The taxpayer's employer, General Motors of Canada Limited, assigned a new vehicle to the taxpayer and about 350 other senior managers or executives no less frequently than every three months for their personal and business use, but on the basis that they would identify shortcomings in the models and promote them to friends and acquaintances. The Director of Accounting and Collections Division of Revenue Canada, Taxation authorized GM in 1982 to use a simplified method for calculating the value of employee benefits, based on the average cost of all GM passenger vehicles sold in Canada and assuming 50% personal use of all vehicles in the pool. The Minister reassessed the taxpayer for 2008 and 2009 on a basis less favourable than the method in the 1982 authorization.
After quoting (at para. 36) a statement in Ryan v. Moore, 2005 SCC 38, that "estoppel by convention operates where the parties have agreed that certain facts are deemed to be true and to form the basis of the transaction," and stating (at para. 37) "that estoppel will not apply if an approval given by a tax authority is contrary to law," Woods J rejected the taxpayer's argument that the Minister was estopped from assessing contrary to the 1982 authorization. She stated (at para. 38):
...[A]n approval should not be set aside by the courts too readily on grounds that it is contrary to law. Latitude should be given to the approval unless it is clearly not supportable by the law. The administration of the tax system would be significantly adversely affected if this were not the case.
The authorization when made in 1982 was not contrary to law, as it "provided a reasonable determination of employee benefits" (para. 41). However, it was clearly invalidated by the enactment of s. 6(1)(k) in 1993 "to provide a specific rule for operating expenses" (para. 47). Furthermore, there had been a material change in factual circumstances (i.e., the turnover of vehicles in 1982 had been more frequent) (para. 49).