On December 20, 2024, the Federal Court reviewed a taxpayer’s application for judicial review of the Canada Revenue Agency (CRA) decision denying relief from penalties and interest. The issue stemmed from the taxpayer’s failure to register for GST/HST and file returns for the 2020–2022 tax years.

CRA had notified the taxpayer on June 23, 2023, of the obligation to register. Despite this, CRA issued notices of assessment on July 31, 2023, including penalties for failure to file and interest on arrears. The taxpayer requested relief, arguing that the GST/HST had already been remitted by the payer on their behalf.

However, the Court upheld CRA’s decision, stating that third-party remittance does not absolve a taxpayer from their legal obligations to register, file, and remit. The Court emphasized that CRA was not required to consider the taxpayer’s prompt registration and filing after notification, especially since over a month had passed before action was taken.

Importantly, the taxpayer admitted the failure was due to human error, which CRA considers within the taxpayer’s control. Relief under taxpayer relief provisions is only granted when extraordinary circumstances—beyond the taxpayer’s control—prevent compliance.

Key Takeaway

If you’re required to register for GST/HST, do so promptly. Filing late—even if someone else remitted the tax—can result in significant penalties and interest, and taxpayer relief may not apply unless exceptional circumstances exist.