In Bozzer v. Canada, the Federal Court of Appeal considered the proper interpretation of section 220(3.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) This section allows the Minister to waive or cancel any or all of the penalties or interest payable by a taxpayer under the Act in respect of that taxation year, subject to a ten year limitation clause. The appellant Mr. Bozzer applied to waive the interest on his outstanding 1989 and 1990 taxes in 2005, which the Minister refused as the application was more than ten years after the assessment year. The respondent Minister argued that the ten year limitation clause starts with the year of assessment. Mr. Bozzer argued that section 220(3.1) allows the Minister to waive or cancel any interest that accrued in the ten years preceding the application for relief.
The court held that Mr. Bozzer’s interpretation was proper for several reasons. First, the section in question was added as part of a fairness package intended on helping taxpayers who, through no fault of their own, could not comply with the statutory requirements for income tax purposes or resolve other issues. The Minister’s interpretations could be harsh in a few rare scenarios, such as in the case of grievous accident. Second, prior to the legislative amendment, the relevant section did not have a ten year limitation clause. As the amendment restricts the taxpayer’s rights, it is incumbent on Parliament to be clear in its language as to its intention and any ambiguity should be resolved in favour of the taxpayer. Lastly, Parliament was aware and able to draft a section that would suit the Minister’s interpretation strictly, but did not. The arguments put forward by the respondent Minister, referring to the Technical Notes and Voluntary Disclosures program were not accepted by the court.
June 2, 2011
Link to Decision
Mary Phan
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