Executive Summary: Key Legal and Evidentiary Issues

• CRA’s decision was found unreasonable because it failed to assess the applicant’s net self-employment income over the alternative 12-month period before her first CRB application, as required by the Canada Recovery Benefits Act.
• Reliance on 2019 and 2020 T1 tax data showed net self-employment income below $5,000, but the record contained no analysis of whether the statutory $5,000 threshold was met in the 12 months preceding the CRB claim.
• Extra-record materials about homelessness and mental illness filed by the self-represented applicant were ruled inadmissible on judicial review as they were not before CRA and did not fall within any recognized exception.
• Arguments that CRA’s communications suggested gross rather than net self-employment income did not displace the clear statutory requirement that CRB eligibility be based on net income under section 3 of the CRB Act.
• Complaints grounded in the Taxpayer Bill of Rights were rejected because that document is a non-binding service pledge with no enforceable legal rights in Federal Court.
• The Court granted judicial review, ordered redetermination by a different CRA agent, and awarded no costs, emphasizing that the remedy was procedural rather than a direct grant of benefits.

Facts of the case

Martha Lescher, a self-represented taxpayer, applied for and received the Canada Recovery Benefit (CRB) from February 28, 2021 to October 23, 2021. The CRB was a temporary income-support program designed in response to the COVID-19 pandemic and administered by the Canada Revenue Agency (CRA) under the Canada Recovery Benefits Act. To receive CRB, applicants were required to meet several statutory conditions, including a minimum income requirement in a defined reference period. After initially paying CRB to Ms. Lescher, CRA initiated a post-payment eligibility review. On March 31, 2023, CRA wrote to her requesting documentation to confirm that she had satisfied the income threshold. She provided the requested materials, which CRA in fact received on June 19, 2023. However, the CRA employee handling her file mistakenly believed that no documentation had been supplied, an error that affected the subsequent decision-making process. On August 8, 2023, CRA issued a first decision letter informing Ms. Lescher that she was ineligible for CRB. The letter stated she had not earned more than $5,000 in 2019, 2020, or in the 12 months before her CRB application. Based on this conclusion, CRA took the position that she had not met the minimum income requirement and was not entitled to the benefits she had received.

CRA decisions and procedural history

Following the August 2023 letter, Ms. Lescher requested that CRA review its decision and provided additional documentation over the ensuing months in support of her position that she had, in substance, qualified for CRB. She also spoke with a CRA agent by telephone on March 10, 2025, further explaining her circumstances and contesting the ineligibility finding. CRA conducted an internal reconsideration and on March 26, 2025, issued a second decision letter. This March 2025 decision maintained the earlier conclusion: that Ms. Lescher was ineligible for CRB because she had not earned more than $5,000 in 2019, in 2020, or in the 12 months prior to her CRB application. It did not provide any detailed analysis of the 12-month period or when it began. This second decision became the subject of her application for judicial review to the Federal Court. In the course of the court proceeding, the Respondent pointed out that the proper respondent under the Federal Courts Rules should be the Attorney General of Canada, not the “Canada Revenue Association” or CRA in its administrative name. The Court accordingly amended the style of cause so that the Attorney General of Canada was named as the sole respondent. The hearing of the judicial review took place by videoconference in Vancouver, British Columbia, on November 12, 2025, with Ms. Lescher representing herself and counsel Kegan Chang appearing for the Attorney General of Canada.

Statutory framework and policy terms

The key statutory instrument in this case was the Canada Recovery Benefits Act. Under paragraph 3(1)(d) of the Act, an individual could qualify for the CRB if they had at least $5,000 in income from employment, self-employment, or certain other specified sources. Importantly, subsection 3(2) defined self-employment income as net self-employment income, not gross business receipts. This meant that for self-employed applicants, deductible expenses had to be subtracted from gross revenue to determine the qualifying amount. The Act also set out alternative qualifying periods. An applicant could meet the $5,000 threshold by earning that amount (a) in 2019, (b) in 2020, or (c) in the 12 months immediately preceding the date of their first CRB application. Each of these timeframes was a distinct route to eligibility, and CRA was required to consider them all when making an entitlement decision. In Ms. Lescher’s case, CRA relied on its T1Case notes, which recorded net self-employment income of $1,733.92 in 2019 and $3,459.19 in 2020, figures that clearly fell below the statutory $5,000 threshold. However, the documentary record did not show any calculation or analysis of whether she might have met the $5,000 requirement within the 12 months before she first applied for CRB. There was also no clear evidence in the record of the exact date on which that first application was filed, which made it impossible to confirm whether CRA had properly identified and assessed the relevant 12-month window. Earlier jurisprudence such as Morozova v Canada (Attorney General) had confirmed that these statutory provisions had been consistent from the CRB’s inception and that CRA was correct to focus on net rather than gross self-employment income. The Court therefore accepted CRA’s use of net income but scrutinized whether the agency had fulfilled its duty to apply the complete set of statutory criteria, including the alternative 12-month period.

