Federal Court Confirms CRA Can Control its own Processes in Relation to Penalty and Interest Relief at the Objection Stage

  • April 21, 2023
  • Boris Stanislav, senior associate, BDO Law LLP, Milosz Zak, associate, BDO Law LLP

[A case note: The lack of interaction between a notice of objection dispute and a taxpayer relief application confirmed by the Federal Court decision of Asare v Canada (National Revenue), 2022 FC 1676[1] (“Asare”).]


Despite the express delegated authority[2] given to Canada Revenue Agency (“CRA”) appeals officers to waive and cancel penalties assessed by the CRA outside the regular process, before applying to the taxpayer relief department of the CRA, the Federal Court in Asare determined that unless the specific criteria set out in the Income Tax Information Circular IC07-1R1[3] (“Circular”) are addressed, the appeals officer is not obligated to consider waiving or cancelling the penalties at issue during the objection stage of a dispute with the CRA. Arguably, even if the criteria in the Circular are addressed, the CRA may still possibly ignore the application for a relief before an appeals officer. As a result, it may be strategically preferable to submit a separate, protective, taxpayer relief application outside the notice of objection submissions to ensure that the CRA will not simply ignore the oft-included relief submissions submitted in the course of notices of objection.