Federal Court Rejects Taxpayer's Request for Penalty Relief

Date: 20260529 Docket: T-259-24 Citation: 2026 FC 704 Ottawa, Ontario, May 29, 2026 PRESENT: The Honourable Justice Fuhrer BETWEEN: [NAME] Applicant and attorney general of canada Respondent

REASONS AND

JUDGMENT I. Overview [ 1 ] The Applicant [NAME] works in the [NAME] as a specialized technician. He sought relief from late-filing penalties and arrears interest under subsection 220(3.1) of the Income Tax Act , RSC 1985, c 1 (5th Supp) [ ITA ], for his tax debt for the 2020 and 2021 taxation years. [ 2 ] In his request for relief, [NAME] asserts he suffered financial, familial and medical issues during the Covid-19 pandemic that impacted his ability to meet tax filing and payment obligations. These issues included an inability to reach his long-time accountant, despite numerous calls that went unanswered, after [NAME] and his spouse relocated from British Columbia to Nova Scotia with an infant and into a home that needed significant repairs. [NAME] eventually found a new accountant in Nova Scotia, but it took the accountant time to get up to speed on [NAME]’s finances. In addition, [NAME]’s health situation meant he suffered from periodic debilitating pain. Further, the [NAME] experienced significant declines in activity during the pandemic and again in 2023. [ 3 ] The Canada Revenue Agency [[NAME]], while expressing sympathy for his situation, nonetheless denied [NAME]’s initial request. He requested a second review and reconsideration that similarly resulted in a denial of his request for relief. The second review officer [Officer] determined that [NAME]’s household income and TFSA were sufficient to pay his balance owing without a prolonged inability to afford basic necessities. The Officer noted that [NAME] made contributions to his TFSA while debt interest was accruing. The Officer also was unable to find a connection between [NAME]’s non-compliance and the circumstances he presented in his request relief. [ 4 ] [NAME] now seeks judicial review of the second review decision. He challenges the reasonableness of the decision, arguing that the [NAME] failed to consider his evidence in its totality, relied on irrelevant considerations, and failed to apply its policy. [NAME] also challenges the procedural fairness of the decision. He asks the Court to approve the request for waiver of the late-filing penalties and arrears interest. Having considered the parties’ material and their submissions carefully, and while [NAME]’s circumstances evoke sympathy, I am unable to find he has established that the second review decision was unreasonable or unfair. For the reasons below, the judicial review application will be dismissed.

II. Issues [ 5 ] A preliminary issue arose at the judicial review hearing concerning the Respondent’s reliance on an articled clerk or articling student to make oral submissions at the judicial review hearing. This issue is addressed at the outset of the Analysis. [ 6 ] The Respondent also raised two other preliminary issues addressed below regarding the style of cause and the admissibility of new evidence that was not before the administrative decision-maker included in [NAME]’s supporting affidavit for this application. [ 7 ] While the parties generally agreed that the overarching issue for the Court’s determination in this matter is the reasonableness of the second review decision, [NAME] also asserted unfairness with the [NAME]’s consideration of his circumstances which the Respondent addressed. I, therefore, also will discuss briefly the issue of procedural fairness.

