Judge notes Tax Court can’t decide how much CRA should have paid its employee
In a case where an employee assailed both the conduct of the Canada Revenue Agency (CRA) as his employer and a reassessment relating to his employment income, the Tax Court of Canada found that some issues raised exceeded its jurisdiction.
In Seunath v. The King, 2026 TCC 140, the judge went over the facts as testified by the appellant, who had begun working for the CRA in January 2003. He said he served as an auditor and as an appeals officer over the years.
The appellant took medical leave at the beginning of 2021 and pre‑authorized vacation leave from June 11, 2021, to July 9, 2021.
As of July 12, 2021, the CRA placed the appellant on involuntary unpaid medical leave, denied him access to its computer systems, and prevented him from resuming work until he passed an occupational fitness assessment.
For 2021, the appellant reported employment income of $43,613.58, $40,163.97 of which comprised employment income for the CRA.
Employment dispute arises
The appellant and his supervisors disputed the hours he worked from May 17, 2021, to June 10, 2021, for which period he had received compensation.
The appellant asserted that he properly completed time sheets reflecting that he was in training within that period. His supervisors re‑coded the time sheets to show unauthorized leave without pay from May 17, 2021, to June 10, 2021.
In May 2023, the appellant ceased his unpaid leave and returned to work. At that point, the CRA clawed back amounts in connection with the alleged overpayment of compensation.
Proceeding brought by employee
Before the Tax Court, the appellant challenged the minister of national revenue’s assessment of tax liability relating to his employment income for the 2021 tax year.
The appellant also requested declaratory relief and damages arising from his managers’ decision to impose involuntary and unpaid leave in 2021.
According to the appellant, the minister underassessed his 2021 tax liability.
The appellant argued that the amount of $40,163.98 did not reflect the employment income he got from the CRA for that year. He claimed that he instead received his annual salary of $70,749. He said the CRA stole from him, given the shortfall.
The appellant informed the Tax Court that he was pursuing the employment issues before the Ontario Superior Court of Justice and had appealed from an interlocutory matter to the Ontario Divisional Court.
Tax Court denies appeal of assessment
The Tax Court dismissed the appeal of the minister’s reassessment under the Income Tax Act, 1985, of the appellant’s 2021 tax year, without costs.
The court saw no facts supporting that the minister had incorrectly assessed tax under s. 5 of the Income Tax Act.
Taxpayer’s employment income
Given that the evidence could not establish how much employment income the appellant had received from the CRA in 2021, the Tax Court held that he failed to prove he had received less or more than $40,163.97 in employment income from the CRA that year.
The court clarified that it was supposed to address how much the appellant had actually received in 2021, not how much he was entitled to receive that year.
The court concluded that the appellant’s employment income for the CRA in 2021 was the amount he had received from the employer that year.
Issues beyond Tax Court jurisdiction
“This is a unique case, wherein the impugned conduct is not just that of the CRA as the agent responsible for the Minister’s assessment of tax, but also the CRA as the Appellant’s employer,” wrote Justice Jenna Clark for the court.
The Tax Court explained that it lacked the jurisdiction to grant declaratory relief, to award damages, or to decide how much the CRA, as the appellant’s employer, should have paid him.
The court did not consider the minister’s or their delegate’s conduct relevant to the issues within its jurisdiction.
Previous Tax Court cases
Here are some other recent decisions from the Tax Court of Canada.
Upon seeing inadequate evidence for a due diligence defence, the Tax Court issued a July 31 decision denying the appeal of a taxpayer, who had earned income as a movie extra, against the assessment of a penalty under s. 163(1) of the Income Tax Act, 1985, for a repeated failure to report total income.
The Tax Court made a July 22 decision finding that an office assistant had not engaged in pensionable or insurable employment with a chiropractic and acupuncture clinic in Ontario under the Canada Pension Plan and the Employment Insurance Act within the relevant period.
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