Published: March 5, 2021
Last Updated: October 16, 2026
Introduction: Remission Order Application as the Last-Ditch Resort for Tax Relief
The tax remission order application, made by an experienced Canadian tax lawyer under subsection 23(2) of the Financial Administration Act, is the final avenue of tax relief for a Canadian taxpayer once every other tax dispute and tax relief procedure has failed to produce a satisfactory result. It is therefore important for Canadian taxpayers to understand exactly what it means for the remission order application to be the last-ditch resort for tax relief, and what a court can and cannot do when the CRA refuses one.
The Federal Court decision in Meleca v. Canada (Attorney General), 2020 FC 1159, was an application for judicial review of a denied remission order application. Meleca illustrates what happens when a taxpayer does not understand the nature of a remission order application. Considerable time and money were wasted as a result.
Meleca is not the whole picture, however. In Mokrycke v. Canada (Attorney General), 2020 FC 1027, decided in the same year, a taxpayer succeeded in setting aside the CRA’s refusal. Read together, the two decisions show precisely where the line falls.
“It is important for Canadian taxpayers to understand exactly what it means for the Remission Order Application to be the last-ditch resort for tax relief.”
David J. Rotfleisch, Certified Specialist in Taxation Law (Law Society of Ontario)
Remission Order Application: What It Is and What It Isn’t
A remission order application is not a tax dispute process. In a remission order application, the taxpayer cannot ask the CRA or the courts to review whether the underlying tax assessment or reassessments were correctly made. Incorrect action or advice given by CRA officials can be relevant as part of building the taxpayer’s narrative for why remission should be granted, but that is a different thing from disputing the assessment.
Remission can extend to interest and penalties owing, or to the tax amount itself. That is what distinguishes it from taxpayer relief under subsection 220(3.1) of the Income Tax Act, which reaches penalties and interest only and can never cancel the principal.
A remission order application can only be granted where tax relief is justified but cannot be obtained under existing provisions of the law. The taxpayer must demonstrate exceptional circumstances of hardship or inequity connected to the tax debt owing. The CRA’s published guidelines identify four factors:
- Payment of amounts owing would cause extreme hardship;
- Financial setback coupled with extenuating factors;
- The amount owing is an unintended result of the legislation; and
- The amount owing is the result of incorrect action or advice by CRA officials.
These four factors are not exhaustive. Our overview of the tax remission order sets out how each of them is applied, and our overview of the CRA remission guidelines explains how the CRA assesses a request internally.
It is also worth knowing before starting that a remission order does not result in a reassessment. If remission is granted, the CRA applies the authorized credit to the taxpayer’s account and the underlying assessment stands.
Judicial Review of a Remission Decision Versus an Appeal of a Tax Assessment
Because a remission order application is not concerned with whether the underlying tax assessments were correct, a judicial review of a rejected remission order application does not involve the court reviewing the substantive correctness of the underlying assessment.
A tax appeal to the Tax Court of Canada is governed by specific provisions of the Income Tax Act. An application for judicial review is made to the Federal Court and is governed by the general principles of administrative law. These are two different proceedings with two different purposes, and confusing them is the single most common and most expensive error in this area.
The Standard of Review After Vavilov
Earlier commentary described the choice between correctness and reasonableness as a matter of considerable debate. That debate was resolved by the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.
As we explain in our analysis of judicial review of discretionary decisions by the CRA, reasonableness is now the presumptive standard for the judicial review of administrative decisions, and it applies to the CRA’s exercise of discretion on a remission request. A reasonable decision is one that is justified, transparent and intelligible, and that is justified in relation to the facts and law that constrain the decision maker. The court does not ask what decision it would have made. It asks whether the decision the CRA actually made holds together and is supported by the record.
The Federal Court continues to apply that standard to discretionary CRA relief decisions. In Maverick v. His Majesty the King, 2023 FC 1728, the Court restated that its role is not to determine what is fair but whether the decision refusing relief is reasonable as that term is understood in administrative law. Barrs v. Canada, 2022 FCA 147 supplies the corollary at paragraph 38: a decision that fails to engage with the request actually made will generally be unreasonable.
This matters practically. A taxpayer who argues on judicial review that the CRA reached the wrong result is arguing the wrong point. The question is whether the CRA’s reasoning was defensible, not whether it was correct.
The Grounds of Review
Subsection 18.1(4) of the Federal Courts Act sets out the grounds on which the Federal Court may grant relief. In broad terms, the Court may intervene where the federal decision maker acted without jurisdiction or beyond its jurisdiction, failed to observe a principle of natural justice or procedural fairness, erred in law, based its decision on an erroneous finding of fact made in a perverse or capricious manner or without regard for the material before it, acted contrary to law, or acted in any other way that was contrary to law including by reason of fraud or perjured evidence.
For a refused remission request, two of these do most of the work. The first is the erroneous finding of fact ground, which is what a taxpayer relies on when the CRA has disregarded material that was in front of it. The second is procedural fairness. An application built on general dissatisfaction with the outcome engages none of them, which is why Meleca failed.
