A taxpayer who relocated from Canada to another treaty country continued filing Canadian resident returns for years. After reconstructing the full residency history, Lepore & Company concluded there was a strong basis for treating the taxpayer as a non-resident for the relevant prior years, prepared amended filings and a detailed technical submission, and — after CRA requested and received further information — had its residency and treaty position accepted. CRA reassessed the relevant years, refunding the client more than $100,000 of Canadian income tax. The outcome was specific to this taxpayer’s facts and is not a precedent.
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T1135 Penalties: What CRA Must Consider Before Refusing Relief
CRA refused further relief from a T1135 late-filing penalty, relying partly on the very failure the taxpayers were asking relief for. On judicial review of that refusal — not of the penalty assessment itself — the Federal Court in Kaur v. Canada (Attorney General) found the reasoning circular and sent the request back to CRA for redetermination. The Court did not cancel the penalty, and CRA may still refuse relief. Here’s what the decision establishes for anyone facing a T1135 penalty or a refusal of relief.
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