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ARTICLE · 26 SEPTEMBER 2025

Disputed Income Taxes: Postpone Payment At Your Peril

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Those who knowingly fail to pay a tax debt pending a decision normally cannot complain […] that the imposition of interest and penalties is unfair"...

CanadaTax
Michael H. Lubetsky
Michael H. Lubetsky
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Case Comment on Canada (AG) v Maloney, 2025 FCA 165, reversing 2024 FC 1474 and Rotfleisch v Canada (AG), 2025 FC 1529

"Those who knowingly fail to pay a tax debt pending a decision normally cannot complain [...] that the imposition of interest and penalties is unfair".1 – FCA Justice Stratas

On September 17, 2025, the Federal Court of Appeal ("FCA") and the Federal Court ("FC") issued judgements in two separate cases that remind taxpayers that, although they may not have to pay disputed income tax liabilities until their dispute is resolved, non-deductible arrears interest continues to accrue at punitive rates, and taxpayers who choose to delay payment until a final resolution of the dispute do so at their peril.

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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