Executive Summary: Key Legal and Evidentiary Issues

• Judicial review concerned whether the CRA’s fresh decision confirming suspension of the applicant’s EFILE privileges complied with procedural fairness.

• The record showed the applicant continued to electronically file returns for taxpayers the CRA treats as “excluded,” including certain temporary foreign agricultural workers and certain deemed residents, even after warnings and an earlier suspension.

• The CRA based the new decision on “Criterion 10,” tied to activities that previously resulted in suspension or would have led to suspension, relying on subsection 150.1(2) of the Income Tax Act.

• The court held that fairness required notice of the facts said to justify maintaining the suspension and a reasonable opportunity to respond, which the Proposal Letter and follow-up calls provided.

• Allegations of confidentiality breaches, conflicts of interest, reputational harm, and delay were found not material to EFILE suitability and did not establish a breach of procedural fairness.

• The court found the CRA’s reasoning to be an “internally coherent and rational chain of analysis,” upheld the application of Criterion 10, and dismissed the application with no order as to costs.

Facts and background

The case is an application for judicial review brought by Ma. Maribel Acevedo Virgen against the Attorney General of Canada. The Canada Revenue Agency suspended the applicant’s participation in its electronic filing program (EFILE) in October 2021. In March 2022, the CRA confirmed that suspension in a first decision based on “Criterion 13,” but that decision was set aside by the Federal Court in November 2022 with an order for redetermination by a different decision maker. A new appeals officer, who had not participated in the first decision, invited new submissions, which the applicant sent by fax and in a 199-page package received by the CRA on April 8, 2024. On May 30, 2024, the appeals officer issued a proposal letter stating that the review focused on the applicant’s continued use of EFILE to file returns for individuals the CRA considers excluded from electronic filing, including certain temporary foreign agricultural workers and certain deemed residents, and inviting further submissions by June 28, 2024.

Procedural steps and parties’ positions

On June 21, 2024, the appeals officer and the applicant spoke by telephone. According to the officer’s notes, he advised that his review was not based on Criterion 13, but on concerns that she continued to file electronically for excluded taxpayers, and he reiterated the June 28, 2024 deadline for additional submissions. The applicant did not provide further supporting documents by that date but wrote on June 24, 2024, requesting a 30-day extension, and on July 26, 2024, asking that new information be accepted, that her EFILE privileges be reinstated, and that any decision be postponed until a related Tax Court ruling. On August 20, 2024, the appeals officer telephoned the applicant, confirmed she had not submitted additional documents between the June 24 and July 26 letters, and advised that the decision had been sent for review and that the file would be closed. The appeals manager then issued the August 21, 2024 decision confirming the suspension and enclosing a working paper addressing the April 8, 2024 submissions. In this judicial review, the applicant argued there were breaches of procedural fairness, raised allegations of confidentiality breaches, conflicts of interest with a competitor, reputational harm, and delay, and sought reinstatement of EFILE privileges, declarations of wrongdoing, costs, and orders affecting third parties.

Policy framework and EFILE criteria

The decision explains that subsection 150.1(2) of the Income Tax Act authorizes the Minister of National Revenue to specify criteria for electronic filing and that CRA program materials list categories of taxpayers for whom an EFILE participant may not file electronically, including some temporary foreign agricultural workers and certain deemed residents. The CRA stated that the applicant’s earlier EFILE account (Q9080) was suspended after it determined she had electronically filed returns for excluded individuals; that in March 2020 she was told verbally and in writing that she could not use EFILE for those taxpayers and was directed to the CRA’s published list of exclusions; that the CRA then conditionally approved a new EFILE account (V7197); and that it later determined she continued to file electronically for excluded individuals. On this basis, the appeals manager applied “Criterion 10,” which concerns activities that resulted in the suspension of electronic filing privileges in a previous year, or that would have led to suspension if discovered, and concluded the applicant did not meet the suitability criteria to participate in EFILE.

Findings on procedural fairness

The court applied the Baker factors and held that the duty of fairness in this context fell at the lower end of the spectrum, noting that EFILE participation is a discretionary administrative privilege under subsection 150.1(2) and that the applicant could still prepare and submit paper returns, including for many clients who were required to file on paper. The court found that the CRA met its duty of fairness. The proposal letter and the June 21, 2024 telephone call gave the applicant notice that the ongoing concern was her continued filing for excluded individuals, and fairness required notice of those facts rather than advance citation of the internal label “Criterion 10.” The applicant had a reasonable opportunity to respond through her faxed and mailed submissions and the invitation to provide further documents by June 28, 2024, and the appeals officer later confirmed whether anything additional had been submitted before closing the file. The court held that the CRA was not required to refer to every document the applicant cited, that the material the applicant relied on relating to conflicts of interest, audits, and reputational harm was not material to EFILE suitability, and that the delay between the first and second decisions did not cause prejudice justifying setting aside the decision. Events during cross-examination in this proceeding were found not to affect the fairness of the administrative process.

Assessment of reasonableness and outcome

The court reviewed the appeals manager’s substantive findings on a standard of reasonableness, noting that decisions regarding access to the EFILE program are reviewed on that standard. It accepted that under subsection 150.1(2) the Minister may specify written criteria, that the CRA had published written criteria and exclusions, and that the decision traced a factual path: an earlier suspension of the applicant’s EFILE account for electronically filing for excluded taxpayers, a March 2020 warning and direction to the exclusion list, conditional acceptance of a new account, and a determination that she continued to file for excluded individuals. The court held that the appeals manager’s conclusion that this conduct satisfied Criterion 10 and justified maintaining the suspension was an “internally coherent and rational chain of analysis” and that the decision was intelligible, justified, and responsive to subsection 150.1(2) and the EFILE suitability criteria. It rejected the argument that the CRA could not move from Criterion 13 to Criterion 10 after the first decision was set aside and found that the applicant’s policy objections and broader allegations were not determinative of suitability. The court dismissed the application for judicial review, confirmed that the suspension of the applicant’s EFILE privileges remained in place, and made no order as to costs.