Prince – Federal Court determines that CRA had reasonably decided that the taxpayer had provided insufficient backup for his claim of having suffered Pt. XIII withholding

The applicant, a Canadian resident, was assessed further to a CRA audit of his 2006 to 2014 taxation years for failure to include in his income dividends from various Canadian public corporations that were held in two Israeli bank accounts. He applied pursuant to s. 221.2 (following the expiry of the two-year period for requesting a refund of Part XIII tax pursuant to s. 227(6)) for a credit - for Part XIII tax that had allegedly been withheld from those dividends and remitted to CRA - to be applied to the balance owing by him under such assessments.

Ferron J found that the CRA decision-maker had not acted unreasonably in refusing to provide the requested s. 221.2 credit in light inter alia of the following:

• It was not unreasonable for the decision-maker to want to be certain that the alleged sums withheld from the dividend payments had not been subject to more than one request for credit and reimbursement.
• Even if the applicant had actually paid Part XIII tax, this likely would not have been done in the applicant's name, as the Israeli banks did not know that Mr. Prince was a Canadian resident.
• Although CRA had requested that the applicant provide it with NR4 returns (which likely had not been issued to him given that the shares were not held by the applicant directly), the CRA decision-maker had been open to receiving alternative documents such as NR7s, affidavits from the Israeli banks, or any other probative evidence confirming the withholding and remitting of the Part XIII tax – which he did not provide.
• The applicant also admitted that, had he acted sooner, he would have been able to obtain such documents, at least for the period of seven years during which the banks retained their records.
• Furthermore, the CRA decision-maker conducted internal verifications to attempt to locate evidence that Part XIII tax had been remitted to CRA on behalf of the applicant, including various searches in the names of the Israeli banks, some of the Canadian corporations, and any Israeli beneficiary (but not for intermediaries as no names for them had been provided to the decision-maker) for amounts corresponding to those claimed.

Ferron J further stated that “[j]ust because taxpayers are to be given some leeway cannot mean that CRA officials are bound to exercise their discretion to grant credits when the taxpayer has not proven his entitlement, at the risk of granting several credits or refunds for a same amount of taxes paid.”

Neal Armstrong. Summary of Prince v. Canada (Attorney General), 2026 FC 367 under s. 221.2(1).