to do.
… In essence, Jayco is submitting that the Minister ought to have exercised her discretion differently and not taken any collection action on the GST/HST assessed. Had she done so, Jayco would not have had to obtain the letter of credit and pay interest on it.
… The Minister has the power to take collection actions against a person under the ETA once a person is assessed and unpaid amounts of tax remain. This Court does not have jurisdiction to review the Minister’s exercise of that power—that jurisdiction rests with the Federal Court. …
The Rules are clear that disbursements will only be awarded if they are essential to the conduct of the proceedings. … The interest was not paid by Jayco to establish that the Minister’s assessment was incorrect and therefore did not arise from the appeal filed before this Court.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 147 - Subsection 147(3) - Paragraph 147(3)(j) | taxpayer has no remedy in a costs award for LC fees paid to secure its GST/HST obligation until reversed | 394 |
Administrative Policy
2024 Alberta CPA Roundtable, Q.3
Is there a process to request a stay on collection while a notice of objection is still being decided by Appeals especially where collection action or provision of security would create undue hardship for the taxpayer?
CRA responded:
As regards the collection of trust funds such as payroll source deductions and GST/ HST amounts owing, the only statutory authority that exists which provides for the postponement of collection action on amounts owing on an appealed assessment fall under subsections 314(2) and 315(3) of the Excise Tax Act (the ETA). These provisions are specific to GST/HST amounts:
- Subsection 314(2) of the ETA allows for the Minister to postpone collection action on amounts owing where the taxpayer provides security “…in an amount and a form satisfactory to the Minister…” in lieu of payment, where the taxpayer has objected to or appealed the amounts assessed
- Subsection 315(3) of the ETA allows for the Minister to postpone collection of GST/ HST amounts owing without accepting security, where the taxpayer has objected to or appealed the amounts assessed. Any postponement under this subsection requires approval of the appropriate delegated authority …
Specific to the postponement of GST/HST amounts owing which have been objected to, where the taxpayer is unable to provide security in a form and amount satisfactory to the Minister, postponement will only be considered where:
- the registrant remains current with tax compliance requirements for all associated accounts
- the GST/HST amounts in dispute have not already been collected by the registrant
- at all times during the objection and/or appeal, the business remains in good financial standing
- the registrant provides relevant information after an assessment is raised that may result in the assessment being overturned
- the registrant’s objection and/or appeal identifies reasonable differences in the interpretation of the legislation
- the registrant has Canadian-based assets
The decision to postpone collection action without the acceptance of security is a local business decision made on a case-by-case basis, based on the facts of each specific account.
Should a taxpayer’s request for postponement be denied by the CRA, the taxpayer may seek judicial review of the Minister’s decision in the Federal Court of Canada.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 222 - Subsection 222(2) | no statutory authority to postpone collection of source deductions | 234 |
CRA National Collections Manual, 2015-01
Collection actions can be postponed, under subsection 315(3) of the ETA, when no security is provided, but this requires approval by the appropriate delegated authority. When approved, the CLP will be extended during the period of the postponement.
Postponement of collection action can be requested when the following conditions are met:
• all associated accounts must remain current with filing/remitting requirements;
• all disputed amounts have not already been collected by the taxpayer;
• the business must be in good financial order during the period of the objection and/or appeal;
• the taxpayer must submit all relevant information that would support vacating the assessment and Appeals is confident that the assessment will be vacated.