Case arose from reassessment of taxpayer according to advance pricing arrangement
Upon the parties’ consent, the Federal Court set aside a decision by a delegate of the minister of national revenue that refused LG Electronics Canada, Inc.’s request for interest relief under s. 220(3.1) of the Income Tax Act, 1985.
In LG Electronics Canada Inc. v. Canada (Attorney General), 2026 FC 895, the applicant was a corporation residing in Canada and a distributor within a multinational group of companies that developed technology and manufactured consumer electronics and commercial products.
In June 2009, LG applied to the advance pricing arrangement (APA) program to cover intercompany transactions between LG and its foreign parent company, which resided in Korea, regarding the purchase and sale of tangible goods.
The APA with the minister involved a bilateral APA (BAPA) with tax authorities in Canada and South Korea, tentatively concluded in December 2015. The APA process wrapped up in October 2017.
In November 2018, the minister reassessed LG under the BAPA and the APA.
On Feb. 6, 2017, LG requested interest and penalty relief in connection with the APA program. On Mar. 5, 2019, LG sought interest and penalty relief for alleged processing errors in its advanced payments to the Canada Revenue Agency (CRA).
On Aug. 13, 2019, the minister denied both requests for relief. LG asked for a second review.
In a decision conveyed on June 23, 2025, the minister’s delegate cancelled the arrears interest assessed on the 2012–15 taxation years from Dec. 16, 2016, to June 27, 2018. However, the delegate refused to grant further relief, as LG failed to identify the CRA’s undue delays in completing the APA.
LG applied for judicial review of the delegate’s decision.
The parties agreed that the court should set aside the decision, which was unreasonable and contained inaccurate factual findings, and remit it to another delegate. However, the parties disagreed on the proper further relief.
The respondent challenged some of LG’s requested relief, which asked the court to:
- Give directions determining factual findings for the different delegated decision-maker
- Permit LG to make fresh submissions within 30 days
- Require a redetermination within 30 days from the receipt of LG’s further submissions
Decision set aside
The Federal Court granted the judicial review application by consent of the parties. Thus, the court set aside the decision and returned the matter to a different delegate of the minister for redetermination after LG has an opportunity to provide additional submissions to the CRA within 30 days.
The court declined to issue the directions or to require a redetermination within 30 days from the receipt of LG’s further submissions.
“I appreciate that it has been a long process, but the circumstances cannot be characterized as an endless merry-go-round of judicial reviews and subsequent reconsiderations,” wrote Justice Giuseppina D’Agostino.
The court found no exceptional circumstances to exercise its discretion to issue directions making determinations of factual findings or dictating how the decision-maker should deal with evidence.
The court also saw no clear evidence or jurisprudence supporting LG’s suggested deadline for redetermination.
