In a most reason decision The Honourable Mr. Justice von Finckenstein has emphasized what the Canada Revenue Agency must consider as grounds for cancellation of interest.
Excise Tax Act, R.S.C
1985 c. E-15
281.1(1) The Minister may waive or cancel interest payable by a person
under section 280.
(2) The Minister may waive or cancel
penalties payable by a person under section 280.
Income Tax Act, R.S.C. 1985 (5th Supp.), c.1
220 (3.1) The Minister may at any time waive or cancel all or any portion
of any penalty or interest otherwise payable under this Act by a taxpayer or
partnership and, notwithstanding subsections 152(4) to 152(5), such assessment
of the interest and penalties payable by the taxpayer or partnership shall be
made as is necessary to take into account the cancellation of the penalty or
interest.
GUIDELINES
8. It may be
appropriate for the Department, in circumstances where there is an inability on
the part of the person to pay amounts owing, to consider cancelling or waiving
penalties and interest in whole or in part to facilitate collection. For
example:
(a) when collection has
been suspended due to an inability to pay;
(b) when a person is
unable to conclude a reasonable payment arrangement because the
penalty and interest charges represent a significant portion of the payments. In
such cases, consideration may be given to waiving penalties and interest in
whole or in part for the period beginning on the first payment due date under
the payment arrangement until the amounts owing are paid, provided the agreed
payments are made on time.
9. Where an extraordinary circumstance beyond the person's control has
prevented the person from complying with the Act, the following factors will be
considered by the Department to determine whether or not penalties and interest
will be cancelled or waived:
(a) Does the person
have a satisfactory history of voluntary compliance (i.e., have previous GST
returns been filed and payments made on time)?
(b) Has the person
knowingly allowed an outstanding balance to exist upon which the penalties and
interest have accrued?
(c)
Has the person acted quickly to remedy the omission or the delay in
compliance, which originally resulted in penalties and interest being
charged?
(d) Is there evidence
that the person exercised reasonable care and diligence (e.g., planned for
anticipated disruptions) and was not negligent or careless in the conduct of its
affairs? The onus is on the registrant to keep abreast of any new developments
in the administration of the GST so as to ensure continuing compliance section
280.
IC92-2,
Guidelines for the Cancellation and Waiver of Interest and Penalties
(March 18, 1992)
5.
Penalties and interest may be waived or cancelled in whole or in part
where they result in
circumstances beyond a taxpayer’s or employer’s control....
6.
Cancelling or waiving interest or penalties may also be appropriate if
the interest or penalty arose primarily because of the actions of the
Department....
7. It
may be appropriate, in circumstances where there is an inability to pay amounts
owing to consider waiving or cancelling interest in all or in part to facilitate
collection.
For example,
(a)
When collection has been suspended due to an inability to pay.
(b) When
a taxpayer is unable to conclude a reasonable payment agreement because the
interest charges absorb a significant portion of payments. In such a case,
consideration may be given to waiving interest in all or in part for a period
from when payments commence until the amounts owing are paid provided the agreed
payments are made on time.
10.
The following factors will be considered when determining whether or not
the Department will cancel or waive the interest and penalties:
(a)
whether or not the taxpayer or employer has a history of compliance with
tax obligations
(b)
whether or not the taxpayer or employer has knowingly allowed a balance
to exist upon which arrears interest has accrued;
(c)
whether or not the taxpayer has exercised a reasonable amount of care and
has not been negligent or careless in conducting their affairs under the
self-assessment system;
(d) whether or
not the taxpayer or employer has acted quickly to remedy any delay or
omission.