Canada Revenue Agency’s error leads to $5mn refund payout on alleged false tax filing

The Canada Revenue Agency is facing renewed scrutiny after a report revealed it issued a nearly $5 million tax refund based on what officials later described as a “bogus” return.

According to court records obtained by CBC’s The Fifth Estate, the agency paid $4,958,716.63 in May 2025 to a British Columbia woman who reportedly earned about $54,000 a year from a hemp and grain business in the West Kootenay region.

“Upon review by the senior program officer at (refund examination headquarters,) it was determined (that one of the forms on file) was invalid, and the resulting $4.9-million refund from the erroneously allowed slip was unwarranted,” the CRA said in court document.

Records show the return included a claim of nearly $10million in foreign income and a matching tax payment, effectively suggesting a 100 percent tax rate.

Despite being flagged for manual review, no follow-up occurred.

The agency identified the error two months after issuing the refund, but court filings indicate no immediate action was taken.

Authorities now believe no taxes were paid and the income claim, reportedly linked to “The United Nations,” did not exist.

The CRA says the woman now owes $7.9 million, including interest and penalties.