Prince George man’s 18-year court battle with Canada Revenue Agency ends with $10 owing

Few things, since people likely won't read all of the court information and not necessarily understand the entire process:

Mr Leroux's problem ultimately comes from the fact that he tried to ignore the CRA, his taxes, and the resulting legal problems. It is why he was awarded no damages. Despite having his income tax assessments decreased and the penalties removed, it is important to note that he actually still ended up owing the CRA money -- pretty much all related to his GST returns.

The court case itself primarily dealt with whether or not the CRA has a duty of care to taxpayers when conducting audits and assessments. This was not an entirely settled legal issue, so it is important from a case law standpoint. The court basically said the CRA has a duty of care to not assess amounts that it knows are incorrect. The court ruled that they had failed in this duty of care only in respect of penalties applied and not the actual taxes assessed (even though the taxes were decreased through the normal objection process).

Mr Leroux claimed losses. The CRA reassessed to decrease the losses and penalized the difference. Since penalties are calculated based on the change in tax, but there really wasn't a change in tax because the losses weren't applied to anything yet, the judge did not understand how they could have determined a penalty amount. But in those circumstances, the CRA normally assesses the penalty as if the person filed $0 income and the reassessment change was the revised income (basically the hypothetical tax on the income amount) because those losses can be carried to other years where they would decrease income. The CRA auditor that appeared as a witness was completely incapable of explaining this, resulting in the judge (who is not a tax court judge or in a court where judges normally hear tax cases) being completely unable to understand it. The result is that he found against the CRA regarding penalties.

The entire dispute resulted from Mr Leroux going through an audit process where he claimed to have provided documents when the CRA claimed he had not. Without the documents, the CRA reassessed as claims were unsubstantiated. Mr Leroux responded to this first by ignoring it and then by making his claims about already providing the documents and that the CRA had destroyed them. The judge did not believe or accept Mr Leroux's allegations.

All of the CRA's collection actions could have been stopped if Mr Leroux decided at any point to stop ignoring them and instead deal with the CRA. Once he did, by doing things such as compiling the documents and going through the objection process, the debts were dealt with and drastically decreased. He wanted the CRA to give him damages to account for all of the collection actions taken while he ignored the CRA. The judge refused to because Mr Leroux caused the problem by ignoring them.

Moral of the story? If you're a normal person and the CRA is telling you to provide them information or that you owe them money, either deal with directly or have a representative do it for you but you cannot ignore them. Things don't get better.

If you're not a normal person, then the moral for you is that the CRA is evil. But you already thought that, so you're just re-enforcing your existing opinion with a case that doesn't do that.

/r/canada Thread Link - cknw.com