Taxman fails fairness test

Income tax rules are simple: file by the deadline and if you’re entitled to a refund, you get it. If you’re late in filing and you owe the federal government money, the more you delay paying that money back, the more interest they tack on.

Income tax rules are simple: file by the deadline and if you’re entitled to a refund, you get it.

If you’re late in filing and you owe the federal government money, the more you delay paying that money back, the more interest they tack on.

If the government owes you a refund and make an error, they add interest to the repayment error, right?

Wrong!

That’s the lesson recently learned by East Coast fishermen who fought a long court battle to recoup about $20 million in overpayments they made to Revenue Canada dating back to 2000. The feds have agreed to repay the overpayments, but refuse to pay 11 years of interest.

That’s both unfair and unconscionable. Eleven years of interest on $20 million would be a huge bonus for fishermen living near poverty.

The tax laws create a double standard — if you owe the government money, no matter how many years ago, you are charged interest from Day 1. But if you overpay in taxes, the government won’t honour that interest obligation.

East Coast lawyer Eli Baker, who represented the more than 754 fishermen in Newfoundland, Labrador and the Quebec’s north shore in the court challenge, said interest will be calculated back to when claimants formally requested a refund. For most of the clients, that was in 2006.

Apparently, taxpayers owed money by the federal government must make a formal request to get back what they are due.

Yet the government doesn’t issue a formal request to taxpayers; Ottawa simply expects each of us to fill out the necessary forms, calculate what we owe, and pay it — or pay interest later, with the original amount!

Last May, the Federal Court ruled that some fishermen overpaid tax on licence buyouts. It ruled that Revenue Canada “gave different and contradictory advice and opinions” on how that income should be treated.

According to The Canadian Press, “fluctuating advice on whether licence buyouts should be treated as a capital gain or a business income meant some fishermen paid thousands of dollars more in taxes than their neighbours.”

Cheques ranging from a few thousands dollars to about $50,000 will soon be in the mail, but they won’t include interest dating back to 2000 when the overpayments were made.

“I think it’s tremendously unfair that the government of Canada gets to hold on to taxpayers’ money interest-free for six years,” said Baker. “The way the law is, a person will receive interest on an overpayment starting from approximately the day they ask for a refund.”

The tax laws appear to be enshrined to benefit the government, at the expense of taxpayers, and damn any potential for fairness.

Noel Carisse, a spokesperson for Revenue Canada, said the Income Tax Act “sets out that interest on repayments does not start to accrue until 30 days after a refund claim is received.” Then why must those owing money to the government pay interest from Day 1?

Baker said the tax laws are especially galling because most of his clients are elderly, were overtaxed because the government failed them, and live in poverty or close do it. Refunds with interest would make a huge difference.

Since the legal action was launched, 108 of Baker’s clients have died.

Canadians should expect nothing less than fair and equitable treatment from its government. And they shouldn’t have to fight lengthy court battles to receive that fairness.

Rick Zemanek is an Advocate editor.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Education Minister Adriana LaGrange says she has not received an official request from any other school board for a similar move to online learning. (Advocate file photo)
’Operational pressures:’ Calgary schools shift to at-home learning for grades 7 to 12

School boards can ask to move online for a number of reasons

Russian President Vladimir Putin visits the Coordination Center of the Russian Government in Moscow, Russia, Tuesday, April 13, 2021. The centre was set up as a line of communication with the whole of Russia for analysing and collecting information, promptly using big data and solving arising problems. (Mikhail Metzel, Sputnik, Kremlin Pool Photo via AP)
Months after hack, US poised to announce sanctions on Russia

First retaliatory action against the Kremlin for last year’s hack

A electric car is seen getting charged at parking lot in Tsawwassen, near Vancouver B.C., April, 6, 2018. File photo by THE CANADIAN PRESS/Jonathan Hayward
‘Wrong signal:’ Federal ministers protest Saskatchewan’s electric vehicle tax

Two federal ministers are protesting Saskatchewan’s plan to bring in a tax… Continue reading

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. Canada’s charities are looking to next week’s federal budget with hopes the Liberals will extend their sector a helping hand as they face the possibility of a prolonged and protracted road to recovery even after the economy reopens. THE CANADIAN PRESS/Adrian Wyld
Charities hope Liberals’ budget lends helping hand as sector eyes long recovery

OTTAWA — Canada’s charities are hoping the Liberals extend them a helping… Continue reading

Deputy Chief Public Health Officer Howard Njoo responds to a question about vaccines during a weekly news conference, Thursday, Jan. 14, 2021 in Ottawa. Njoo says a faster vaccine ramp-up alone would likely not have thwarted the third wave of COVID-19 in many parts of the country. THE CANADIAN PRESS/Adrian Wyld
Faster vaccines alone could not have stopped third wave: deputy public health officer

A top federal public health official says a faster vaccine ramp-up alone… Continue reading

WestJet president and CEO Ed Sims addresses the airline’s annual meeting in Calgary, Tuesday, May 7, 2019. THE CANADIAN PRESS/Jeff McIntosh
WestJet CEO Ed Sims finds Air Canada aid package ‘bittersweet’ as talks drag on

OTTAWA — WestJet CEO Ed Sims says the federal government’s aid package… Continue reading

British Columbia Premier John Horgan (centre, blue jacket) is drummed into the Lower Post Residential School by Kaska drummers in Lower Post, B.C. on Orange Shirt Day in a 2019 handout photo. A former residential school building known as a place of pain and fear for residents of the remote British Columbia community of Lower Post will be demolished and replaced after decades of lobbying efforts by local Indigenous leaders. The federal and B.C. governments say construction on a new $13.5 building project is set to start in June and expected to be complete next year. THE CANADIAN PRESS/HO-Manu Keggenhoff MANDATORY CREDIT
Residential school building at Lower Post, B.C., to be demolished, replaced

VICTORIA — A former residential school building in the remote British Columbia… Continue reading

A 60-year-old COVID-19 patient fights for his life, desperately gasping for air as head intensivist Dr. Ali Ghafouri, centre, provides life saving medical care in an emergency situation in the intensive care unit at the Humber River Hospital during the COVID-19 pandemic in Toronto on Tuesday, April 13, 2021. The patient was intubated and put on a ventilator successfully. THE CANADIAN PRESS/Nathan Denette
‘Sicker and younger’: Toronto ICU copes with pressure during third wave of pandemic

TORONTO — Intensive care nurse Jane Abas is assessing her patient, checking… Continue reading

FILE - NHL Commissioner Gary Bettman speaks during the “Topping Off” ceremony of the New York Islanders new home, the UBS Arena at Belmont Park in Elmont, N.Y., Friday, Oct. 9, 2020. THE CANADIAN PRESS/AP-Mary Altaffer
Islanders close to selling out inaugural season at UBS Arena

Arena capacity of about 17,000 for hockey

An Uber Eats delivery person carries items near the Japan National Stadium, where opening ceremony and other events are planned for postponed Tokyo 2020 Olympics, with engravings in honor of 1964 Tokyo Olympics seen on the side of the stadium wall behind the fence Tuesday, April 6, 2021, in Tokyo. Two top officials of Japan’s ruling LDP party on Thursday, April 15, 2021, said radical changes could be coming to the Tokyo Olympics. One went as far to suggest they still could be canceled, and the other that even if they proceed, it might be without any fans.(AP Photo/Eugene Hoshiko)
Officials say Olympic cancellation, no fans still an option

COVID-19 cases have been rising across Japan

Most Read