Procedural fairness and taxpayer rights

On judicial review, Ms. Lescher raised concerns not only about the outcome but also about the fairness of the process. She argued that CRA’s website and the CRB application materials did not originally clarify that eligibility would be judged on net self-employment income rather than gross revenue. She said that, had she understood the statutory definition, she may not have reasonably believed she qualified. The Court noted that the clarity of CRA’s public communications regarding CRB was “not a model of clarity.” However, it held that the governing legal definition of self-employment income is contained in the CRB Act itself, and applicants are presumed to know the law even if they misunderstand its meaning. Relying on decisions such as Dekany v Canada (Attorney General), as well as Khosroabadi v Canada (Attorney General) and Morozova, the Court held that communications or forms produced by CRA cannot override the statutory text. The agency remains bound by Parliament’s definition of net self-employment income. Ms. Lescher also complained that CRA’s service fell short of the standards articulated in the Taxpayer Bill of Rights, particularly regarding delays, professionalism, and the mistaken assumption that her documents had not been received. The Court examined the legal status of the Taxpayer Bill of Rights, referring to Olivet v Canada (Attorney General), Maloney v Canada (Attorney General), and El-Nakady v Canada. It concluded that the Taxpayer Bill of Rights is an internal administrative guide, essentially a service pledge, and does not confer legally enforceable rights that the Federal Court can directly uphold. Any grievances about the quality of CRA service must be pursued through the complaint mechanisms described in that document, not via judicial review based on the Bill of Rights itself.

Court’s analysis on reasonableness and evidentiary record

The Court identified the applicable standards of review. Substantive CRB eligibility determinations by CRA are reviewed for reasonableness, as set out in cases like Coscarelli v Canada (Attorney General), while allegations of procedural unfairness attract a correctness-like approach, in line with Canadian Pacific Railway Company v Canada (Attorney General). The core of the Court’s substantive analysis focused on whether CRA had reasonably applied the CRB Act’s income requirement to Ms. Lescher’s situation. The T1Case notes clearly showed that her net self-employment income for 2019 and 2020 was below $5,000, and the Court accepted that CRA was correct to use net income figures. However, the Court found a critical gap in CRA’s reasoning: there was no evidence that any officer had assessed whether she might have met the $5,000 threshold in the 12 months before her first CRB application. The record did not identify the date of that first application, and neither the respondent’s materials nor the affidavit from the CRA decision maker, Mark Day, addressed this point. Without knowing the start and end points of the relevant 12-month period, CRA could not have properly evaluated her income during that timeframe. The decision letter asserted that she did not satisfy the income requirement for “2019, 2020, or the 12 months prior” to application, but the Court found that this conclusion was unsupported by evidence in the file. On judicial review, Ms. Lescher had attempted to introduce additional materials—two website links about the social costs of homelessness and mental illness—to contextualize her situation. The Court, applying the principles from Association of Universities and Colleges of Canada v Canadian Copyright Licensing Agency (Access Copyright), ruled that these materials were inadmissible. Judicial review is generally confined to the record before the original decision maker, subject only to limited exceptions (for instance, to show a lack of jurisdiction or procedural unfairness). The applicant’s materials did not fall within those exceptions and, in any event, were not relevant to the statutory income criteria at issue.

Ruling and overall outcome

In the end, the Court concluded that CRA’s March 26, 2025 decision was unreasonable because the agency failed to address a mandatory component of the statutory eligibility test: whether Ms. Lescher had at least $5,000 in net self-employment income in the 12 months prior to her first CRB application. This omission meant the decision did not reflect a full and intelligible application of the Canada Recovery Benefits Act to the facts of her case. The Court therefore granted the application for judicial review and ordered that her CRB entitlement be reconsidered by a different CRA agent. It also formally amended the style of cause to name the Attorney General of Canada as the proper respondent and declined to award costs, noting that Ms. Lescher appeared on her own behalf. As a result, the successful party in the Federal Court proceeding was Ms. Lescher, but the remedy was strictly procedural: the matter was sent back for redetermination rather than an order awarding benefits or damages. The judgment did not fix any specific sum payable to her, and because neither CRB amounts nor any costs or damages were ordered, the total amount granted in favour of the successful party cannot be determined from this decision.