Federal Court of Appeal: Fairness Provisions

Bozzer v Canada (2011) FCA 186

Since 1991, taxpayers who feel they were unjustly charged interest or penalties on income tax owing could apply to the CRA under the ëfairness provisions' for potential relief. These provisions offer the CRA a wide discretion to cancel, waive or alter penalties or interest, but not the tax itself.

In order for the provisions to apply, the contentious interest and/or penalties must have arisen from circumstances which were beyond the taxpayer's control including events such as, natural disasters, civil disturbances, a serious illness or accident, or serious emotional or mental distress such as a death in the family.

Subsection 220(3.1) of the Income Tax Act gives the CRA a wide discretion to waive or cancel any portion of interest or penalties owing under the Act, statutorily limited to ten years; the question in the Bozzer case was how to delineate the parameters of that ten year limitation. The Federal Court of Appeal gave an answer that was very favourable to all taxpayers.

The CRA denied Bozzer's request for relief multiple times before he arrived at the Court of Appeal, saying the ten years expired for his file on December 31, 1999 for the 1989 taxation year and December 31, 2000 for the 1990 taxation year.