Historically, Canadian courts have been hesitant to recognize that governmental bodies such as CRA are capable of being sued privately by Canadian citizens for the damage their actions cause ostensibly because of the “chilling effect” the fear of legal liability would have on their duty to perform their statutory directives.
Not surprisingly, the actions of the Canadian income tax department can have disastrous effects on the lives of Canadian taxpayers, but in the past there has been little no recourse against CRA for taxpayers once the damage is done. Income tax collectors can garnishee taxpayer bank accounts by simply mailing a letter and can register a certificate in Federal Court, without notice, and put a lien on a taxpayer’s home for the full amount of an unsatisfied tax debt, even if the income taxes owing turn out to be less than the original income tax assessment shows. CRA income tax collections officers have one directive, to collect, and are not concerned with the validity of the underlying income tax assessment.
Revenue Canada auditors can make assumptions about a taxpayer’s tax liability in the absence of documentary evidence to the contrary and have the power to levy significant penalties and interest that often exceed the actual underlying taxes owing. Any Canadian taxpayer who has ended up on the wrong side of a dispute with the Canada Revenue Agency (“CRA”) is likely aware of the broad powers given to the Tax Man by the Canadian Income Tax Act.
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