Posted Thursday November 19, 2020

Tax Errors

CRA and Revenu Quebec must be held accountable for audit mistakes, CFIB tells the Supreme Court

The Canada Revenue Agency (CRA) and Revenu Quebec (RQ) should be held liable when its employees make mistakes that impact small businesses, says the Canadian Federation of Independent Business (CFIB). Last Thursday, CFIB submitted an affidavit in support of Restaurant Le Relais de Saint-Jean and its owner Gary Chionis’ petition to have their case heard by the Supreme Court of Canada.

Restaurant Le Relais de Saint-Jean and Mr. Chionis of Saint-Jean-sur-Richelieu, Quebec, are petitioning the Supreme Court of Canada to review a decision by the Quebec Court of Appeal on whether CRA and RQ are liable for errors committed by their auditors and collection agent. In 2005, an audit by RQ mistakenly claimed Restaurant Le Relais de Saint-Jean owed $1 million in sales taxes. It took the restaurant and Mr. Chionis five years and $350,000 in accountants and lawyers’ fees to prove the error, but they have not been compensated by CRA or RQ for the stress and damages it has caused them, including the permanent closure of their restaurant.

“When tax authorities make a mistake of this magnitude, it puts a huge financial strain on the business owner, causes them personal stress, hurts their reputation and sometimes leads to the permanent closure or winding down of the business” said Corinne Pohlmann, CFIB’s senior vice-president of national affairs. “We urge the Supreme Court to do the right thing and review the Relais decision by the Quebec Court of Appeal.”

CRA customer service leaves a lot to be desired

Small businesses need to rely on revenue agencies to have access to appropriate information in order to fulfill their tax obligations. However, in CFIB’s 2017 CRA survey, 58 per cent of businesses said they felt “intimidated when dealing with CRA,” and 54 per cent felt that CRA treated them like “they had done something wrong.” The Supreme Court must provide guidance and establish a proper threshold for when revenue agencies will be held liable for audit and collection actions that are proved to have been damaging.

“There is a big imbalance of power between tax authorities and the small business owners they audit,” added Pohlmann. “There needs to be greater accountability on the part of CRA and RQ when an error in the audit process causes undue damages to small business owners.”


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ISSN 0824-45
Copyright, 2020

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