Court allows Iristel judicial review against CRA to stand in tax fight

A Federal Court judge has rejected a request from the government to throw out an application for judicial review from Iristel Inc., in which the company sought a review of the Canada Revenue Agency’s conduct in a pair of audits into the company. In a Thursday decision judge Kevin Aalto wrote that he disagreed with the argument, put forward by the Attorney General on behalf of the CRA, that Iristel’s application for review was made in bad faith. Iristel’s application -- in which the company alleges it was denied procedural fairness by the CRA during the audits -- was either an attack on the correctness of a tax assessment and thus a matter for the tax court, or was made to bolster a future tort claim, the Attorney General’s office and the CRA argued. “I disagree,” Aalto wrote in the decision. “The future tort claim is speculative until such time as one is commenced. The conduct of the Minister as it relates to the issuance of the assessment, not the assessment itself, is the subject matter of the application,” he wrote, and awarded Iristel costs for the motion. In July, the Federal Court ruled that it did in fact have the jurisdiction to hear Iristel’s case against the CRA over its conduct, while at the same time dismissing Iristel’s claim for interim relief in the form of $63.2 million in tax returns it said it is owed but that the CRA is withholding. In rejecting the CRA’s motion to strike, Aalto wrote that it “cannot be said, ... that application is bereft of any chance of success.” The case stems from a dispute between the company and the country’s tax collectors worth tens of millions, and that Iristel has said its survival depends upon. The dispute has been heated at times, as in September when Iristel accused the CRA of the “deliberate mischaracterization” of conversations between the CRA and the CRTC about whether or not communities in the far north would be without 911 service should Iristel go under because of a tax bill. In 2018 the CRA audited Iristel’s tax returns, and after initially withholding the company’s tax returns during the audit, eventually released them after a request by Iristel. The audit did not end up altering the amount of Iristel’s returns. A year ago last fall, the CRA then initiated a second audit of the company covering the periods in 2019, and then expanded the audit to cover the first two months of 2020. Iristel again asked for the release of the tax returns while the audit was underway, except the second time the Minister of National Revenue Diane Lebouthillier refused. The CRA has said it believes Iristel may be using a “carousel scheme” to claim tax refunds that it did not pay in the first place. That issue is proceeding separately in tax court. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Court allows Iristel judicial review against CRA to stand in tax fight

News | January 22, 2021

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Court allows Iristel judicial review against CRA to stand in tax fight

News | January 22, 2021

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