What a Judicial Review Is Not
There is no trial on a judicial review. There are no witnesses and no oral evidence. The application is built on affidavits and is decided on the record that was before the CRA decision maker. Evidence that was never put before the CRA will generally not be admitted, and arguments raised for the first time in court will generally not be entertained.
If the application succeeds, the usual remedy is that the decision is set aside and sent back to the CRA to be reconsidered by a different delegated official. The CRA’s own guidance confirms this: the Federal Court cannot replace the decision, but it can refer the matter back to be considered by a different decision maker. The court does not grant remission itself and has no power to do so, because under section 23 of the Financial Administration Act only the Governor in Council can.
That is why the written submission made to the CRA determines almost everything. The record built at that stage is the record the court will review.
Before You Go to Court: Two Steps That Come First
Judicial review should not be the first response to a refusal, and the CRA’s own guidance says so.
- The CRA advises that a taxpayer should generally ask for a second administrative review before filing an application for judicial review with the Federal Court. A second-level review is conducted by a different and more senior official, it is far faster and cheaper than litigation, and it frequently succeeds where the first decision was made on an incomplete record.
- There is also a step specific to remission. The CRA expects full and complete disclosure with the original request, but it acknowledges that new information or documents may come to light that the taxpayer could not have provided earlier. Where that happens, the CRA invites the taxpayer to make contact to see whether the request can be further reviewed. That route costs nothing and does not consume the filing deadline in the way litigation does, although the 30 day clock continues to run regardless, so it should be pursued in parallel rather than instead.
It is also worth knowing the CRA’s own service commitment: it generally advises in writing within 30 calendar days whether a remission request will be considered for review at all.
The 30 Day Deadline
An application for judicial review must be brought within 30 days after the decision was first communicated to the applicant, under subsection 18.1(2) of the Federal Courts Act, subject to an extension that a judge may allow.
This deadline is short and it is missed regularly. It should be diarized from the moment any adverse decision is received, even where the taxpayer intends to pursue further administrative review first. An extension can be sought by motion to the Federal Court, either before or after the 30 days have expired, but it is discretionary and is not something to rely on.
The application itself is commenced by filing a notice of application with the registry of the Federal Court together with the applicable filing fee. The procedure is governed by Part 5 of the Federal Courts Rules, which sets out the steps, the affidavit evidence, the applicant’s and respondent’s records, and the timetable. These are strict procedural requirements and a defect in them can end an application before its merits are ever considered.
The Meleca Case: What Went Wrong
The taxpayer in Meleca submitted a remission order application on September 9, 2015 for personal income tax debts arising from the 2001, 2002, 2009, 2010 and 2012 taxation years, and GST/HST debts for reporting periods from 2008 to 2010 and 2012 to 2013. The application relied on the death of the taxpayer’s son, the taxpayer’s poor health and advanced age, and a lack of income. It also raised CRA errors in a CRA tax audit in which insurance cheques for damaged buildings had been assessed as unreported income.
The CRA rejected the application. The taxpayer applied to the Federal Court for judicial review and chose to represent himself rather than retain an experienced Canadian tax lawyer.
On the judicial review he asked the court to order a complete review of the CRA’s assessments for the 2001, 2002, 2009, 2010 and 2012 taxation years, and to grant relief from interest and penalties. The CRA responded that the Federal Court had no power under administrative law to review whether the original assessments were correct, and that the only question available was whether the CRA’s administrative decision was reasonable. The taxpayer advanced no argument at all on reasonableness, and the CRA nevertheless made submissions explaining why its decision had been reasonable.
The court ruled in the CRA’s favour in a brief decision, holding that it had no power to order a review of the underlying assessments and that the CRA’s decision to reject the remission order application was reasonable.
Meleca is cited by the Supreme Court of Canada in Canada (Attorney General) v. Collins Family Trust, 2022 SCC 26, in the passage describing remission as an extraordinary remedy granted in rare circumstances.
The Mokrycke Case: What a Successful Application Looks Like
Mokrycke is the counterpoint and is the more instructive of the two for anyone preparing an application.
The taxpayer missed the 90 day deadline to file a notice of objection to reassessments for the 2005 and 2006 taxation years, and then missed the deadline to appeal to the Tax Court of Canada. In his remission request he argued that the reassessments were inaccurate because of circumstances beyond his control: he had relied on tax professionals, the first of whom was unable to respond to the CRA tax audit and the second of whom failed to pursue the matter.
The Federal Court set the CRA’s refusal aside and sent the request back for reconsideration. It held that it was unreasonable for the CRA to reject the request on the footing that its review had disclosed no CRA error at the CRA tax audit stage, when the conduct of that tax audit was the very point in issue. The court also faulted the CRA for giving no reasons for rejecting the argument that the failure of the taxpayer’s professional representatives was an extenuating circumstance.
The lesson is narrow and useful. Meleca lost because he attacked the assessment rather than the reasonableness of the refusal. Mokrycke succeeded because he identified a specific ground the CRA had failed to engage with. The successful applicant does not argue that the CRA was wrong. He or she shows that the CRA did not deal with something it was required to deal with.
