Practice National Taxation

The CRA's national policy for saying sorry to taxpayers

There are clear issues with a CRA formal apology policy, says Canadian tax lawyer and accountant David J. Rotfleisch

Author: David J. Rotfleisch

Introduction: Annual Report 2019-20, "Transformation through Disruption"

The Canada Revenue Agency thinks it is time to draft a national policy for issuing apologies to taxpayers for its mistakes. Currently, the CRA does not have a formal guideline in place on what to say to taxpayers for its mistakes, which are addressed on a case-by-case basis.

In June 2020, the Office of the Taxpayers' Ombudsman released its Annual Report 2019-2020 "Transformation through Disruption" (the "Report") pertaining to the services provided by the CRA to taxpayers in which it presented recommendations for improving the CRA's service delivery and correcting its service issues. In particular, the Report suggested for the CRA to improve its services when dealing with taxpayers by way of "letters of apology." The Report explains that, given the large number of programs administered by the CRA, the lack of a uniform policy as to when the CRA should provide an apology for its wrongdoings permits different treatments among taxpayers, dependent on the CRA program area with which the taxpayer is dealing. This Report was drafted in light of the Office of the Taxpayers' Ombudsman mandate to uphold the Taxpayer Bill of Rights.

The Taxpayer Bill of Rights

The Taxpayer Bill of Rights presents 16 rights relating to the treatment to which taxpayers are entitled to when dealing with the CRA and includes various avenues that taxpayers pursue if they believe that the CRA has not respected their rights. In particular, Article 5 of the Taxpayer Bill of Rights presents taxpayers the right to be treated professionally, courteously, and fairly when dealing with the CRA. Under Article 11, taxpayers have a right to expect the CRA to be accountable for its decisions pertaining to their tax affairs, specifically concerning its errors and omissions.

Article 9: The Right to Lodge a Service Complaint and to be Provided with an Explanation of CRA's Findings

Under Article 9 of the Taxpayer Bill of Rights, taxpayers have the right to lodge a service complaint against the CRA and to be provided with an explanation of the CRA's findings relating to their matter. According to Article 9, "service" refers to the "quality and timeliness" of the work performed by the CRA and "services complaint" includes "having received unclear or misleading information, staff behavior matter, mistakes, or due delays". In this context, if a taxpayer is not satisfied with the services received from the CRA, they (the taxpayer) should attempt to resolve the matter with a CRA representative. If the taxpayer still disagrees with the way their issue is being addressed by the CRA, they (the taxpayer) may request to discuss the matter with the supervisor (of the CRA representative). If the taxpayer is still not satisfied with how their concern is addressed by the supervisor, they (the taxpayer) may complete Form RC193, Service Feedback and submit it to the CRA Service Feedback National Intake Centre by mail, fax or email. If the CRA still has not resolved the taxpayer's service complaint, the taxpayer may submit a complaint with Office of the Taxpayers' Ombudsman.

Article 11: The Right to Expect the CRA to be Accountable

Article 11 of the Taxpayer Bill of Rights grants taxpayers the right to expect the CRA to be accountable for its actions, errors and omissions. This means that when the CRA makes a decision pertaining to a taxpayer's benefits and tax affairs, the CRA must be able to explain its decision and inform the taxpayer of their rights and obligations pertaining to the relevant decision. In this context, the CRA is accountable through Parliament to all taxpayers on the performance and results of its service standards.

Article 4: The Right to a Formal Review and a Subsequent Appeal

Article 4 of the Taxpayer Bill of Rights grants taxpayers the right to a formal review and a subsequent appeal. This means that if a taxpayer believes that he or she did not receive their full benefit entitlement under the Income Tax Act or the taxpayer is unable to reach an agreement with the CRA concerning their tax affairs, they (the taxpayer) may request a preliminary review of their CRA file. If the taxpayer is still not happy with the decision reached by the CRA officer assigned to conduct the preliminary review, they (the taxpayer) can appeal or seek a judicial review of that decision in the appropriate court and certain matters can be heard by the Canadian International Trade Tribunal. Under Article 4, objections, appeals and reviews may pertain to income tax assessments and reassessments, GST/HST assessments and reassessments, benefits and credits, pension and employment insurance assessments as well as relief requests and voluntary disclosures.

The Evolving CRA Duty of Care

While a number of cases concluded that a duty of care should not be imposed on employees of the CRA, however, the reasoning in each case was informed by the respective pleadings and nature of the claims, as stated in Leroux v. Canada Revenue Agency.

In McCreight v. Canada (Attorney General), the motion judge held that CRA officers do not owe a duty of care to subjects (meaning the taxpayer) under investigation and that in any event, policy consideration would negate private law duty of care. Although, the Ontario Court of Appeal agreed that policy consideration would negate private law duty of care, it confirmed that to ground a claim in negligence, CRA tax investigators must be found to owe a duty of care to the subject (being the taxpayer or a third party) under investigation by the CRA. The test for determining whether a person owes a duty of care is (a) does the relationship between the plaintiff and the defendant disclose sufficient foreseeability and proximity to establish a prima facie duty of care; and (b) if so, are there any residual policy considerations which ought to negate or limit that duty of care?, as stated by the Supreme Court of Canada in its leading decision, Cooper v Hobart.

