If a court take too long to hear a taxpayer’s case, is the taxpayer entitled to interest relief under the fairness provisions of the Income Tax Act? In Cole v. Canada (Attorney General), 2005 FC 1445, the CRA said no. The Federal Court took another view of the matter.
The Court saw no reason why delay beyond the control of the CRA should be relevant to whether fairness is available to a taxpayer.
[18] There is nothing in the legislation which restricts interest relief to those circumstances where the events causing delay were within the control of the Agency. While the matter of whether delay was within the control of the Agency would be a relevant consideration, it is not the only criterion for relief.
[19] In the Minister’s own guidelines, matters which were beyond the control of either the taxpayer or the Agency (see Guidelines paragraph 5) may still entitle a taxpayer to interest (or penalty) relief. These include natural and human-made disasters, civil disturbances or disruptions in services, serious illness or accident.
[20] There is no reason why delays in court proceedings, depending on the circumstances, could not be considered as a basis for relief. In addition, neither the legislation nor the Minister’s policy restricts consideration only to those events within departmental or Agency control.
[21] Although a guideline does not have the force of law and the Minister may depart from the guidelines, there must be a reasonable basis for so doing. No reasonable basis for departing from the Guidelines has been provided.
[22] Therefore, in this instance, the Minister narrowly limited his exercise of discretion and failed to properly consider events which at least, the taxpayer says, were beyond the taxpayer’s control. On this ground alone, the matter should be referred back for reconsideration in light of the Court’s comments.
The Court, however, went on to cast doubt on whether the taxpayer in Cole would be entitled to relief on the facts of his case.
Will this case prove useful to taxpayers? The CRA might refuse to grant relief on the ground that a taxpayer can always choose to pay a disputed amount. If the taxpayer does not pay the disputed amount, and court-related delay adds significantly to the taxpayer’s bill, that is the taxpayer’s problem. The taxpayer, then, might be able to request relief only if the taxpayer can also show that paying the disputed amount was beyond his or her means and, accordingly, his or her control.
