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Published: October 11, 2022

Last Updated: October 28, 2022

Taxpayer sought damages against the CRA for sale of property

In Oddi v CRA, Mr. Alberta Oddi (the “Taxpayer”) operated an illegal marijuana growing operation on a farm property that he and his spouse had purchased from 2002 to 2005. However, the Taxpayer reported either nil income or $1 income for the taxation years from 2002 to 2007. In 2009, the CRA reassessed the Taxpayer for those years. The CRA then issued related notices of assessment for GST but failed to send these notices to the correct address, and the Taxpayer didn’t receive them.

After the Taxpayer filed notices of objection to the income tax reassessments, the CRA allowed the Taxpayer’s objection in part and reduced his personal income tax debt by issuing reassessments. The Taxpayer and his wife then refinanced their farm property with a third-party lender in September 2012. The CRA subsequently registered two liens against the farm regarding the Taxpayer’s income tax and GST debts. The third-party lender then commenced power of sale proceedings for the farm property which resulted in the lender selling it in December 2014 after the Taxpayer failed to make the required monthly payments.

The Taxpayer argued he couldn’t secure financing due to the CRA’s registered liens and commenced an action against the CRA seeking damages for alleged negligence, fraud, and a violation of his rights under section 7 of the Charter of Rights and Freedoms. The CRA brought a motion for summary judgment that there was no genuine issue for trial. The Federal Court reviewed the facts and issues and sided with the CRA.

The Federal Court agreed with the CRA that there was no genuine issue to be tried

Pursuant to Rules 213 to 215 of the Federal Courts Rules, SOR/98-106, a summary judgment is intended to allow the Federal Court to summarily dispense with cases that should not proceed to trial because there is no genuine issue to be tried.

There were specifically five issues at trial:

  1. Whether the assessments and reassessments of the Taxpayer’s personal income tax and GST were valid and binding;
  2. Whether the CRA’s collection of the Taxpayer’s debts was proper and valid;
  3. Whether the cause of action in negligence should be dismissed;
  4. Whether the cause of action in fraud should be dismissed; and
  5. Whether the claim for damages on the basis of an alleged breach of s.7 of the Charter should be dismissed.

The CRA’s assessments and reassessments under the Income Tax Act and the Excise Tax Act were valid and binding

The Federal Court found that the Taxpayer had a statutory right to object to the 2010 T1 reassessments issued, but he chose not to do it. As for the GST reassessments, although the CRA sent them to the wrong address, the court found that the CRA promptly rectified its error and issued new reassessments by reducing the Taxpayer’s GST debt including interest.

The Taxpayer chose not to bring a judicial review application to lift the CRA liens

The CRA argued that the Taxpayer could bring an application for judicial review of the CRA’s decision not to lift the liens. The Federal Court found that the two liens were validly registered on the title of the Taxpayer’s farm property. Furthermore, the Taxpayer and his Canadian tax litigation lawyer were aware of the GST debt before the court granted the CRA the certification of the GST, because they inquired of the CRA whether the GST debt could be appealed. In fact, the CRA also provided evidence that both the Taxpayer and his Canadian tax lawyer advised the CRA collections division that he would be paying the personal income tax and GST debts. The court, therefore, found the CRA exercised its discretion to collect the Taxpayer’s debts in a proper way.

There was no causation between the sale of the farm property and damages

The court reviewed the evidence and found that the loss of the farm property was a result of the Taxpayer’s poor management of funds and his failure to pay his mortgage payments. Therefore, there was no causation between the loss of the property and any action of the CRA. The court also ruled the Taxpayer’s allegation of fraud was unfounded because an incorrect tax assessment was not a legitimate basis to assert a claim of fraud, and the CRA indeed corrected its error promptly once it realized its own mistake. There was also insufficient evidence to demonstrate the CRA’s actions rose to the level of depriving the Taxpayer of his Charter right to security of the person.

Pro tax tips – seek professional tax advice to understand all your options

In this case, the Taxpayer might have been able to stop the CRA from selling his farm property if he had chosen to file a judicial review application when the CRA refused to lift its liens against his farm property. Unfortunately, neither he nor his Canadian tax litigation lawyer filed the application, and therefore the court determined the loss of his property was due to the Taxpayer’s own fault. The CRA’s collection powers may seem unfair to taxpayers, but its powers were intended by the legislation. Therefore, it is highly recommended for a taxpayer to seek professional advice from an experienced Canadian tax lawyer in order to object to an assessment or reassessment, or appeal to the Tax Court.


What is a summary judgment?

A summary judgment is a motion brought by one party against another to have a case decided summarily without going to trial.

What is a judicial review application?

Judicial review is a process by which courts make sure that the decisions of administrative bodies (such as the CRA) are fair, reasonable, and lawful.

What collection powers does the CRA have?

The Income Tax Act gives the CRA collection offers a variety of powers that often take taxpayers by surprise. Generally speaking, they have the following powers:

  1. Garnish amounts owing to a taxpayer by issuing a requirement to pay to a third-party to make a payment directly to the CRA instead of the taxpayer.
  2. Seizure of accounts receivable to a taxpayer by ordering a third-party to pay the CRA directly.
  3. Bank account seizures.
  4. Register a certificate against the taxpayer for the outstanding debt plus any penalties and interest.
  5. Secure the debt owed by a taxpayer by way of placing a lien on the taxpayer’s property.

For more information, please refer to our article about CRA’s collections powers at CRA Collections Powers | Toronto Tax Lawyer (


"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

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