Few areas of Canadian tax practice cause more confusion than the difference between a tax assessment you can appeal to the Tax Court of Canada and a discretionary relief decision the Minister makes under the taxpayer-relief provisions. The leading decision drawing that line for interest relief is Bozzer v. Canada (National Revenue), 2011 FCA 186, a Federal Court of Appeal judgment that reshaped how the Canada Revenue Agency applies the ten-year limitation period in subsection 220(3.1) of the Income Tax Act. For any taxpayer carrying old tax debt on which interest keeps compounding, Bozzer is the case that decides whether relief is even on the table.
The decision matters because, before Bozzer, the CRA routinely refused to cancel interest the moment the underlying tax year fell outside a ten-year window — even where the interest itself had built up recently. The Court of Appeal rejected that reading. Understanding why is essential before anyone files a relief request or assumes the door has closed.
The facts
Ronnie Louis Bozzer had tax debts arising from his 1989 and 1990 taxation years. As is common with unpaid balances, those debts continued to attract arrears interest that compounded year after year. By the time Mr. Bozzer applied to the CRA in 2005 for relief from that interest under the taxpayer-relief (then called "fairness") provisions, a very large portion of what he owed was interest rather than the original tax.
The CRA refused. Its position was that subsection 220(3.1) only let the Minister waive or cancel interest "in respect of" a taxation year that fell within the ten calendar years preceding the application. Because Mr. Bozzer's debts originated in 1989 and 1990 — well outside any ten-year window measured from 2005 — the CRA took the view that it had no authority to grant relief at all. Mr. Bozzer sought judicial review in the Federal Court, lost, and appealed to the Federal Court of Appeal.
The issue
The appeal turned on a single question of statutory interpretation. Subsection 220(3.1) lets the Minister, on application made within ten years, "waive or cancel all or any portion of any penalty or interest otherwise payable" by a taxpayer "in respect of [a] taxation year." The fight was over what the ten-year limit attaches to:
- The CRA's "debt-origin" reading: relief is available only if the taxation year that generated the underlying debt falls within the ten years before the application. On that view, a debt from 1989 is permanently beyond relief once 1999 passes, no matter how recently the interest accrued.
- Mr. Bozzer's "interest-accrual" reading: relief is available for any interest that accrued during the ten taxation years preceding the application, regardless of how old the underlying tax debt is.
The distinction is not academic. Interest on a stale debt keeps compounding indefinitely. Under the CRA's reading, the older the debt, the more interest a taxpayer accumulates and the less able they are to obtain any relief — precisely the opposite of what a fairness provision would seem to intend.
What the Court decided (and why)
The Federal Court of Appeal — Justices Sharlow, Trudel and Stratas, with reasons written by Stratas J.A. — allowed the appeal and adopted Mr. Bozzer's interest-accrual interpretation. The Court held that the Minister had authority to cancel interest on Mr. Bozzer's 1989 and 1990 tax debts to the extent that the interest accrued during the ten taxation years preceding his application. The matter was sent back to the CRA to reconsider on that correct legal basis.
Several threads of the Court's reasoning are worth drawing out:
- The provision is about interest, not the original tax year. The Court read the words "interest … payable … in respect of [a] taxation year" as meaning interest that accrued in a given year on a tax debt. The ten-year limit therefore measures the period over which accrued interest can be relieved — not a deadline tied to the age of the debt.
- Purpose pointed the same way. The Court emphasized the relief provision's remedial, fairness-oriented purpose. It illustrated the point with the example of a taxpayer prevented by serious illness or injury from dealing with the CRA for years: the debt-origin reading would arbitrarily shut such a person out simply because the debt was old, defeating the purpose of the provision.
- This was a question of correctness. Because the dispute was about the proper interpretation of the Minister's statutory authority, the Court treated it as a question of law to be decided correctly, rather than deferring to the CRA's administrative view of its own powers.
A structural point sits underneath the whole case and is easy to miss. A taxpayer-relief decision under subsection 220(3.1) is not an assessment. It cannot be appealed to the Tax Court of Canada. The Tax Court's jurisdiction is over the correctness of assessments — whether tax, penalties and interest were properly imposed under the Act. A discretionary refusal to waive validly-imposed interest is challenged instead by judicial review in the Federal Court, which is the path Mr. Bozzer took. Bozzer is, in that sense, a clean illustration of the limits of the Court versus the Minister: the Court does not substitute its own view of how much relief is deserved, but it will hold the Minister to a correct understanding of the statutory power and send the file back where that power was misread.
Why this decision matters / practical takeaways
For taxpayers and advisors, Bozzer changed the practical map for interest relief. The CRA subsequently revised its taxpayer-relief guidance (Information Circular IC07-1) to reflect the decision. The key takeaways:
- Old debt does not mean no relief. If a tax debt arose more than ten years ago but interest has continued to compound, you may still apply to cancel the interest that accrued within the ten calendar years before your application. The age of the original assessment is not, by itself, a bar.