Takeaway
A judicial review of a refused remission order application is a narrow proceeding with a short deadline and a demanding standard. The court will not revisit the assessment, will not hear new evidence, will not substitute its own decision, and will not grant remission.
What it will do is set aside a refusal that fails to engage with the grounds actually advanced. That makes the quality of the original written submission decisive, because the record built before the CRA is the record the court reviews. The applications that succeed are the ones where the ground was clearly raised, supported by evidence, and left unanswered.
Pro Tax Tips: Distinguish Tax Objections From a Remission Order Application
Meleca is a cautionary tale about the risks of self-representation in court without the necessary legal expertise. Several of the missteps would have been avoided by an experienced Canadian tax lawyer.
If the case for CRA errors in the CRA tax audit was strong, it should have been made in a notice of objection and a Tax Court appeal. Even after the 90 day deadline has lapsed, every effort should be made to have the matter reviewed by the Tax Court under the extension of time provisions in subsection 167(5) of the Income Tax Act, within one year and 90 days of the deadline.
Where judicial review of a refusal genuinely is the last resort remaining, an expert Canadian tax lawyer will attack the substantive and procedural reasonableness of the refusal. That means asking whether every argument in the remission order application was properly considered by the CRA decision maker, whether the decision maker relied on improper or irrelevant grounds, and whether the decision falls within a range of acceptable and rational outcomes on the record.
Diarize the 30 day deadline under subsection 18.1(2) of the Federal Courts Act the moment an adverse decision arrives. Losing the right to review because a deadline slipped is an avoidable failure, and an extension is discretionary.
Finally, build the record at the CRA stage as though it will be read by a judge, because it may be. Every ground should be stated expressly and supported by documents. A ground raised only in a telephone call is a ground the Federal Court will never see.
Our Canadian tax lawyers are experienced in providing legal representation at every stage of a CRA tax audit, a tax dispute, CRA collections and a tax relief request. We will advise whether a remission order application is suited to your circumstances, we can prepare the application, and we can represent you in any subsequent judicial review.
Frequently Asked Questions
Can I appeal a rejected remission order application?
Not by way of appeal. You may apply to the Federal Court for judicial review of the decision. The court examines whether the CRA exercised its discretion reasonably. If the taxpayer succeeds, the matter is sent back to the CRA for reconsideration rather than decided by the court.
Should I ask for a second review before going to court?
Yes. The CRA’s own guidance is that a taxpayer should generally request a second administrative review before applying for judicial review. It is faster, far cheaper, and decided by a different and more senior official. For a refused remission request, the CRA also invites taxpayers to make contact where new information or documents have emerged that could not have been provided earlier. Pursue either route in parallel with diarizing the 30 day deadline, because the clock keeps running.
How long do I have to file?
Generally 30 days after the decision was first communicated to you, under subsection 18.1(2) of the Federal Courts Act. A judge may grant an extension, but it is discretionary.
Will the Federal Court review whether my assessment was correct?
No. That was the error in Meleca. The correctness of an assessment is a matter for a notice of objection and an appeal to the Tax Court of Canada, not for judicial review of a remission decision.
What standard does the court apply?
Reasonableness, as established in Vavilov, 2019 SCC 65 and applied to discretionary CRA relief decisions in Maverick v. His Majesty the King, 2023 FC 1728. The court asks whether the decision is justified, transparent and intelligible on the record, not whether it is the decision the court would have made, and not whether the outcome is fair.
What are the grounds for judicial review?
They are set out in subsection 18.1(4) of the Federal Courts Act and include acting without or beyond jurisdiction, breach of natural justice or procedural fairness, error of law, an erroneous finding of fact made perversely or capriciously or without regard to the material, and acting otherwise contrary to law. General dissatisfaction with the result is not a ground.
What if I miss the 30 day deadline?
You can bring a motion to the Federal Court for an extension of time, before or after the 30 days expire. It is discretionary, and relying on it is a poor substitute for filing on time.
Can I file new evidence on the judicial review?
Generally no. The application is decided on the record that was before the CRA decision maker, and it proceeds on affidavits rather than oral testimony.
If I win, do I get the remission?
No. The usual outcome is that the refusal is set aside and the request is sent back to the CRA for a fresh decision. Only the Governor in Council can grant remission under section 23 of the Financial Administration Act.
What makes a judicial review succeed?
Showing that the CRA failed to engage with a ground actually advanced, as in Mokrycke, 2020 FC 1027, rather than arguing that the CRA reached the wrong result.
Can I apply for remission before trying taxpayer relief?
No. Remission is generally only recommended where all other options have been exhausted, including objections, appeals and taxpayer relief requests. Where relief from penalties and interest is refused, see our analysis of judicial review of denied taxpayer relief. The application must also show that the taxpayer meets the circumstances recognized by the CRA.
What factors does the CRA consider?
Extreme hardship, financial setback coupled with extenuating factors, unintended results of the legislation, and incorrect action or advice by CRA officials. The list is not exhaustive, but an application should expressly invoke at least one.
Does a remission order change my assessment?
No. If remission is granted, the CRA applies a credit to the account. No reassessment is issued.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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