http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/145640/index.do
Gordon v. Canada (Attorney General) (June 9, 2016 – 2016 FC 643, Mactavish J.).
Précis: The taxpayer applied for interest relief in respect of GST/HST which had been remitted in a timely manner but by the wrong taxpayer. He carried on business with an associated business, Coastal Collision, which remitted the GST/HST on vehicles they sold together. It turned out that he should have remitted the tax personally and the Minister assessed him for the tax and interest. Mr. Gordon applied for relief on the interest portion since the Minister was in possession of the principal amount of the tax in a timely manner. The Minister allowed the application in part, limited to amounts of interest in excess of 4% of the tax payable, and Mr. Gordon applied to the Federal Court for judicial review. The Federal Court held that the Minister had improperly fettered her discretion by relying on non-binding administrative guidelines, set aside the decision and sent it back to the Minister for redetermination.
Decision: The Court held that the Minister’s delegate had improperly fettered her discretion:
[37] In this case, the Minister’s Delegate failed to give any consideration to Mr. Gordon’s individual circumstances, including his history of compliance with the Act, the fact that the GST/HST was remitted promptly – first by Coastal Collision and then by Mr. Gordon – and that the error was not the result of any negligence on Mr. Gordon’s part, but rather his reliance on professional advice. All of these factors may have led the Minister’s Delegate to grant Mr. Gordon the full amount of relief that he requested if she had turned her mind to them. Instead she concluded that Guideline 16.3.1 only permitted her to consider cancelling the portion of the interest owing that exceeded 4% of the value of the tax not properly collected.
[38] Finally, I cannot accept the respondent’s argument because it implies that the only grounds for the Minister or his delegate to consider granting relief to a taxpayer are those set out in the relevant guidelines.
[39] Once again, there is no statutory authority that supports such a limitation on the Minister’s discretion. Subsection 281.1(1) provides the Minister with an unfettered discretion to grant taxpayers relief from interest owing under the Act, free of any restrictions on either the circumstances in which the Minister may grant a taxpayer relief or the quantum of relief the Minister may provide. The establishment of various criteria in Guidelines 16.3 and 16.3.1 for when the Minister will exercise his discretion does not change this. Thus, contrary to the respondent’s submission, it is simply not the case that Guideline 16.3 and Guideline 16.3.1 exhaust all of the circumstances in which the Minister may consider granting a taxpayer relief.
[40] This is not to say that the Minister cannot utilize administrative guidelines when deciding whether or not to grant relief under subsection 281.1(1). Indeed, it is clearly beneficial for the Minister to consider these guidelines when making his decision, as they provide consistency, transparency, and fairness to the decision-making process: Guerra, above, at paras. 18-19.
[41] Administrative guidelines, however, are not law. They are advisory only, and therefore cannot be relied on in a manner that limits the discretion conferred on the Minister by statute.
[42] In this case, the Minister’s Delegate considered Guideline 16.3.1 to be binding on her decision, concluding that she could not grant Mr. Gordon the relief he requested because “the wash transaction rules do not allow or provide” for her to do so. Instead, the Minister’s Delegate determined that she was limited to considering only whether to cancel the portion of Mr. Gordon’s interest that was in excess of 4% of the value of the tax not properly collected. As a result, the Minister’s Delegate fettered the discretion conferred on her by subsection 281.1(1) of the Act. Accordingly, the Minister’s Delegate’s decision will be quashed.
Thus the matter was referred back to the Minister for redetermination. There was no order as to costs.