ST. JOHN'S, N.L. - East Coast fishermen who fought a long court battle to recoup tax overpayments won't get interest dating back to the start of their dispute on refunds worth a total of about $20 million.
More than 754 fishermen in Newfoundland, Labrador and along Quebec's north shore triumphed in a Federal Court ruling last May that accused the Canada Revenue Agency of unfair treatment. Ottawa chose not to appeal the judgment.
The Federal Court found that some fishermen overpaid tax on licence buyouts as the tax agency "gave different and contradictory advice and opinions" on how that income should be treated.
Refund cheques ranging from a few thousand dollars to about $50,000 will soon arrive. But they won't include interest dating back to 2000 when the tax was actually paid, said St. John's lawyer Eli Baker, who represented the fishermen.
Interest will instead be calculated back to when claimants formally requested a refund which, for most clients, was in 2006, Baker said in an interview.
"I think it's tremendously unfair that the government of Canada gets to hold on to taxpayers' money interest-free for six years.
"The way the law is, a person will receive interest on an overpayment starting from approximately the day they ask for a refund."
Noel Carisse, a spokesman for the Canada Revenue Agency, said the Income Tax Act sets out that interest on repayments does not start to accrue until 30 days after a refund claim is received.
Carisse said a dedicated team is reviewing fishermen's requests for reassessment.
"The Canada Revenue Agency is committed to providing impartial and fair tax treatment to all Canadian taxpayers in accordance with the law," he said in an emailed response.
Baker said the policy is especially galling because most of his clients are elderly, were overtaxed through the agency's own misdirection, and live in poverty or close to it. Those refunds will make a huge difference, he said.
"They're going to be fixing their roofs. They'll be turning their heat up into the comfortable range this winter as opposed to having to walk around the house with their outdoor parkas on."
Baker said one of his clients wears a snowsuit to bed.
"He won't be sleeping in a snowsuit this winter, probably not any winter for the rest of his life."
The estates of 108 clients who died as the case dragged on will receive their refunds, Baker said.
Questions about uneven treatment were raised after the tax agency settled a lawsuit out of court in December 2003 with about 150 fishermen, but then refused to compensate others.
Fluctuating advice on whether licence buyouts should be treated as a capital gain or as business income meant that some fishermen paid thousands of dollars more in taxes than their neighbours.
Most of Baker's clients didn't formally ask for a refund until 2006, he said. Another 151 people have contacted Baker since National Revenue Minister Gail Shea offered to reassess other cases in light of the Federal Court ruling, he added.
The government's position is cold comfort for Elizabeth Harvey of Isle aux Morts, a tiny fishing outport on Newfoundland's south shore, who spearheaded the court challenge.
She has fought for fairness since her husband Douglas paid $24,000 in taxes and employment insurance clawbacks on a payment of $110,000 for his groundfish licence in 1999.
Interest should be calculated back to 2000 when he was wrongly instructed to overpay taxes, Harvey said in an interview.
"To me, it's unfair because if we owed it to them, do you think they would have done the same thing? 'Oh, we won't charge you interest for the years you didn't bother paying.'
"It's a lot better in our pockets than it is in the government's pockets."
