Tort Actions Against CRA

The Federal Court has denied an appeal by the Crown in Scheuer v. Canada against a decision to dismiss CRA’s motion to strike the plaintiffs’ claim. The claim is in a suit for damages, by several persons who lost charitable donations in a charitable tax shelter (Global Leaning Group Inc.) and it concerns CRA’s failure to properly warn and protect them from a charitable “shelter”, registered as a shelter by CRA, when CRA knew it would not accept or honour those charitable donations.

I know of many who have participated in one or another charitable donation shelter. It seems possible that many would fit these facts.

CRA argued that it had no “duty of care” toward taxpayers. The Federal Court did not disagree exactly, and didn’t have to disagree in order to find for the plaintiffs, but it found that there was a reasonable prospect of the plaintiffs establishing sufficient proximity between the CRA and the inviduals, proximity that is required for a duty of care. The “proximity” is the defendant (CRA’s) actions that have a direct (or “close”) effect on the plaintiffs that is potentially harmful to them.

The decision is here and Sas Ansari has excellent extracts and quick analysis here.

I would not presume to ask what chance the plaintiffs have of succeeding in their claim, but it is good to see the Federal Court extend at least minimal legal protection to those who may have been harmed by CRA’s actions in dealing with charitable tax shelters.

(I am reminded that recently the Supreme Court of British Columbia found a duty of care to exist, owed by CRA towards a taxpayer…)

Written by Craig Burley

Craig is a tax lawyer in private practice in Hamilton, Ontario. Call Craig at (905) 296-3378 to discuss issues that you think may need independent tax advice. In addition to tax, Craig writes and works publicly on a number of other issues related to law, justice, and public affairs.