Financial Hardship: TAXPAYER RELIEF

In a January 14, 2021 Federal Court
case, the taxpayer sought a judicial
review of CRA’s denial to provide
interest and penalty relief on a tax
debt of nearly $400,000. The
taxpayer argued that relief should be
granted due to financial hardship
and inability to pay. While the
taxpayer provided information
demonstrating that monthly expenses and income resulted
in a deficit, the taxpayer’s own statements referring to his
assets suggested that there was more to his financial
situation.

Taxpayer loses
The Court supported CRA’s view that assets and liabilities, not just income and expenses, were relevant to the
question of financial hardship, and information requested on
his assets had not been provided.
The Court ruled that, as it appeared that the taxpayer could
pay the debt arrears by selling assets, it was not
unreasonable for CRA to deny relief. The Court also stated
that financial hardship is “the prolonged inability to afford
basic necessities such as food, clothing, and shelter and
reasonable non-essentials” reiterating the high bar to
demonstrate financial hardship.

Be aware that interest relief requested on
the basis of financial hardship is very difficult to obtain.

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