Court did not have jurisdiction to make order against Minister to return amount of penalty

In 2014, Canada Revenue Agency (CRA) assessed taxpayer as having made two separate contributions to Tax-Free Savings Account (TFSA) and applied penalty and interest which taxpayer objected to, and CRA granted his request for waiver. In 2016 taxation year taxpayer had contribution limit of $10,045.18, contributed $10,000 to his TFSA and ten days later clerk at financial institution redid contribution. Several months later, taxpayer gave directions over phone to financial institution to split his accounts but this was mistaken for order to contribute $10,000 to TFSA, so that taxpayer ended up with TFSA contributions in 2016 of $30,000. Taxpayer was assessed by CRA and withdrew $20,000 from his TFSA. CRA assessed taxpayer penalty of $1,784.60 under Part XI.01 of Income Tax Act as result of over-contributions and taxpayer’s request for discretionary relief from taxes and penalties was denied. Taxpayer requested second review of denial, and Minister’s delegate declined request, finding that discretion would not be exercised in favour of taxpayer as he was repeat over-contributor to his TFSA. Taxpayer applied for judicial review of decision. Application granted. There was limited case law concerning exercise of Minister’s discretion under s. 207.06(1) in Act to waive tax liability for TFSA over-contributions. Over-contributions in 2016 were outside of taxpayer’s control. Fact that taxpayer had caused over-contribution to his TFSA in 2014 was not connected to question of whether relief should be granted regarding over-contribution in 2016. Delegate’s decision was unreasonable because it did not fully assess extent to which excess contributions resulted from mistakes of persons other than taxpayer. Decision would be set aside and matter returned to Minister for redetermination by different delegate. Court did not have jurisdiction to make order against Minister to return amount of penalty.

Gekas v. Canada (Attorney General) (2019), 2019 CarswellNat 3671, 2019 CarswellNat 4360, 2019 FC 1031, 2019 CF 1031, Keith M. Boswell J. (F.C.).

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