Judges affirm that Canada Revenue Agency has ‘duty of care’ to taxpayers by Julius Melnitzer, January 26, 2016, Financial Post
Two appellate court rulings confirm that the Canada Revenue Agency is not at liberty to intimidate and threaten taxpayers and must take appropriate care in how it treats them.
In separate decisions released earlier this month, both the Federal Court of Appeal and the British Columbia Court of Appeal confirmed that the CRA has a general legal “duty of care” with respect to taxpayers.
“A few decisions have accepted this principle over time, but these are the most senior courts to affirm,” says tax lawyer David Rotfleisch of Rotfleisch & Samulovitch PC in Toronto. “This should, over time, result in a difference in the way the CRA treats taxpayers and their rights.”
Yet the results are not a complete win for taxpayers. According to the Federal Court of Appeal (FCA), the duty is general but not specific. In particular, the FCA found that the CRA did not have a specific duty to warn investors about the potential dangers of tax shelters — even when the CRA has cause for concern about particular ones.
“The FCA negated the existence of a classical tortious duty of care on the part of CRA and its official in the highly contentious area of tax shelters,” says Bill Innes, a tax lawyer with Rueter Scargall Bennett LLP in Toronto.
Still, the decisions suggest that the tax agency is not at liberty to treat taxpayers as it chooses.
The B.C. court case involved Irvin Leroux, a Prince George businessman. The decision marked the end of his 19-year fight with the CRA. He claimed the CRA wrongfully imposed tax assessments on him and sought well over $1 million, including interest and penalties.
During its audit, the CRA took original documents without authorization, shredded them accidentally, and then asked Leroux to provide further documentation.
Even after the CRA reduced the assessment, Leroux continued his claim for compensation, alleging the Agency’s actions had caused him to lose his business. The Canadian Taxpayers Federation supported Leroux in his fight.
Leroux won the war but lost the battle. Tax professionals are calling the B.C. court’s ruling a milestone for taxpayers who seek to hold the CRA accountable for its actions. But the court also found that the CRA’s actions were not the cause of Leroux’s losses. Not only did Leroux fail to receive compensation, the court ordered him to pay the CRA’s legal fees. The case settled earlier this month with Leroux paying the nominal sum of $10 to the CRA for legal costs. [Would the CRA have settled and agreed to this nominal sum, if Harper was still PM?]
The Federal Court of Appeal case also produced a bittersweet result for the taxpayers in a case released this month called Canada v. Scheuer.
The bitter part follows the appellate courts’ refusal to acknowledge that the CRA had a specific duty to investors in terms of tax shelters. Imposing such a duty “would be to effectively create an insurance scheme for investors at great cost to the taxpaying public,” the court stated.
The taxpayers who sued had claimed the CRA had a duty not to issue tax shelter numbers if the agency had concerns about the applicants. Rotfleisch explains the agency didn’t have that choice.
“The Income Tax Act clearly requires the Agency to provide a tax shelter number to anyone who applies, and also requires the tax shelter promoter to indicate that CRA does not endorse the shelter,” Rotfleisch says.
“Warning the investors about the shelter was also problematic because it put the CRA in the position of providing investment and tax advice that could make them liable to the promoter.”
Then there’s the sweet part, the federal appellate court’s acknowledgement of the CRA’s general duty of care. “Liability may attach if public officials act in a manner inconsistent with the proper and valid exercise of their statutory duties, in bad faith or in some other improper fashion,” wrote Justice Eleanor Dawson in the unanimous, three-judge ruling.
Because the taxpayers had relied on a specific duty that did not exist in law, the Federal Court struck out the claim. The court gave the taxpayers the right to change their pleadings to assert a lawful basis for their suit.
Rotfleisch believes both the Federal Court of Appeal and the B.C. Court of Appeal got it right. [Emphasis added]
[Refer also to:
Harper government enabling the frac harm cover up? Environment Canada criticized for leaving fracking chemicals off pollutant list saying not enough frac chemicals used – 362,000 litres of diesel invert lost underground near Alberta family home
Did Harper and the oil and gas industry order RCMP/CSIS/Snipers to attack innocent mothers and grandmothers, and set aflame stripped police cars in New Brunswick to discredit all Canadians concerned about frac harms and lay a red carpet for Harper’s Bill C-51?
Sulfolane (used to sweeten sour gas) leak at Bonavita Energy’s South Rosevear Gas Plant, Edson Alberta, contaminated drinking water, severe health harm experienced by Mersadese Royale, her husband and children; Family evicted after raising concerns publicly
‘National disgrace’: Alberta First Nations sue Harper government over drinking water; Harper government breaks promise, legislates liability protection for the government if citizens get sick or die from drinking water
March 31, 2014 Devastation Day for Alberta’s Water: The Oil and Gas Industry takes over total control of Alberta’s Fresh Water as “No Duty of Care” Spying AER now a single regulator, 100% funded by industry, takes over Environmental Protection and Enhancement Act and Water Act
“Criminal charge” for ‘misleading statements’ by Toyota; Canadian law suits filed against GM for defective ignition switches that GM knew about 11 years ago, only recalled in 2014; How many more years will oil and gas and service companies, politicians and regulators lie about frac harms?
Alberta Justice Minister Kathleen Ganley: ordinary Albertans “can’t afford legal services anymore.” Canada’s Chief Justice Beverly McLachlin: people falling through the cracks, “We all know that unresolved legal problems adversely affect people’s lives….”
Shred Fraud? “Better Shred than Read!” Tory Cover-up Saga Continues: Document shredding rules not followed by Alberta Environment, investigation finds. “344 boxes of executive records were destroyed between May 1 and May 13,” including related to litigation
Why the Bully Victim Act? What fraud this time? What are AER & Bonavista hiding? Perpetual acid gas injection break outs into drinking water zones? Frac hit(s)? Other toxic chemicals contaminating Edson groundwater? Bonavista whines about AER ordering it to do the right thing. PS Who’s going to fix the aquifers?
AER Duty of Care Anywhere? Judge decries chaos, uncertainty around liability of public authorities: “Such a low standard would immunize government from liability in every case of bureaucratic ineptitude, no matter how substandard or damaging the misconduct may be. No court anywhere has set the bar that low.” [Except in Alberta?]
Gerard Protti Sings “I Wanna Stay.” Who is Gerry? Chair of Alberta’s Energy Regulator. AER is: Legally Immune, Charter Violating, “No Duty of Care,” 100 Percent Industry Funded, Deregulating, Non-Enforcing, Lying Propaganda Synergy Machine; Protti IS Director Petromanas; was Encana VP, Lobbyist, Advisor to Cenovus, Creator/Chair of CAPP, Director Alberta Research Council/Innovates …
Bravo! Prevent Cancer Now calls out AER’s Health Fraud! “The AER has no jurisdiction for human health, and Alberta is famed for a chill against the medical community linking ill health to petrochemicals.”