By Ahmad Hathout
The country’s highest court ruled Friday that Iristel’s allegation that the Canada Revenue Agency is improperly withholding millions of dollars in tax returns is a matter wholly within the domain of the Tax Court, rejecting its appeal from the lower court.
Iristel has alleged for years now that the tax agency has been improperly withholding more than $80 million owed to the company after audits allegedly found long-distance call traffic suppliers used by the far north telecommunications provider are not reporting or remitting taxes.
Legally, Iristel is arguing that the assessment to withhold and penalize the telecom is not grounded in evidence and that the minister has not provided it with the opportunity to respond to the claims because of the timing of the minister’s assessment, breaching due fairness. It challenged a decision from the Federal Court of Appeal that ruled those issues are related to the tax assessments – not the discretion of the minister of National Revenue – which is the sole jurisdiction of the Tax Court.
And the Supreme Court of Canada agreed with the lower court, ruling Friday that the Tax Court is the appropriate forum for these types of issues because they are confined to the assessments and not the discretion of the minister, which could have been beyond the scope of the Tax Court.
“An appeal to the Tax Court will allow the parties to present documentary evidence and submissions on whether the assessments were well founded in fact and in law, including whether they were supported by the court and were made by the Minister in accordance with its statutory obligations,” the Supreme Court said in its decision.
“A finding by the Tax Court that Iris is liable to pay the tax will finally dispose of Iris’ three allegations,” it added, which include the breach of fairness, evidentiary and carousel scheme claims. “Judicial review should not be used to create a new form of related procedure designed to circumvent the system of tax assessments and appeals established by Parliament.
“There is no longer any current dispute between the parties other than the issue of the appropriateness of the Minister’s assessments,” it added. “The Federal Court does not have the power to vary or rescind an assessment, and making declarations that do not vary or cancel the assessments would serve little or no purpose.”
Iristel, which was granted a hearing at the high court last March, has claimed that the withholding of the funds is “stifling jobs, smothering economic growth, and denying Canadians more competition in the wireless universe.”
The telecom said the tax agency is withholding the money on suspicion its call suppliers are involved in a “carousel scheme,” wherein the importer of the good, or call traffic in this case, would not report or pay taxes, sells the good down the supply chain until its exported, and then imports the good to continue the cycle.
