A routine phone call has turned into an expensive mistake for the Canada Revenue Agency after a Federal Court judge ruled the CRA violated basic fairness in its handling of a GST refund dispute worth $879,092.Justice Danielle Ferron found the agency’s conduct so lacking in transparency and justification that a collections officer’s brief 2023 conversation with Hillcore Financial Corporation’s tax lawyer amounted to an unlawful decision. The officer refused the firm’s refund request, offered no written explanation, and failed to cite any authority for his position.Ferron wrote that the verbal refusal “provided minimal reasoning and no supporting details,” concluding it was neither justified nor intelligible. She said the officer’s comments were not a casual courtesy but a binding decision — one made without proper authority and without forwarding the matter to anyone who did have it..Hillcore, a Toronto-based tax consultancy, argued the officer never disclosed he lacked the power to approve or deny the refund. The Court agreed, noting he also failed to reference any section of the Excise Tax Act or conduct further research before shutting the file down.Ferron ruled the process breached procedural fairness and ordered the CRA to revisit Hillcore’s request. The agency must also spend $9,500 to cover the firm’s legal costs.The decision comes against the backdrop of a 2018 Auditor General report that found the CRA routinely applied tax rules inconsistently across the country. The audit highlighted wide disparities in how long corporate tax reviews took — 279 days in one province compared to 425 in another — and warned that taxpayers in similar situations were being treated differently depending on where they lived or how they earned income.
