Executive Summary: Key Legal and Evidentiary Issues

• Judicial review was sought of a CRA decision denying CRB eligibility for 2019, based on the applicant’s reported income.

• The applicant’s amended 2019 tax return and supporting documents were not accepted due to failure to provide receipts for claimed expenses.

• Legal counsel advised the applicant not to provide requested documentation, which was incorrect and contrary to statutory requirements.

• The court considered whether the CRA’s decision was reasonable and whether procedural fairness was breached due to incompetent legal representation.

• The statutory obligation to provide information under section 6 of the CRB legislation was central to the dispute.

• No costs were awarded; the matter was remanded to a different decision maker for redetermination.

Facts and outcome of the case

Background and facts

The applicant, Jennifer Doheney, is a wellness consultant and yoga instructor who re-entered the workforce as an entrepreneur in 2019. That year, she earned $6,389.02 through short-term contracts for consulting, teaching, and providing virtual yoga and coaching sessions. Her tax filing for 2019, prepared by a third party, deducted expenses that reduced her net income to minus $414. She applied for and received the Canada Recovery Benefit (CRB) from September 27, 2020 to October 9, 2021, and also received the Canada Emergency Response Benefit (CERB) from March 15, 2020 to September 26, 2020. The only issue before the court was her CRB eligibility for 2019.

The CRA audited her CRB eligibility and requested documents to establish she met the $5,000 income requirement. The applicant provided invoices, receipts, and bank statements showing gross income over $5,000 for 2019, but her net self-employment income remained below the threshold due to claimed expenses. After an initial denial by the CRA, her lawyers submitted additional documents and filed an amended 2019 T1 return and T2125 Statement of Business or Professional Activities, now reporting a gross and net business income of $6,389.02. The CRA requested proof of the expenses claimed in the amended return, but her lawyers refused to provide receipts, incorrectly asserting that such documentation was not required because the applicant was not being audited.

Court proceedings and legal issues

The applicant, self-represented at the hearing, sought judicial review of the CRA’s decision. The court considered whether the CRA’s decision was reasonable and whether there was a breach of procedural fairness due to the advice given by the applicant’s lawyers. The court noted that section 6 of the Canada Recovery Benefits Act requires applicants to provide any information requested by the Minister, and that compliance with this requirement is not optional. The court found that the CRA acted properly in requesting proof of expenses and that the applicant’s lawyers’ refusal to comply was legally incorrect. The court also found that the applicant relied on her lawyers’ advice and that this resulted in an inadequate record before the CRA.

Outcome and remedy

The court concluded that the applicant was denied procedural fairness due to incompetent legal representation, which constituted extraordinary circumstances. The application for judicial review was granted, the CRA’s decision was set aside, and the matter was remanded to a different decision maker for redetermination. The applicant was directed to provide the requested proof of expenses for 2019. There was no order as to costs.