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The Supreme Court of Canada has overturned the ruling of an appeal court in a Canada Revenue Agency case that found the agency had a duty to withhold tax from the income tax returns of Quebec taxpayers because they owed unpaid taxes on the same income they had given to the province.

In 2013, the agency issued a notice informing its client of a debt owed on the income he claimed in another province. The CRA claimed the debt as income from the province he claimed to reside in.

The government argued its duties were limited to cases where federal tax is owed or an exemption is claimed. The CRA argued this meant it had no obligation to file a claim in Quebec even though it had previously been notified in the province of the outstanding tax liability. On this basis, after six months the CRA refused to provide payment of the debt to satisfy the debt.

The Quebec Court of Appeal agreed with the CRA, finding that the court had not properly considered the government’s obligation to “provide” the individual with a refund for the provincial taxes owing or the tax exemption the client claimed. The court also found the court had not correctly defined a “refund” in assessing the agency’s duty to “provide.”

In effect, it was the court who had no jurisdiction in this case. The court of appeal’s decision said the CRA has a duty to provide the taxpayer with a refund, but that there is no duty to do so because the “refund” is provided by the government rather than the employer.

The Supreme Court of Canada on Friday agreed.

The decision reverses the 2015 decision by the appeal court, which found that the agency had a duty to provide tax refunds in Quebec. The appeal court found the decision was “erroneous” and, according to the court of appeals, “further evidence that it has no authority over tax collection.”

Tax law experts say it does not affect the IRS’s obligation to withhold tax in cases where an employee’s withholding obligations are not satisfied.

The ruling is the latest to rule out taxation of income from Canada as income in Canada and, as such, it comes as federal taxation of income earned

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