What’s fair for the goose is fair for the gander, right?
Well, unless the goose is the Canada Revenue Agency.
Then, sometimes, the gander has to go to court to try and get fair treatment.
This is the story of a taxpayer who ran afoul of the Income Tax Act’s rules for tax planners: back on June 12, 2012, the CRA issued a notice of assessment to Richard Glatt, telling Mr. Glatt he owed the tax man $2,890,050. Glatt filed an objection to the assessment, but as precautionary measure, paid the federal government $1 million in November of 2013.
The payment was made in case Mr. Glatt lost his appeal of the assessment — the idea being that the $1 million sent to the government would mean that interest wouldn’t continue to be added for that portion of the penalty.
In 2015, Glatt went further, taking the case to the Tax Court of Canada — in May of 2016, the two sides reached a settlement, and the CRA issued a reassessment notice saying that Glatt didn’t actually owe the CRA $2.89 million. The actual amount owing was nothing. Nada. Zero.
Along with that reassessment came a payment of $1 million dollars, the amount that Glatt had deposited way back in November, 2013.
What’s fair for the goose is fair for the gander, right?
Well, unless the goose is the Canada Revenue Agency.
But wait a minute: if, during the years of assessment challenges and court actions, Glatt would have to pay interest on the assessed amount, why would the CRA not have to fork over interest that it would have realized on the $1 million it was holding?
Good question, hey?
Glatt’s lawyers asked for an answer to exactly that, essentially, if you’re going to charge interest while something’s under review, why don’t you have to pay interest on money you’re holding (without cause) while that same issue is under review?
The response from the CRA’s lawyers was that there was no legislative requirement to pay interest, because the Glatt case didn’t involve a specific tax year — and the fact that a specific tax year was used CRA on some documentation was a mistake.
Glatt’s lawyers asked for a written explanation of the refusal, and, getting none (even though they were promised one), everything went back to court in 2017.
After another two years, a Federal Court judge gave an answer: “The Court declares that interest must be paid on the $1M Principal Amount refunded to the Applicant in December 2016 in accordance with the Act. The matter will accordingly be remitted to the Minister for the calculation and payment of interest on the refund, in accordance with the Act and these Reasons.”
So, at this point, the gander is going to get seven years of interest and his court costs.
Let’s see if the goose decides to appeal.
