The taxpayer sought judicial review of a CRA decision dated July 5, 2024, which determined that he was ineligible for the Canada Recovery Benefit (CRB). In support of his application, the taxpayer submitted invoices, bank statements, and tax documents. He provided records relating to his employment with 2357504 Ontario Inc., showing earnings of $929 between November 2019 and January 2020.
For his employment with RGIS Canada ULC, he submitted various documents and claimed earnings of $3,571.81. He also produced a Notice of Assessment reflecting claimed earnings of $320.32 from 1642377 Ontario Ltd., but did not provide supporting bank statements or invoices.
After a second review, a CRA benefits validation officer concluded that the taxpayer had not demonstrated employment or self-employment income of at least $5,000 in 2019, 2020, or in the 12 months preceding his CRB application. The officer determined that the Notice of Assessment alone was insufficient to substantiate the claimed income.
The taxpayer contended that the CRA failed to consider all of the evidence submitted and that the process was procedurally unfair because he was not advised of deficiencies in his application or given an opportunity to address the CRA’s concerns.
The issues before the Court were whether the decision was reasonable and whether it was made in a procedurally fair manner.
The Federal Court found the CRA’s decision to deny taxpayer CRB claim unreasonable
The Court assesses reasonableness by determining whether a decision demonstrates justification, transparency, and intelligibility, and whether it aligns with relevant factual and legal constraints (this is based on the Supreme Court of Canada decision of Vavilov, para. 99). The taxpayer submitted documents, including bank statements and tax records, during both the First and Second Reviews to support his eligibility for the Canada Recovery Benefit (CRB).
The knowledgeable tax litigation lawyer representing the CRA cited Aryan v. Canada (AG), 2022 FC 139, noting that a Notice of Assessment is not conclusive proof of income. In Vatankhah v. Canada (AG), 2025 FC 235, it was observed that CRB legislation is ameliorative and taxpayer evidence should be weighed accordingly. The Court emphasized that a Notice of Assessment is only one piece of evidence and must be considered alongside other supporting documents.
In this case, the taxpayer provided records showing $929 earned from 2357504 Ontario Inc., $3,571.81 from RGIS Canada ULC (supported by bank deposits but no invoices), and a Notice of Assessment claiming $320.32 from 1642377 Ontario Ltd., without corresponding bank statements or invoices. The CRA officer concluded the taxpayer was ineligible, finding that he did not meet the statutory $5,000 earnings threshold and that the Notice of Assessment alone was insufficient.
The CRA objected to the taxpayer introducing additional documents in his affidavit that were not before the Officer, but the Court noted that exceptions allowing new evidence (e.g., for procedural fairness or background) did not apply. Nonetheless, the additional documents were “neutral” and could have been readily verified.
Considering the ameliorative purpose of CRB legislation and the reasonableness standard, the Court found that the CRA Officer failed to reasonably consider all submitted evidence, particularly the Notice of Assessment, and did not provide an explanation for dismissing it. As a result, the Officer’s decision lacked transparency and justification and did not meet the standard of reasonableness.
The Court found there was no breach of procedural fairness
The Court cited the decision in In Moncada v. Canada (AG), 2024 FC 117, which held that the procedural fairness owed in assessing eligibility for CRB benefits is minimal. The taxpayer argued that he should have been informed of deficiencies in his submissions. However, given the low degree of procedural fairness required, the Court was not persuaded that any duty was breached. The taxpayer was aware of the eligibility requirements and had submitted supporting documents. The Court found that the decision was unreasonable because the CRA officer failed to demonstrate that she considered all of the evidence provided.
Consequently, the Court declined to issue directions to the next decision-maker. The application for judicial review was allowed, the CRA officer’s decision was set aside, and the matter was remitted to another officer for redetermination of the taxpayer’s CRB eligibility, ensuring that all submitted evidence is properly considered.
Pro tax tips – the CRA should consider all evidence provided by the taxpayer
Although the CRA denied the taxpayer’s covid benefits during the two rounds of review, luckily the Court decided to side with the taxpayer because the CRA officer did not demonstrate that she considered all of the evidence submitted.
Since the court generally does not allow taxpayers to introduce additional evidence at the judicial review stage, it is important for taxpayers for provide all relevant information in a timely manner during a covid benefit review.
Still, due to the complexity of the judicial review process, it is highly recommended that taxpayers retain an experienced Canadian tax lawyer to maximize their chances.
FAQ:
Can taxpayers submit additional evidence to the federal court that was previously not provided to the CRA when they seek judicial review?
The general rule is that only the evidence before the decision-maker will be considered upon an application for judicial review. However, there are three exceptions set out in Association of Universities and Colleges of Canada v. Canadian Copyright Licensing Agency (Access Copyright), 428 N.R. 297 (FCA), that allows taxpayers to submit additional evidence:
- to provide background information,
- to address an issue of procedural fairness, or
- to show a total lack of evidence that would support the decision.
Regarding judicial review for COVID benefits decision, what is the standard of review?
According to Canada (Minister of Citizenship and Immigration) v. Vavilov, [2019] 4 S.C.R. 653, the merits of the decision are reviewable on the standard of reasonableness, which essentially comes down to whether it is reasonable for the CRA to deny any COVID benefit based on the information taxpayers provided and the relevant COVID benefit eligibility criteria.
Disclaimer: This article just provides broad information. It is only up to date as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.