http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/109078/index.do 
Finanders v. Canada (Attorney General) (April 13, 2015 – 2015 FC 448, O’Keefe J.).
Précis: Ms. Finanders received and reported short term disability income she received in 2008. In 2009 she went on long term disability because of complications resulting from surgery. She was advised, erroneously, by her insurer that the long term payments were not taxable and the T4 slip for her long term disability went to her former address so she never received it. She did not report the long term disability payments in her 2009 return. She was reassessed including penalties and interest. She applied for taxpayer relief and, at the second level review, she was granted interest relief but no relief for the penalties. The Federal Court found that the decision not to grant relief on the penalties was unreasonable and may have been unduly influenced by the fact that she reported the short term disability payments received in 2008 which were erroneously characterized in the second level review as “long term”. The matter was referred back to CRA for redetermination by another person. There was no order as to costs. Interestingly Ms. Finanders was self-represented.
Decision: The decision involves a judicial review of a CRA decision to deny Ms. Finanders taxpayer relief for penalties levied on unreported long term disability payments she received in 2009.
[3] The applicant started working for NYK Canada Inc. in January 2001. She went on short term disability in June 2008 due to surgeries for carpal tunnel syndrome.
[4] In July 2008, the applicant moved from 748 Herring Cove Road to 940 Herring Cove Road, Halifax, Nova Scotia. Later, as a result of surgical complications, she left work in March 2009 and went on long term disability.
[5] In 2009, the applicant filed her 2008 income tax return based on the T4 slip and short term disability slip issued by her employer NYK Canada Inc. The applicant was informed by her case manager at the Great-West Life Assurance Company that her long term disability was non-taxable. Also, she did not receive the T4 slip for her 2009 long term disability payments because it was sent to her former address. Further, in 2009, the applicant received a severance package from her company. It affected her disability benefits and resulted in a $200 overpayment per month that the applicant had to pay back.
[6] In 2010, the applicant did not claim the long term disability payments on her 2009 tax return. After the applicant received a call from the CRA regarding the unclaimed long term disability on her 2009 tax return, she found out the T4 slip for the long term disability was issued but sent to her former address.
[7] Subsequently, the applicant withdrew from her registered retirement savings plan funds to pay off some of the balance, causing her hardship due to increased income and loss of eligibility for tax credits.
[8] In addition, the applicant states that she is a single mom who no longer receives childcare benefits. She states that she recently went through difficult family changes as well.
She received no relief on the first level of CRA review but at the second level she received interest relief but no relief for penalties. The reviewer misapprehended the facts:
[30] A review of the record shows that CRA has, since at least February 9, 2012, believed that the applicant received long term disability payments from Great West Life and claimed them in her 2008 income tax return. At page 32 of the certified tribunal record, the first level decision stated:
…However our records indicate that you received long term disability from Great West Life in 2008 and it was properly reported on your 2008 income tax return. …
[31] In the taxpayer relief fact sheet for the second level request, the following is stated at page 77 of the certified tribunal record:
… I have noted the TP correctly reported T4A income on her 2008 return.
And at page 80 of the certified tribunal record:
A review of our system shows that you received disability payments from Great-West Life in 2008 and correctly reported these amounts on your 2008 tax return.
[32] There is no dispute that one of the reasons for refusing the applicant relief was that she had received long term disability benefits in 2008 and she had included the amounts in her 2008 tax return. As a result, she should have known to include the long term benefit amount in her 2009 income tax return.
In light of this the Federal Court concluded that the decision was unreasonable and referred it back to CRA for redetermination by another person:
[34] The decision letter dated February 28, 2014 shows that the decision maker relied on the fact that she had claimed long term disability amounts in 2008 to support the decision to deny relief. I cannot tell how much this influenced the decision maker to deny the relief or whether the result would have been different had the decision maker considered the actual facts.
[35] As a result, the decision is unreasonable and must be set aside and the matter remitted to another decision maker for redetermination.
[36] There shall be no order as to costs.
Kudos to Ms. Finanders who was self-represented.