The plaintiff, a U.S. business registered to collect HST, successfully appealed a $14 million CRA tax assessment but incurred over $1.4 million in interest and professional fees.
The plaintiff sued the government for indemnity and negligence, alleging the CRA acted in bad faith during the audit.
The defendants moved to strike the statement of claim.
The Superior Court of Justice granted the motion, finding that neither the common law nor the Excise Tax Act provides a right to indemnity for such costs, and that the CRA does not owe a private law duty of care to taxpayers or tax collection agents during an audit.
