A single phone call by a Canada Revenue Agency collections officer has cost taxpayers $879,092 after a Federal Court judge ruled the verbal refusal of a tax refund breached basic standards of fairness.Blacklock's Reporter said in a sharply worded decision, Justice Danielle Ferron found that a 2023 conversation between a CRA collections officer and a tax lawyer amounted to an unreasonable decision that lacked transparency, justification, and intelligibility.“The decision rendered verbally provided minimal reasoning and no supporting details,” Ferron wrote. “It was clearly not justified, transparent nor intelligible. The court therefore finds the decision is unreasonable.”The ruling arose from an application by Toronto-based Hillcore Financial Corporation, a tax consultancy involved in a six-figure GST dispute with the revenue agency. During the phone call, an unidentified collections officer refused Hillcore’s refund request and declined to provide written reasons..The court found the officer understood the refund request and made a definitive decision to deny it, rather than offering a casual or preliminary response. However, the officer neither cited relevant sections of the Excise Tax Act nor forwarded the request to another official with proper authority.Ferron noted the officer never advised Hillcore that he may have lacked authority to decide the matter, nor did he conduct any independent research or consult other CRA officials before refusing the refund.“This alone constitutes a breach of procedural fairness,” Ferron wrote, adding that the officer’s conduct prevented any meaningful consideration of Hillcore’s request.The court ordered the CRA to pay $9,500 in costs and return Hillcore’s refund request for a fresh review..Ferron also criticized the agency for failing to identify which internal policies were consulted and for refusing to provide written reasons for the decision. The officer admitted he relied solely on policy documents, conducted no further research, and cited no provisions of either the Excise Tax Act or the Income Tax Act.The decision echoes concerns raised in a 2018 Auditor General report, which found the CRA routinely applied tax rules inconsistently across the country. The audit concluded taxpayers in similar circumstances often received different outcomes depending on where they lived or how their income was earned.“We found the agency did not consistently apply tax rules when it audited or reviewed taxpayers’ files even though the Taxpayer Bill of Rights includes the right to have the law applied consistently,” auditors wrote.In one example cited in the report, corporate tax reviews averaged 279 days in one province and 425 days in another, though the provinces were not identified.
