Taxpayers Win on Federal Court of Appeal Decision

Three-justice panel rules it has jurisdiction in heated case between Iris Technologies and Canada Revenue Agency

TORONTO, July 9, 2020 /CNW/ - Iris Technologies Inc., Canada's fastest-growing telecom services provider, is pleased the Federal Court of Appeal has ruled against CRA's strong-arm tactics in a fiery GST/HST tax case.

In yesterday's ruling, the Appeal Court dismissed the CRA's appeal from the finding of the Federal Court affirming it retains jurisdiction to review the CRA's conduct during an audit, while at the same time dismissing Iristel's motion seeking interim financial relief as too early. The CRA has refused to provide any audit report or any record of any findings of fact, while withholding almost $100 million of input tax credits and assessing almost $25 million of penalties against Iristel.   

The Federal Court will hear Iristel's judicial review application this year on whether Iristel is entitled to relief because of that conduct while the case works its way through Tax Court.

"We didn't win interim relief but all taxpayers finding themselves in a dispute with the CRA won today because the court effectively told the CRA its bully tactics don't wash," says Samer Bishay, Iristel President and CEO.

After Iristel applied for relief in the Federal Court, the CRA issued new assessments and penalties against Iristel and told the Federal Court that issuing these assessments meant Iristel's claims for relief are moot because the case must be ultimately decided by the Tax Court, not the Federal Court. The Tax Court does not have jurisdiction to consider the CRA's conduct. The Appeal Court specifically held that the Federal Court retains jurisdiction to review the CRA's conduct and that the Minister's assessing actions do not insulate the Minister from review.

"Yes, we wanted interim relief but this is still a win because the Federal Court will hear our case and whenever the CRA uses these aggressive and intimidating tactics on other taxpayers, our case will be cited," Mr. Bishay says. "I'm confident we will one day win in Tax Court, but the actions of the CRA to use their power in bad faith oversteps the boundaries of good governance and the Court has effectively said so."

In addition to heaping on new assessments and penalties in a bid to move the case out of the Federal Court's jurisdiction, during the COVID-19 pandemic the CRA also reached out to provide misinformation to the administrators of the CEWS relief program, denying Iristel the basic assistance Prime Minister Justin Trudeau and Minister of Finance Bill Morneau have promised Canadian employers.

"The CRA is acting in the most unprofessional manner possible," Mr. Bishay says. "Thank goodness the Federal Court of Appeal panel has unanimously confirmed they do not have the power to do this."

Adds Mr. Bishay: "We hear the Minister of Finance say 'employers, large and small, are facing challenges due to the COVID-19 global pandemic. Our government has their backs.' We hear The Prime Minister say 'we know that times have been tough, and Canadians are concerned about their jobs, and the health and safety of their families.' Instead of any support, Diane Lebouthillier, Minister of National Revenue, and the CRA seem bent on choking us, an essential service provider and lifeline, on a suspicion about other companies' compliance with the Excise Tax Act. The Minister's attempts to use the provisions of the Excise Tax Act to shield her conduct from the review of the courts has failed."

The Court of Appeal did not find that the CRA had completed its audit or made any finding of any wrongdoing on Iristel's part. The Court noted the factual record identified by Iristel: "By the Minister's own admission, there is at best a suspicion that this may be the case," writes Mr. Justice Donald Rennie.

Mr. Bishay says during the pandemic and this legal tussle, he and his company have done everything possible to keep Iristel "open for business", but the company has had to scale back on its expansion plans to bridge the "digital divide" in remote Northern areas of Canada.

"I'm asked all the time why I'm fighting the tax man and my answer is the same: I'm doing it for my company, my employees, my customers and all Canadians who are bullied by the CRA with its vast government resources behind it. There must be checks and balances for government and today was a good day where the Court ruled the CRA cannot abuse its power," Mr. Bishay says.

"The fight is not over yet, but the Court has certainly sent a message to all taxpayers being harassed and wrongfully accused by the CRA," he says.  

About Iristel

Iristel is Canada's fastest-growing carrier providing innovative communication services, including cybersecurity, that are changing how consumers and businesses communicate. Founded in 1999, Markham-based Iristel operates Canada's largest facilities-based local voice network extending Coast-to-Coast-to-Coast. It also owns Ice Wireless, an LTE-A carrier with operations in Canada's northern territories and Quebec. Iristel also owns brands such as Sugar Mobile, an Over-the-Top (OTT) app where phone calls and text messages can be transmitted through data, and TDE, a company that offers sale, rental and repair services of telecommunication equipment in Eastern Quebec and Northern New Brunswick.

SOURCE Iristel Inc.

www.iristel.com, [email protected] or call 416-800-0010