In 2007 the Minister reassessed the 1996 taxation year of the taxpayer ("Bolton") by adding $602,998 in alleged unreported sales to Bolton's reported income of $1,260,074 (for a total of $1,863,072) - but later conceded that Bolton's income had been overstated by $403,219 at most.
The Minister subsequently accepted a Bolton offer to settle by varying the 2007 reassessment "in order to add $403,219 to Bolton's income." The Minister treated "Bolton's income" as referring to its income as reassessed rather than as reported, and accordingly reassessed by adding $403,219 to the $1,863,072 of income assessed in 2007.
In response to a Crown submission that s. 169(3), by overriding s. 152(5), permits the parties to enter into settlements which increases the tax from a previous assessment, Campbell J stated (at para. 33) that "the principle that the Minister may not increase tax from a previous reassessment, is a general limitation placed on the Minister's ability, as well as the Court's, to increase an assessment of tax."
Moreover, having regard to the "factual matrix, surrounding the settlement offer," the Minister's interpretation of its terms could not prevail - so that Bolton's agreement under the settlement agreement did not satisfy the requirement under s. 169(3) for it to consent to the addition of the phantom income to its income (para. 44).