III. Analysis A. Respondent’s Reliance on Articled Clerk to Make Submissions [ 8 ] After the Applicant made his initial submissions, the Respondent’s counsel indicated that her accompanying articled clerk would make the Respondent’s oral submissions. While I applaud the Respondent’s effort to provide the articled clerk with oral advocacy experience, I find that the Respondent’s counsel was ill-prepared to advise the Court of the basis on which the articled clerk was permitted to do so. After some discussion, and having regard to item 93 of the Court’s “Amended Consolidated General Practice Guidelines” dated June 20, 2025, as well as to section 11 of the Federal Courts Act , RSC 1985, c F-7, I permitted the articled clerk to make submissions on the premise that she was supervised by the Respondent’s counsel and was permitted to do so in Nova Scotia where the hearing took place. [ 9 ] In the course of the discussion on this issue, the Respondent’s counsel referred the Court to Nova Scotia’s Barristers and Solicitors Act , RSNS 1989, c 30, which, I discovered following the hearing, has been repealed since 2005. The Legal Profession Act , SNS 2004, c 28 [ LPA ], however, seemingly confirms that an articled clerk is a member of the Nova Scotia Barristers’ Society (paragraph 5(1)(a) of the LPA ), and may carry on the practice of law in accordance with the Regulations made pursuant to the LPA (per paragraph 16(2)(c) of the LPA ). From my understanding, the Regulations permit an articled clerk to appear before courts in Nova Scotia. [ 10 ] Notwithstanding the Respondent’s counsel’s reference to repealed legislation, in the end it made no material difference to the capacity of the articled clerk to make oral submissions. [ADDRESS] strongly urges counsel to ensure, before they arrive for a hearing, that their articled clerk or articling student who comes before us to make submissions has the capacity or is qualified to do so, and that either the counsel or the student is able to explain to the Court the basis on which the student is representing the applicable party. B. Respondent’s Reliance on Articled Clerk to Make Submissions [ 11 ] The Respondent submits that the Attorney General of Canada is the proper Respondent in this matter and should be named as such in place of the Canada Revenue Agency. I agree. Having regard to subrule 303(2) of the Federal Courts Rules , SOR/98-106, the style of cause in this matter will be amended, with immediate effect, to replace the currently named Respondent, Canada Revenue Agency His Majesty the King, with the Attorney General of Canada. I add for the benefit of [NAME], who is self-represented before the Court, that this change has no material impact on the outcome of his judicial review application. C. Admissibility of Applicant’s New Evidence [ 12 ] The Respondent submits that the letter from [NAME], dated February 21, 2019, contained in Exhibit “B” to the Applicant’s supporting affidavit, as well as Exhibits “C,” “D,” and “E” to the affidavit are inadmissible because they were not before the Officer and do not fall within one of the three recognized exceptions to this rule found in Association of Universities and Colleges of Canada v. [NAME] ([NAME]) , 2012 FCA 22 [ [NAME] ] at para 20. [NAME] has not provided any submissions regarding the admissibility of this evidence. [ 13 ] With regard to [NAME]’s letter, [NAME] submits that, after moving to Nova Scotia, he had difficulty finding a family doctor but was eventually able to obtain the letter from his former doctor in British Columbia. While the Court acknowledges the difficulty [NAME] faced in this regard, it does not address the Court’s concern about the letter’s admissibility (i.e. the ability of the Court to have regard to it), given that it was not presented to the [NAME]. [ 14 ] Exhibits “C,” “D,” and “E” comprise various pieces of financial information, such as invoices and bank statements and includes a Statement of Income, Balances, and Penalties (2017-2024). According to paragraphs 30, 30.1 and 32(g) of the [NAME]’s “Income Tax Information Circular IC07-1R1” [Circular], the Statement of Income, Balances, and Penalties, in particular, is the type of relevant information that should have been submitted with the first request for relief. [NAME] does not contest that he did not file these documents with either his first or second request for relief. [ 15 ] I agree with the Respondent that the above-described evidence was not before the Officer and does not fall within any of the [NAME] exceptions regarding admissibility . In the circumstances, the Court will not consider the evidence challenged by the Respondent on this basis. D. Reasonableness of Decision [ 16 ] Noting that the Officer is not held to a standard of perfection and is not required to address every piece of evidence presented or argument made, I am satisfied that the Decision on the whole is transparent, intelligible and justified: Canada (Minister of Citizenship and Immigration) v [NAME] , 2019 SCC 65 at paras 10, 25, 91 [ [NAME] ]. [ 17 ] [NAME] submits the Officer did not engage meaningfully with key facts he presented, including his medical documentation, the breakdown in his relationship with his accountant, his cross-country move in 2019, pandemic disruptions, and the cumulative strain of these factors. He clarifies that, in his view, the [NAME] assessed his circumstances too narrowly and individually rather than considering their cumulative and prolonged impact over time. According to [NAME], this lack of engagement demonstrates a failure in justification under the [NAME] framework. Pointing to no prior experience with the [NAME] relief process, however, and limited guidance regarding what information or level of detail would be important to provide, [NAME] recognized in oral submissions that his original [NAME] relief submissions could have been more complete, organized, and clearly explained. [ 18 ] The Respondent argues that the Minister has broad discretion to accept or reject a [NAME]’s request for a waiver or cancellation of penalties and interest otherwise payable to the [NAME], having regard to subsection 220(3.1) of the ITA , which provides that “the Minister may […] waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by the [NAME].” The Circular describes the process