Taxpayer Relief Applications

In a January 14, 2021 Federal Court case, the taxpayer sought a judicial review of CRA’s denial to provide interest and penalty relief on a tax debt of nearly $400,000. The taxpayer argued that relief should be granted due to financial hardship and inability to pay. While the taxpayer provided information demonstrating that monthly expenses and income resulted in a deficit, the taxpayer’s own statements referring to his assets suggested that there was more to his financial situation.

The Court supported CRA’s view that assets and liabilities, not just income and expenses, were relevant to the question of financial hardship, and information requested on his assets had not been provided.

The Court ruled that, as it appeared that the taxpayer could pay the debt arrears by selling assets, it was not unreasonable for CRA to deny relief. The Court also stated that financial hardship is “the prolonged inability to afford basic necessities such as food, clothing, and shelter and reasonable non-essentials” reiterating the high bar to demonstrate financial hardship.

Be aware that interest relief requested on the basis of financial hardship is very difficult to obtain.

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