Ottawa admitted the decision was flawed. The court still wouldn't finish the job
A Federal Court has ordered the CRA to redo a tax-relief decision it made against LG Electronics Canada, but refused to script the outcome.
The Federal Court's July 3, 2026 ruling, LG Electronics Canada Inc. v. Canada (Attorney General), 2026 FC 895, granted the company's application for judicial review on consent and sent the file back to a different delegate at the Canada Revenue Agency.
At issue was the CRA's refusal to grant LG full relief from interest tied to an advance pricing arrangement, a program covering inter-company transactions between LG and its foreign parent. LG, a Canadian-resident distributor whose parent company sits in Korea, used a bilateral version of the arrangement handled by tax authorities in Canada and South Korea.
The company entered the program in June 2009 to cover the purchase and sale of goods with its parent. The bilateral arrangement was tentatively completed in December 2015, and the full process wrapped up in October 2017. The CRA reassessed LG in November 2018 based on that arrangement.
LG asked for interest and penalty relief in February 2017, and again in March 2019 over alleged errors in how the CRA processed its advance payments. The agency denied both requests in August 2019. After a second review, the CRA delivered its decision on June 23, 2025. It cancelled some arrears interest on the 2012 to 2015 tax years but refused further relief, finding no undue delay on the agency's part in completing the arrangement.
Both sides agreed that decision could not stand. The government conceded it rested on inaccurate findings of fact and should be set aside. The only real fight was over what should happen next.
LG wanted the court to hand the new decision-maker a fixed set of facts, allow fresh submissions within 30 days, and impose a 30-day deadline for the redetermination. The government resisted, arguing that pinning down the facts and the timing would strip the CRA of its role as the decision-maker.
Justice D'Agostino sided largely with the government. She agreed to let LG file further submissions within 30 days but declined to dictate the facts or set a redetermination deadline, holding that the merits belong to the agency, not the court. She noted the case could not be described as "an endless merry-go-round of judicial reviews and subsequent reconsiderations."
The court gave LG until August 4, 2026 to file its submissions. No costs were awarded.
For advisors and their corporate clients, the ruling is a reminder that winning a judicial review does not mean winning the tax fight. Even when the CRA admits its own decision was flawed, courts will usually return the matter to the agency rather than decide it, leaving the taxpayer to make its case again.
