Executive Summary: Key Legal and Evidentiary Issues

• Judicial review centered on whether CRA’s denial of COVID-19 benefits met the reasonableness standard.

• Applicant claimed a re-filed tax return should have qualified her for benefits by eliminating business expenses.

• CRA relied on the applicant’s original tax return and her own prior statements about 2019 expenses.

• The court found CRA’s decision justified, transparent, and intelligible under Vavilov standards.

• Procedural fairness claim was rejected due to lack of evidence of actual misadvice from CRA agents.

• No costs were awarded despite the respondent’s request; application dismissed without compensation.

Facts and outcome of the case

Background and dispute

The applicant, Lori Thompson, sought judicial review of the Canada Revenue Agency’s (CRA) decision that found her ineligible for three COVID-19 benefits: the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), and the Canada Worker Lockdown Benefit (CWLB). All three programs required applicants to have earned at least $5,000 in income during 2019, 2020, or another qualifying 12-month period.

Thompson operated a household services business in 2019. Her original tax filing showed gross income of $5,647 but reported $1,675.43 in business expenses, which reduced her net income to $3,971.57—below the eligibility threshold. She later re-filed her 2019 return, removing the expenses and showing her gross and net income both as $5,647.

Despite the re-filing, the CRA denied her benefits, citing her original tax return and personal statements acknowledging those 2019 business expenses. Thompson argued that the CRA acted unreasonably by failing to accept her amended return and claimed she was treated unfairly due to being encouraged by CRA agents to estimate her expenses.

Legal analysis and findings

The court determined that the central issue was whether the CRA’s decision was reasonable under administrative law principles, particularly those outlined in Vavilov. The court emphasized that while re-filed tax returns may be considered, self-reported information is not necessarily conclusive, especially when contradicted by the applicant’s own statements.

The CRA's decision was found to be reasonable, as it was based on the applicant’s previous representations and lacked any satisfactory explanation for the sudden retraction of her claimed expenses. The court also rejected the procedural fairness claim, finding no evidence that the applicant was misadvised by CRA agents.

Outcome and costs

The application for judicial review was dismissed. Although the CRA requested costs, the court found no basis to award them and ruled that the matter would proceed without costs. As a result, the CRA prevailed, and no damages or financial penalties were imposed on the applicant.