In Leroux v. Canada Revenue Agency, the Supreme Court of British Columbia rejected that CRA's argument that it (the CRA) owes no private law duty of care to an individual taxpayer. In this case, the Supreme Court of British Columbia held that a prima facie duty of care did exists and therefore the CRA breached its duty of care that it owed the taxpayer.

In both McCreight and Leroux, the courts found that the CRA owed and breached its duty of care to the taxpayer. In McCreight the Ontario Court of Appeal held that an action for negligence against the CRA was permitted to proceed to trial "along with the causes of action for misfeasance in public office and abuse of process". However, in Leroux while Supreme Court of British Columbia held that the CRA breached its duty of care owed to the taxpayer, the taxpayer's claim failed on the issues of causation as the court was unable to find a causation link between the CRA's breach of duty of care and the taxpayer's losses.

McCreight and Leroux are a reflection of the shift and effort in how courts are reviewing the actions of CRA employees or agents. Should Parliament approve proposals to mandate the CRA's national policy for saying sorry to taxpayers, it would be interesting to see how courts would review the actions of CRA employees in the context of a national policy built on the basis of improving consistent and equitable approach to apologies.

Taxpayers' Ability to Sue the CRA

Taxpayers have the right to commence a lawsuit against the CRA for negligence and damages. Under the provisions of the Crown Liability Act, the federal government can be sued for negligence and damages resulting from the actions of its employees and officers. In order for CRA to be liable, the taxpayer must establish that the CRA employee owed a duty of care to the taxpayer, breached that duty of care, and caused the loss. In Ontario, the Proceedings Against the Crown Act govern the procedure for suing the CRA for damages. At least 60 days before commencing an action against the CRA, the taxpayer must serve on the Crown a notice of the claim containing the relevant particulars.

The CRA's Service Complaint Program

The CRA's existing Service Complaints consists of guidelines based on the following criteria: if the CRA is at fault it will issue the taxpayer a letter using the word "apologize," if the CRA was not at fault it will use the word "regret". According to the Taxpayers' Ombudsman Report, despite the large number of programs administered by the CRA, these criteria are only used by one CRA program. This is problematic as it reflects the CRA's lack of accountability concerning its errors and omissions. Further, the fact that the Service Complaints criteria is only used by one CRA program raises concerns about whether a national policy will be effectively applied by all CRA program areas when dealing with taxpayers.

The Benefits & Concerns with a National Policy for Saying Sorry to Taxpayers

Creating a national policy for saying sorry to taxpayers may reflect the CRA's effort in addressing taxpayer's complaints and acknowledging its own wrongdoings. The Taxpayers' Ombudsman Report provides that a formal national policy on issuing letters of apology would improve "accountability and treat everyone fairly." In response to the Report's recommendations for service improvement, the CRA acknowledged that a national policy on issuing apology letters to taxpayers would "help support a consistent and equitable approach."

There are, however, clear issues associated with the CRA's implementation of a national policy for saying sorry to taxpayers. First, why does the CRA think that it needs to create an agency wide policy for apologizing to taxpayers? This perspective by the CRA raises concerns relating to the quality of its services and lack of focus on improving its service delivery and correcting its service issues. The fact that the CRA is drafting a national policy for saying sorry to taxpayers reflects the CRA's admission to its mistakes and raises concerns relating to the CRA's uncertainty in administering and enforcing Canadian tax law. Perhaps this policy may be the CRA's way of saying that it cannot continue addressing taxpayer's issues against its service delivery on a case-by-case basis (as it does now) and that it needs an agency-wide policy to help address its service issues and improve its service delivery.

Second, since the CRA is responsible for administering and enforcing the Income Tax Act, there should already be checks and balances set in place to reduce mistakes and prevent improper behaviors. The CRA should already have an accountability framework and use its errors and omissions as training opportunities to prevent future and reoccurring mistakes from happening.

Third, the fact that the CRA is drafting a national policy for saying sorry to taxpayers reflects its lack of focus on accountability, which is a fundamental basis on which this policy ought to be built. The CRA must acknowledge its errors and omissions and consider its wrongdoings in each case on a case by case basis. A national policy can be problematic in that it could treat all mistakes in the same manner and fail to recognize that not all mistakes are equal. The CRA must focus on improving its accountability and rendering high quality and practical services that treat taxpayers fairly — all of which are taxpayers' rights under the Taxpayer Bill of Rights.

Moreover, if the CRA is holding taxpayers accountable on a case by case basis, then the CRA should also be held to the same standard of accountability. The CRA needs to be empathetic in its apology to taxpayers, all while taking the necessary steps to consider the consequences (i.e., emotional stress) of its actions on taxpayers and their family.

David J Rotfleisch, CPA, JD, is the founding tax lawyer of Rotfleisch & Samulovitch P.C., a Toronto-based boutique tax law firm. With over 30 years of experience as both a lawyer and chartered professional accountant, he has helped start-up businesses, resident and non-resident business owners and corporations with their tax planning, with will and estate planning, voluntary disclosures and tax dispute resolution including tax litigation. Visit and email David at

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