On November 21, 2011, the Canada Revenue Agency (CRA) issued a news release entitled “Taxpayer relief deadline is December 31, 2011“, which confirms that it formally accepts the interpretation of the 10-year limitation period for interest relief established by the Federal Court of Appeal in Bozzer v. Canada.
Before the Federal Court of Appeal decision in Bozzer, the CRA took the position that the Minister may exercise his discretion to cancel or waive interest otherwise payable under the Income Tax Act only if a taxpayer applies within 10 calendar years of the end of the taxation year in which the underlying tax debt arose. The Federal Court of Appeal in Bozzer held, however, that the Minister’s discretion allows for the cancellation or waiver of interest that accrues during the 10 calendar years preceding the calendar year in which the request for relief is made, regardless of the year in which the tax debt arose.
Although the Bozzer decision dealt with the interpretation of the 10-year limitation period for interest relief requests in the context of the Income Tax Act, the CRA confirmed in its November 21, 2011 news release that the 10-year limitation period will be interpreted in the same manner with respect to interest relief applications made under the Excise Tax Act, the Air Travellers Security Charge Act, the Softwood Lumber Products Export Charge Act, 2006, and the Excise Act, 2001.
Although the Crown did not seek leave to appeal the decision of the Federal Court of Appeal to the Supreme Court of Canada, it was unclear whether the CRA would actually follow and apply the FCA decision across the board. For this reason, the news release is most welcome.