Strategies for Executive Compensation: Design and Tax Issues for a ...

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interest paid or payable thereon, where the Governor in
Council considers that the collection of the tax or the
enforcement of the penalty is unreasonable or unjust or that
it is otherwise in the public interest to remit the tax or
penalty.
A remission order must be sponsored internally by the CRA and the procedure is timeconsuming.
The CRA will generally require evidence of extreme hardship or incorrect
action or advice from the CRA that led to additional tax. There is no public record of a
remission order ever been provided in the case of a clawback.
Unjust Enrichment
Unjust enrichment is another remedy that might be considered. This equitable remedy
requires an enrichment of one party, a corresponding deprivation of another, and the
absence of any juristic reason for the enrichment. The remedy has been raised by
taxpayers in a number of cases, with mixed results.
One difficulty in raising the remedy is that it will often conflict with the legislation on
which the particular assessment is based. In the British Columbia Ferry Corp. v.
M.N.R., [2000] FCJ 227 F.C.T.D. in which the plaintiff sought a determination of whether
it had overpaid taxes on fuel oil, the Court concluded that the Excise Tax Act constituted
a complete code and excluded any equitable remedy that might otherwise have been
available.
Another difficulty with the remedy in the case of a clawback is that there may arguably
be a juristic reason for the enrichment and deprivation, namely the operation of the Act
as it applies to the receipt of employment income in a particular taxation year.