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FEDERAL INCOME TAX - Interpretation - Administration and enforcement

Wednesday, July 17, 2019 @ 6:24 AM  


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Application by Glatt for judicial review of the Minister of National Revenue’s decision not to pay interest to him. The Canada Revenue Agency (CRA) issued a Notice of Assessment to Glatt in June 2012, levying a penalty of $2,890,050. Glatt filed a Notice of Objection to the Assessment in August 2012 and, in November 2013, paid advance funds of $1,000,000 to the Minister as an amount in controversy, to offset the interest should he ultimately have been found liable. That did not occur. Glatt objected and appealed. The parties ultimately settled before trial. The Minister issued a reassessment, cancelling the penalty and returning $1,000,000 to Glatt without paying any interest on it. The respondent took the position that the judicial review should be dismissed for delay. The respondent further submitted that although the CRA provided a taxation year of 2012 in the Reassessment, that was an error and should not have been written into the reassessment. Glatt took the position that failing to provide interest to him resulted in a windfall for the government. He further submitted that the 30-day time limitation did not apply in this case.

HELD: Application allowed. Whether viewed as a nil assessment or a refund, the judicial review was properly before the Federal Court. The Reassessment issued to Glatt was a final decision stating that the refund of the principal amount was being returned with no interest. The decision fell within the 30-day time limitation and Glatt was out of time. However, dismissing the judicial review for lateness would have undermined the interests of justice. No taxation year was listed in the original assessment. However, the assessment was deemed to no longer exist, having been replaced by a subsequent reassessment. The inclusion of a taxation year in a reassessment meant interest had to be paid by operation of sections 152(8) and 164(3)(e) of the Income Tax Act. The clear reading of the text of the Act made that the only reasonable interpretation in these circumstances. An interpretation in favour of the Minister would also have been inconsistent with the jurisprudence. The Minister’s refusal to provide interest was unreasonable.

Glatt v. Canada (Minister of National Revenue - M.N.R.), [2019] F.C.J. No. 652, Federal Court, A. Diner J., June 6, 2019. Digest No. TLD-July152019008