- Know which forum you are in. Relief from penalties and interest under subsection 220(3.1) is a discretionary application to the Minister, reviewed by the Federal Court — not an appeal to the Tax Court. Disputes about whether a penalty or assessment was correctly imposed in the first place (for example, a gross-negligence penalty or a net-worth reassessment) are Tax Court matters with their own deadlines and burden-of-proof rules.
- The ten-year window is rolling and unforgiving at the back end. Each passing year drops the oldest year out of reach. Interest that accrued eleven years before an application cannot be recovered later. Filing promptly preserves the most relief.
- Build the record for discretion, not just the law. Bozzer settled the Minister's authority to grant relief; it did not assure any taxpayer will receive it. Relief still depends on the facts — circumstances beyond the taxpayer's control, CRA delay or error, or inability to pay — and on a well-documented application. A favourable legal framework is only the starting point.
- A weak relief decision can be challenged. Where the CRA misapplies the law or fails to grapple with the taxpayer's actual circumstances, judicial review in the Federal Court remains available, and the typical remedy is to send the decision back for reconsideration on the correct basis.
How Barrett Tax Law approaches taxpayer-relief and penalty/interest files
Files in this area succeed or fail on two things: choosing the right forum and assembling the right record. Our process begins by separating the questions. If the real dispute is whether a penalty or reassessment should have been imposed at all, that belongs in the objection-and-appeal stream and ultimately the Tax Court of Canada — and the deadlines there are strict. If the tax is validly owing but the penalties and interest are crushing, the path is a taxpayer-relief application to the CRA, with Federal Court judicial review held in reserve if the Minister's decision misreads the law or ignores the facts.
From there, we map the rolling ten-year window so nothing valuable expires, document the circumstances that engage the Minister's discretion, and frame the request around the relief actually available under provisions like subsection 220(3.1). Where a refusal does not hold up, we assess the merits of judicial review. The same disciplined approach carries over to related files — gross-negligence penalty disputes, net-worth audits, audit representation, and voluntary disclosures — each of which can generate the very penalties and interest a relief application later seeks to soften. If you are weighing your options, we offer a free, no-obligation consultation to talk through which route fits your situation. You may also find our guides on evidence and burden of proof in the Tax Court and how CRA payment arrangements work helpful background.
You can read the full decision on CanLII: Bozzer v. Canada (National Revenue), 2011 FCA 186.
This article is commentary on a public court decision and is general information only. It is not legal advice, no solicitor-client relationship is created by reading it, and outcomes depend on the specific facts of each case. For advice about your situation, speak with a Canadian tax lawyer.
Frequently asked questions
What did Bozzer v. Canada actually decide?
In Bozzer v. Canada (National Revenue), 2011 FCA 186, the Federal Court of Appeal held that the ten-year limitation period in subsection 220(3.1) of the Income Tax Act runs from when interest accrues, not from the year the underlying tax debt arose. The Minister can therefore cancel interest that accrued within the ten years before a relief application, even if the original tax debt is older. The appeal was allowed in the taxpayer's favour, and the matter was sent back to the CRA to be reconsidered on the correct legal basis.
Can I get relief on interest for a very old tax debt?
Possibly. After Bozzer, the fact that a debt arose more than ten years ago is not, by itself, a bar to relief. You may apply to cancel interest that accrued during the ten calendar years before your application, regardless of how old the underlying debt is. Whether relief is actually granted still depends on the facts and the strength of your application, because the Minister's discretion remains a separate question from the Minister's authority to grant relief.
Is a taxpayer-relief decision appealed to the Tax Court of Canada?
No. A decision under subsection 220(3.1) to waive or cancel penalties and interest is a discretionary decision of the Minister, not an assessment. It cannot be appealed to the Tax Court of Canada. The way to challenge an unreasonable or legally flawed relief decision is judicial review in the Federal Court, which is the route the taxpayer took in Bozzer. The Tax Court's jurisdiction is over whether tax, penalties and interest were correctly imposed in the first place.
What is the difference between the Court's role and the Minister's discretion here?
The Minister has the discretion to decide whether to grant relief and how much. The Court does not substitute its own view of what relief a taxpayer deserves. What the Court can do, as in Bozzer, is hold the Minister to a correct interpretation of the statutory power and, where the Minister misreads or misapplies that power, send the decision back to be made again on the proper basis. The dispute in Bozzer was about the scope of the Minister's authority, which the Court decided as a question of law.
How long do I have to apply for relief from penalties and interest?
An application for relief under the taxpayer-relief provisions must generally be made within ten years. After Bozzer, that window is more accurately understood as a rolling period that lets you seek relief for interest accrued in the ten calendar years before your application. Because each passing year drops the oldest year out of reach, applying promptly preserves the most relief. Interest that accrued more than ten years before an application generally cannot be recovered.
Does Bozzer mean the CRA will automatically cancel my interest?
No. Bozzer confirmed that the Minister has the authority to grant relief for recently accrued interest on older debts, but it did not decide that any particular taxpayer must receive relief. Relief is discretionary and depends on factors such as circumstances beyond your control, CRA delay or error, or genuine inability to pay, supported by a well-documented application. Bozzer sets the legal framework; the outcome still turns on your specific facts.