CRA Guidance and Taxpayers 

The Canada Revenue Agency (CRA), along with the Department of Finance, issues numerous documents addressing a variety of income tax and excise tax (GST/HST) topics. These include Interpretation Bulletins and Folios, which provide interpretations of certain sections of the Income Tax Act, and Information Circulars, outlining the CRA’s administrative procedures. 

These documents cover a range of topics, such as “Health and Medical” tax credits, “transfers of Income, Property, or Rights to Third Parties”, and “employee benefits”. They are a crucial resource for the over 26 million taxpayers who interact with the CRA annually, especially given the complexity and often ambiguous nature of the Income Tax Act. 

However, the reliability of these government publications is a matter of debate. If the information provided is incorrect or if the CRA changes its stance, the legal implications for taxpayers can vary depending on the specific document and the context of its use. 

Canadian courts have established that government departments or agencies cannot create laws. This implies that the CRA’s publications are merely interpretations of the law at a given time and are not legally binding. This can be advantageous for taxpayers who disagree with the CRA’s position, as courts will interpret the law independently of the CRA’s views. However, it can be challenging for most taxpayers to understand the complex provisions of the legislation. Relying on the CRA’s guidance can be risky, as they may change their position at any time. 

There is an exception concerning discretion and procedure. If the CRA outlines how they will exercise discretion or the proper procedure to follow, courts will hold the CRA accountable to these representations.