and requirements for obtaining relief from penalties and interest; it is publicly available: [NAME] v Canada (National Revenue) , 2022 FC 1676 at para 33. [ 19 ] In my view, the Officer reasonably considered [NAME]’s circumstances, including the breakdown in his relationship with his accountant, his medical issues, his children, his alleged impecuniosity due to the writers and actors strikes, as well as his cross-country move. [NAME]’s arguments that the Officer did not consider his reasons for requiring relief have no merit. [ 20 ] Further, I determine that the Officer looked at the totality of the evidence presented and found that there was no link between [NAME]’s reasons for filing late and his inability to comply with his reporting obligations under the ITA . [ 21 ] [NAME] essentially disagrees with the Decision, asking the Court to reweigh the evidence and come to a different conclusion. This is not the Court’s role on judicial review, however: [NAME] , above at para 125. [ADDRESS] must consider whether, based on the arguments and evidence presented to the administrative decision-maker, the reasons given and conclusion drawn are intelligible, transparent and justified when read holistically. In the circumstances, I find that they are. [ 22 ] The fact that a different decision-maker might have made different inferences or drawn different conclusions from the facts, in itself, does not make a decision unreasonable. [ADDRESS] generally will intervene only where it is satisfied that the evidence overwhelmingly is against the decision-maker’s findings: [NAME] v Canada (Citizenship and Immigration) , 2026 FC 625 at paras 21, 23. I am not persuaded that this is the case here. [ 23 ] [NAME]’s first and second requests for relief described the various issues that he wanted the decision-maker to consider. Apart from his request that they all be considered, he did not request specifically that they be considered cumulatively, nor does the Circular require an officer to make a cumulative assessment. That said, I find that the Officer nonetheless reasonably addressed the issues raised by [NAME] and determined that they could not find a connection between the circumstances and the non-compliance, with reasons supported by the evidence. [ 24 ] Further, I find that the Officer’s consideration of [NAME]’s income, [NAME], and [NAME] was reasonable in the circumstances. I disagree with [NAME] that these were irrelevant considerations. The Circular explicitly mentions at paragraph 28.1 that “[t]he [NAME] will review in detail a [NAME]’s financial situation to determine their ability to pay amounts owing and the interest charges that will continue to accrue. A financial review considers such things as: income and expenses; assets and liabilities; ability to borrow funds and sell assets; actions and efforts to pay amounts owing.” [ 25 ] In the end, I am not persuaded that the evidence [NAME] submitted in support of his requests for relief overwhelmingly is against the Officer’s findings, such that this Court’s interference is warranted. E. Procedural fairness [ 26 ] I am not persuaded that the Officer reached the Decision in a procedurally unfair manner. [ 27 ] No standard of review per se applies to questions of procedural fairness. The review approach, however, is best reflected in the correctness standard. [ADDRESS] essentially must ask itself whether the procedure was fair having regard to all of the circumstances: Canadian Pacific Railway Company v Canada (Attorney General) , 2018 FCA 69 at para 54. [ 28 ] [NAME] asserts that the Decision was unfair because his company did not receive any grants from the government during the pandemic and that, because of this, he had to drain his company’s bank account to pay his taxes owed for the tax years 2020 and 2021. A fair approach would have prevented this endangerment of the survival of his company. [ 29 ] The Respondent counters that the duty of procedural fairness was met because the Applicant was given the opportunity to know the case to be met and to present his case fully and fairly. [ 30 ] I agree with the Respondent. [NAME] had not only a first review but also a second one. During the first review, through a procedural fairness letter, [NAME] was afforded the opportunity to submit more information regarding his medical issues, and he availed himself of that opportunity. When he filed his second review, [NAME] was permitted to submit further information and submissions, which he seized. As mentioned above, [NAME] essentially conceded that his [NAME] relief submissions could have been more complete, organized, and clearly explained. The onus was on him to file clear and complete submissions at the earliest opportunity, however, as described in paragraphs 30, 30.1 and 32(g) at pages 5-6 of the Circular. [ 31 ] Further, whether [COMPANY] received, or should have received, any grants during the pandemic is not relevant, in my view, to the issue of whether the process followed in his request for relief from penalties and interest was procedurally fair. The decision to provide financial assistance to businesses during the pandemic was policy-related and has no bearing on the rights of and possible remedies available to [NAME] in this application.

IV. Conclusion [ 32 ] For all the above reasons, I conclude that [NAME] did not satisfy the onus on him to establish that the Decision was unreasonable or procedurally unfair. The judicial review application thus will be dismissed.

V. Costs [ 33 ] At the judicial review hearing, the Respondent advised the Court that they are not seeking costs in this matter. Therefore, no costs are awarded.

JUDGMENT in T-259-24 THIS COURT’S

JUDGMENT is that : The style of cause is amended with immediate effect to identify the Respondent as the Attorney General of Canada. The Applicant’s judicial review application is dismissed. No costs are awarded. "Janet M. Fuhrer" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-259-24 STYLE OF CAUSE: [NAME] v attorney general of canada PLACE OF HEARING: halifax, nova scotia DATE OF HEARING: may 12, 2026

REASONS AND

JUDGMENT: FUHRER J. DATED: may 29, 2026 APPEARANCES: [NAME] For The Applicant (ON THEIR OWN BEHALF) [NAME] For The Respondent SOLICITORS OF RECORD: Attorney General of Canada Halifax, Nova Scotia For The Respondent